Genter Julie Anne: Oral Questions — Questions to MinistersText is incorporated into the Bound VolumeGenter Julie Anne: Oral Questions — Questions to Ministers[Sitting date: 11 May 2016. Volume:713;Page:10974. Text is incorporated into the Bound Volume.]9.JULIE ANNE GENTER (Green) to the Minister of Revenue: Does he agree with the Prime Minister who said the disclosure and reporting requirements for foreign trusts under IR607 were “extremely broad and deep”?Hon MICHAEL WOODHOUSE (Minister of Revenue): Yes because once a trustee has registered a trust through the IR607 they must keep detailed records in relation to that trust including particulars of any settlements made on the trust and particulars of distributions made by the trust. The Inland Revenue Department (IRD) can get this information at any time from the trustee. The IRD can then exchange this with its treaty partners either automatically or on request. I would point out to the member that those rules were put in place in 2006 and the Government is open to making changes around the disclosure rules covering foreign trusts which is why we recently appointed John Shewan to conduct an independent review.Julie Anne Genter: Can he confirm that according to section 59B of the Tax Administration Act unless the settlor is resident in Australia there is no requirement to disclose to the IRD any information about the settlor the beneficiaries or their countries of tax residence?Hon MICHAEL WOODHOUSE: I draw the member’s attention to section 22 and 22(7) of the Tax Administration Act. It requires that documents that evidence the creation and constitution of the foreign trust and particulars of settlement made on and distributions made by the foreign trust must be collected by the trustee. All of that information is available on request or proactively by IRD.Julie Anne Genter: Is tax law professor Michael Littlewood correct in his paper where he says that as a consequence of section 59B “if the settlor is resident anywhere other than Australia the IRD generally have no idea of who the settlor is or of the country in which he [or she] resides. The IRD is therefore not able to inform that country’s revenue authority that one of their residents has set up a trust in New Zealand. And of course the other country’s tax authority is unlikely to ask” because it would not know?Hon MICHAEL WOODHOUSE: I certainly dispute the last two parts of the quotation in that question—that the IRD is unable to find the information and unable to provide it to the foreign jurisdiction because the foreign jurisdiction would not know. It appears that the member is under the mistaken illusion that somehow the transactions that go on overseas in the procurement of assets and the transaction of business are somehow completely beyond the radar of those tax authorities because they are New Zealand - registered foreign trusts. That is simply not true.Julie Anne Genter: Can he confirm that only 1 percent of the nearly 12000 registered New Zealand foreign trusts have a settlor resident in Australia and therefore 99 percent of New Zealand foreign trusts do not automatically disclose to the IRD information that would be necessary for us to share information with other jurisdictions’ tax departments?Hon MICHAEL WOODHOUSE: No I cannot but the member may well be correct about that. I go back to the point I have made earlier in this question and yesterday and last week and the week before: there is plenty of opportunity for foreign tax jurisdictions to ask for and the IRD proactively to offer the information when it is necessary.David Seymour: Has the IRD committed personnel to searching through the so-called Panama Papers to look for names and records of New Zealand taxpayers?Hon MICHAEL WOODHOUSE: Yes but that is business as usual for the IRD. It does that as a routine process anyway primarily to ensure that New Zealand tax residents are not using New Zealand resident foreign trusts to shelter income that they should be paying to the New Zealand taxpayer. This is business as usual for the IRD.David Seymour: If the IRD is prepared to use those “stolen records” as the Prime Minister described them earlier in question time will the IRD start hacking the records of private law firms itself or is it good enough just to receive stolen goods?Mr SPEAKER: Order! Marginal question—I will allow it.Hon MICHAEL WOODHOUSE: I can assure the member that the IRD’s investigations are well within the law.Julie Anne Genter: Would it not make it easier for the IRD to provide information to our tax treaty partners if we collected more relevant information at the point of registration as we currently do with Australia? If it is the case why is his Government so opposed to having greater disclosure?Hon MICHAEL WOODHOUSE: I note that is exactly the question that Dr Michael Cullen as Minister of Revenue asked in 2005 and 2006 and came up with the answer no. But that is the essence of the inquiry that is being led by John Shewan and we will have further information on that in the next couple of months.