Robertson GrantThird ReadingHon GRANT ROBERTSON (Minister of Finance) on behalf of the Minister of Revenue: I move That the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Bill be now read a third time.The Government's first priority is preventing and mitigating the health risks posed by the coronavirus and to protect the vulnerable in our society. But we are also keenly aware of the need to prevent and mitigate risks to our economy. We must protect our economic health alongside our physical and mental health.This bill therefore contains measures which aim to help New Zealand weather the economic storm which we are already going through and assist in the recovery. It proposes various measures to provide support through the tax system for businesses and for ordinary citizens. The bill also proposes a number of social assistance changes to ensure that those financially impacted by COVID-19 will receive the support that they need.I'll provide a brief overview of those proposed measures. Firstly reinstating depreciation deductions for buildings. Before 2010 the New Zealand tax system allowed for deductions for building depreciation but this was abolished in 2010. We propose reinstating depreciation deductions for non-residential buildings. This is intended to support businesses with cash flow in the near-term and assist with the broader economic recovery by stimulating businesses' investment in new and existing buildings in the future. It is not a short-term measure. The recent Tax Working Group reviewed the international evidence and concluded that industrial and commercial buildings do indeed depreciate. The Government believes that the current policy setting for depreciation deductions puts New Zealand out of step with other countries creates a distortion of the tax system and most importantly discourages investment in buildings. Reinstating depreciation deductions is a positive step for business. It's going to encourage investment in the recovery phase support productivity and enable the capital costs of the seismic strengthening of the building to be depreciated. And of course by reducing tax for building owners it will increase cash flow and stimulate the economy. This is not a temporary measure until we get back on our feet; it is instead a change to restore and correct policy settings.Members are no doubt aware that provisional tax is paid in instalments during the year instead of a lump sum at the end of the year. This is paid by taxpayers who have a tax liability of more than $2500 to pay in the prior year. We can relieve some of the cash-flow pressure and compliance costs for around 95000 small taxpayers by allowing them to defer their tax payments. They would still be expected to pay income tax but would instead do so in one payment set in February following the end of the income year. The bill proposes to do this by increasing the threshold for provisional tax from $2500 to $5000. This too is intended as a permanent change and will have effect from the 2020-21 and later income years.The Government is also proposing to stimulate investment reduce compliance costs and increase cash flow for businesses by increasing the threshold for writing off low-value assets. Immediate expensing will allow businesses to fully deduct the cost of low-value assets when they are purchased rather than spreading the deductions over many years. The threshold for the low-value asset write-off is currently $500. The bill proposes a one-year temporary increase in the threshold to $5000 for property purchased on or after 17 March 2020 reverting to $1000 for property purchased on or after 17 March 2021. The initial temporary increase provides for an incentive for businesses to bring forward purchases and to take advantage of this measure and thus provide further support to the economy in the recovery phase.Other investment that we want to encourage is research and development. Like other businesses research and development performers will be struggling. We want to ensure that these businesses continue to innovate. Such businesses will be part of our recovery. To help support businesses' research and development we're proposing to bring the broader research and development refundability rules that would have applied from the next income year forward to this one. Without this measure R & D performers facing a very difficult future might be forced to scale back their R & D programmes to stay afloat. The loss of these programmes would cost jobs and reduce innovation and that would hinder our recovery once the global situation has stabilised. This measure will provide a much-needed cash injection to these firms and allow our R & D businesses and its sector to better weather the storm protecting New Zealand jobs and ensuring a smoother recovery.The Government is also proposing that the Commissioner of Inland Revenue should be allowed a time-limited discretion to waive use-of-money interest if a taxpayers' ability to make a tax payment on time has been significantly adversely affected by the COVID-19 outbreak. Taxpayers' use-of-money interest is when they underpay their tax. It compensates the Government for the time value of money lost because of the underpayment. The interest applies to all tax types administered by Inland Revenue as well as underpayments of tax that are withheld at source and for Working for Families' debt. We know that people are going to be facing tough times so allowing the IRD to cancel use-of-money interest provides targeted relief to directly affected taxpayers facing cash-flow pressures. This is a very important measure. It would apply for all tax payments due on or after 14 February 2020. At present Inland Revenue shares specific information such as contact details with approved agencies for use of specific purposes such as preventing serious crime. This bill proposes an amendment to allow Inland Revenue to share information with other Government departments to assist those agencies in their response to the COVID-19 outbreak. This allows information to be supplied to assist the efficient and effective delivery of the Government's COVID-19 response. At the same time the information sharing could be used for fraud prevention—for example Inland Revenue will be able to alert the Ministry of Social Development to fraudulent claims for the wage subsidy. This ensures that the money made available in the Government's economic package will help if it goes where it is genuinely needed. The information-sharing arrangement is intended to get us through the current crisis and it is time limited. The in-work tax credit is an income-tested cash payment to working families with children. To be eligible families must normally work at least 20 hours a week if they're sole parents or 30 hours a week if they're couples. This provision allows recipients to keep receiving a tax credit over short periods with fewer hours worked such as sick leave or vacation. However that hours-worked requirement means that the tax credit is currently not available to workers with unpredictable or variable hours such as shift workers people with multiple jobs or as is very important in this situation where their hours worked drop below the threshold. These workers are at risk. We know that people are likely to face a reduction in their hours in the wake of COVID-19. The Government therefore is proposing in this legislation to extend the tax credit to all families not receiving a main benefit and who have some level of employment income each week by removing the hours test.Earlier this month I announced emergency measures including wage subsidies and leave payments to help businesses stay afloat and keep people in jobs. We want businesses to get the full extent of that support we are providing. So an Order in Council was made to ensure that wage subsidies and leave payments would not incur GST as they would in the normal course of events. This order applied from 24 March 2020. However the wage subsidy and leave payments have been paid out from 17 March 2020. To ensure fairness and consistency of treatment the bill proposes that GST not apply to payments of the COVID-19 wage subsidy and leave payments from 17 March until the date in 2020 that the amendment order came into force.Working for Families and emergency benefits: the bill proposes to allow people on a temporary visa who wouldn't otherwise meet the Working for Families residency criteria to qualify for Working for Families if they receive an emergency benefit from the Ministry of Social Development. This ensures that families on a temporary visa who receive an emergency benefit because of COVID-19 are able to access a comparable level of financial support to other recipients of main benefits.The final measure that I want to mention is the winter energy payment. This is a benefit paid to help eligible people meet their household heating costs during the winter months. The rates for the payments have been doubled by Order in Council to $900 per year for single people with no dependent children and $1400 per year for couples and people with dependent children. However this increase in rates is temporary and intended to apply for 2020. The bill therefore proposes to restore the winter energy payments from 2021 onwards to their current rates.This is a good bill and one that is urgently needed. I want to thank all members of the House for their ability to work with us to ensure that it can pass through as quickly as possible. I commend this bill to the House.