Robertson Grant: Taxation (Land Information and Offshore Persons Information) Bill — In CommitteeText is incorporated into the Bound VolumeRobertson Grant: Taxation (Land Information and Offshore Persons Information) Bill — In Committee[Sitting date: 09 September 2015. Volume:708;Page:6437. Text is incorporated into the Bound Volume.]GRANT ROBERTSON (Labour—Wellington Central): I want to pick up where my colleague Stuart Nash left off. I want to do that by responding the intervention Mr Scott made earlier when he told us that we have nothing to worry about in terms of the definition of an exemption for a main home being based on the idea of “greatest connection”. He said it is fine because “home is where the heart is”. So now we are going to base law in this House on some kind of Hallmark greetings card basis. That is how we will do it. We are trying to provide certainty to the people of New Zealand and we have to go on Mr Scott’s feelings—what is in his waters. That is what we have to base the law on—Mr Scott’s feelings.I am actually not surprised that Mr Scott is struggling a bit with this law because he could easily get up in this Chamber and be the embodiment of the problem here. Is home—and home is where the heart is—in the lovely suburb of Kelburn in Wellington Central? Or is it in Martinborough where you might want to represent some people? Where is that—where is the heart there? Is it where you live? Actually we will if I get some time Mr Scott use you as an example as we work our way through the definition of “greatest connection” because I think you are living proof of the problem that we have got here.It is completely ridiculous to have a member of the Government stand up and tell us that it is fine because “greatest connection” is “home is where the heart is”. That cuts to the internal inconsistency of this part of the bill because on the one hand we were told by Minister Upston when she took her call that this is fine and it is an objective test and then Mr Scott got up and said that it is based on a feeling about where one’s home and heart are.Sue Moroney: It’s the vibe.GRANT ROBERTSON: Exactly—the vibe. That is the problem here: an untested definition is brought into this House and it creates a loophole. This is not an objective test no matter how much the Government might want to tell us that it will be an objective test.To make that point in the commentary on the bill provided by Government MPs they say in the same paragraph where they say that there will be confusion that they expect the factors to define “greatest connection” to include a series of things. They do not say “These are the things” that will be defining what the greatest connection is but “We expect”. That is as certain as this law gets—an expectation of Government members about how the term “greatest connection” will be defined. That is poor lawmaking. It is rushed lawmaking. It is not going to help New Zealanders understand as much as we need to about who is buying and selling properties in this market. It is emblematic of the confusion that lies in this law.To make that point even further in one part of the commentary on the bill the Government members have removed the original reference that was in the bill as to whether any member of a person’s family is living with that person. That has now been deleted out of the bill because according to the Government that is not relevant in terms of the definition. I am reading here that “It is irrelevant to the definition of ‘main home’ whether or not a person’s family lives with them”. If you go two paragraphs down you will see that one of the expected factors for deciding whether somebody has a “greatest connection” which will be the thing that defines where their main home is is where their immediate family lives. So they take it out of one section of the bill and then include it in the list of expected factors for deciding whether or not someone has a “greatest connection”.This is confused lawmaking. It is not clear in an area where we need to be clear. But fundamentally what no Government member has been able to do is say why the main home should be exempted from this process. Louise Upston when she stood up to speak before said that it is because this is not actually a register. She said it is about making sure that people pay their tax fairly. Well actually that is in another bill. That is in the Taxation (Bright-line Test for Residential Land) Bill. This bill is actually about collecting data and collecting information.The Government’s reasoning for why it would be so complex for people to provide an IRD number on the purchase of their main home is laughable. I want to read again from the commentary on the bill: “… the majority of us accept that not making such an exception [for the main home] would greatly increase the volume of information to be managed by Land Information New Zealand and the Inland Revenue Department and could lead people to worry needlessly that the transaction would be taxable even though in most cases it would not be.”Let us unpick that justification for exempting the family home—that “it would greatly increase the volume of information to be managed by Land Information New Zealand and the Inland Revenue Department. It is absolute nonsense. Most people purchasing what would be their family home already have an IRD number. There is no increase in compliance for what I would venture to suggest is probably 95 percent of the people involved in those transactions. As Julie Anne Genter and Stuart Nash have already said it is a regular part of conveyancing to simply fill out a form and include one box on it that has your IRD number in it. I know my IRD number off by heart. I am not going to say it now lest someone tries to steal my identity but I do know it off by heart. Most people would.David Bennett: Phil Twyford might put it on a list for you.GRANT ROBERTSON: David Bennett’s number is 3 or 4 as he is so old—is it not? But their IRD number is easily remembered by most people. It is not a difficult thing. In terms of the Inland Revenue Department there is no compliance increase at all and for Land Information New Zealand the increase is a very very minor one. Again there is a confusion here—and we will come to it in Part 2 of the bill—as there is an unnecessary compliance burden being put in place by the Government. But this is not it. In this part of the bill it is absolutely one of the easiest things we could do: make a small change to the sale and purchase agreement. Conveyancing lawyers do this work anyway. Most people buying their main home will already have an IRD number. That is not a decent justification for exempting the main home.The second part of the Government’s justification for exempting the main home is that it could lead to people worrying needlessly that the transaction would be taxable even though in most cases it would not be. How does that work? You are not given an obligation to pay tax just because you supply an IRD number. People who have IRD numbers know that they have IRD numbers. You supply IRD numbers at all sorts of times of your life and you do not have an expectation that you will necessarily be paying tax. These are empty reasons for exempting the main home and in the end they compromise the quality of the data.This is a confused piece of legislation. Part 1 is a particularly confused piece of legislation. I do urge members of the Committee to consider supporting Julie Anne Genter’s Supplementary Order Paper. We will have a much better set of data if we do not have silly exemptions in the law as proposed by National.In the time I have remaining I want to move to a couple of points that have not been raised. One of those is the changes in new sections 156A(2) 156B and 156C in clause 4 around the meaning of exempt transfer. This really is a classic example of how complicated it can get once you start making exemptions. This is about the idea that you would not be able to exempt transactions that were not undertaken by individuals—that were perhaps undertaken by trusts or companies. The original drafting of the law apparently did not make this clear and so the Finance and Expenditure Committee had to find a process through this to clarify the situations in which a piece of land might have multiple uses.Again here we get ourselves into a confusing situation. So now we end up with an amendment to section 156A(2) to specify that the main home exemption would be available “when most of the land was used for a home by the owner and when it was so used for most of the time the person owned it.” as the commentary on the bill states. Well we are opening a can of worms about what “most of the land” and “most of the time” means. The obvious examples here are perhaps farms where people will live on different parts of the land at different times. They might have a home that they have on the land plus a property further away within the farm. Which of those is their main home? Creating exemptions around that creating exemptions around that kind of land is simply creating loopholes and is unnecessary.This may well make for a tidier definition—I accept that; I accept that the officials have proposed things that will make a tidier definition—but by creating these loopholes and exemptions we simply make for complex law.Very briefly the last clause that I want to mention is one that we actually support which is around the question of the changes to the information to be supplied in tax statements.