Robertson Grant: Taxation (Residential Land Withholding Tax GST on Online Services and Student Loans) Bill — In CommitteeText is incorporated into the Bound VolumeRobertson Grant: Taxation (Residential Land Withholding Tax GST on Online Services and Student Loans) Bill — In Committee[Sitting date: 12 April 2016. Volume:713;Page:10417. Text is incorporated into the Bound Volume.]GRANT ROBERTSON (Labour—Wellington Central): I want to look specifically at clause 71 which contains as I foreshadowed in an earlier contribution the amendments that have been included to look again at offshore persons’ bank accounts in so far as that requirement was put in place in the Tax Administration Amendment Act 2015 which for those who have been following closely was an earlier piece of legislation as part of the suite of legislation that the Government has put in place to establish its new rules around resident—The CHAIRPERSON (Lindsay Tisch): I am sorry to interrupt the honourable member. The time has come for me to leave the Chair for the dinner break.Sitting suspended from 6 p.m. to 7.30 p.m.GRANT ROBERTSON: I will try to make it as interesting and stimulating for the Chair as I possibly can. Part 4 of this bill however is about the Tax Administration Act so we have got only limited material to work with here. But the contribution I was making before the break was around the fact that this is the clause—I am referring here to clause 71 of the bill—where again we are amending a piece of legislation that the House passed only months ago and that was the Tax Administration Amendment Act 2015.What that Act did was create a requirement for offshore persons to have a New Zealand bank account in order to apply for an IRD number. In part this was to ensure that the anti - money-laundering identity verification requirements that New Zealand has signed up to apply to offshore persons. I am sure everyone in the Committee would agree that New Zealand’s being party to all of the anti - money-laundering requirements that have been internationally agreed is important because we do not want to see New Zealand out there as an outlier in the world in terms of providing good standards of probity in our taxation and financial arrangements. That would be a terrible thing and one that we on this side do not think should have any place whatsoever in the way that New Zealand presents itself to the world.However after that piece of legislation was passed it became clear that some of the compliance costs involved in everybody getting a bank account in order to get an IRD number were a little high. Officials went away and came up with some solutions. Some of them are non-legislative and are not covered in here but they were described to the select committee in some detail. However some of them are legislative and they are the ones contained in clause 71. In particular there was one that was a pretty obvious one which was around seasonal workers employed under the Recognised Seasonal Employer scheme. Clearly it would be quite difficult in some instances to immediately get bank accounts—things like identification and all of those sorts of things are a little hard at times to get—so non-resident seasonal workers under the Recognised Seasonal Employer scheme are going to be allowed a grace period of 1 month after arriving to get a New Zealand bank account and inform the Inland Revenue Department before the higher withholding tax would apply. All members of the select committee supported this as being a practical way of dealing with that.The other category of person is a person who has already had anti - money-laundering verification undertaken by a New Zealand reporting entity and would not need to obtain a bank account to avoid duplication of that process. So in law what that equates to is “a person for whom a reporting entity under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 has conducted the customer due diligence procedures required for customer due diligence under that Act”. There were some questions asked at the committee as to whether that would provide exactly the same level of assurance as somebody who had a bank account but apparently it is a consideration within all of the provisions of that 2009 Act I mentioned and therefore those people are exempt as well. Then the bill already exempts non-resident suppliers of remote services from the requirement to have a bank account and the committee has recommended that other non-resident suppliers also be exempt as long as the IRD number was being supplied solely because they were a non-resident supplier of services.So this all came about because the Government—Hon Ruth Dyson: How do you know that?GRANT ROBERTSON: Well it is amazing that I know all of that is it not?Hon Ruth Dyson: No but how do you know why they supplied it?GRANT ROBERTSON: No well the thing is they supplied it—the only reason a non-resident supplier would supply that would be because they were a supplier of remote services to New Zealand because otherwise they will not have a New Zealand bank account. There is no reason for them to have a New Zealand bank account. They are not an entity operating in New Zealand.Alastair Scott: But you are amazing to know all that.GRANT ROBERTSON: I know. It is—well exactly. Alastair Scott could potentially have taken a very similar call to mine had he chosen to do so. He has not and I am sure he is grateful that we have now traversed that material. [Bell rung]The CHAIRPERSON (Hon Chester Borrows): Grant Robertson.GRANT ROBERTSON: It will be only a brief addition—The CHAIRPERSON (Hon Chester Borrows): Do not apologise. Just get on with it.GRANT ROBERTSON: —to that statement which is really just to sum up my contribution here.So I think this clause 71 is useful but it does highlight the shortcomings with the way the Government has gone about this. We are nearly at the end of the Committee stage of the third bill of three. It is a pretty poor trifecta if you ask me because in those three bills the Government has set up the brightline test that has not really worked it has created a series of obligations that it has had to come back to the House and correct and in the end I do not thinkNew Zealanders are particularly better off for these changes. We are supporting them because they are minute steps in the right direction but actually the Government when it looks back on how it has gone about these three pieces of legislation will probably want to have a pretty serious rethink about whether it has got it right. We do not think it has in terms of the issues that are meant to be being managed by the brightline test but on top of that if you are making law and then correcting it months later there is a problem with how that law is being made and we need to do better than that.