Rurawhe Adrian; Woodhouse Michael; Parker DavidPart 2 Other amendmentsCHAIRPERSON (Adrian Rurawhe): Members we come now to the debate on Part 2 clauses 32 to 38 Other amendments.Hon MICHAEL WOODHOUSE (National): Thank you Mr Chair. I'm looking forward to getting into the debate on Part 2 and examining the motives for some quite extraordinary changes to the Tax Administration Act which we touched on at first and second readings. We have an extraordinary situation where a tax bill has been slammed by the Attorney-General a particular clause on the powers of the Commissioner of Inland Revenue to just go and get whatever information she deems relevant for the purposes of developing policy as if the Inland Revenue Department didn't have enough policy staff. They're great people but it's not as if there's a shortage of them. So now the Minister of Revenue is giving the commissioner the power to go in and compel any relevant information for the purposes of developing a policy and the Attorney-General quite rightly slams this by saying in his conclusion that it is a breach of the right to freedom of an expression and most concerning even for a tax bill the breach of a right against unreasonable search and seizure that are affirmed by the New Zealand Bill of Rights Act. The Minister of Revenue was clearly quite rebuked by the Attorney-General and decided before the bill had even hit the table to prepare a Supplementary Order Paper which says in essence that the commissioner must not use as evidence in proceedings against a person information provided by the person in response to a notice that's been issued under that section. But that protection doesn't apply to any information subsequently obtained by the commissioner under another section of the Act. I'd like the Minister to just clarify whether I have got this right. Subsection (2) of the amendment to clause 33 is saying there's an immunity against proceedings unless the Inland Revenue subsequently obtains information under another part of the Act and I described what that meant in my second reading speech. I'm genuinely interested in the Minister's view or the Attorney-General's view for that matter about whether or not that addresses the issues raised by the Attorney-General whether or not this is a blanket prohibition on proceedings of the information gathered by the commissioner under the new power or whether it is technically legally possible for the commissioner to then go and get subsequently obtained information under another part of the Act and then commence proceedings. I wonder if the Minister could first address that point please.Hon DAVID PARKER (Minister of Revenue): I will do so but it will take me a little while to put this in context. Members may have read recent press articles about an ongoing dispute between Owen Glenn and Eric Watson. The financial affairs of Eric Watson are so complex—crossing international jurisdiction lines with many different investment vehicles—that it has taken Owen Glenn $100 million of expenditure to get to the bottom of it. I think that illustrates how complex the tax affairs are of some wealthy taxpayer groups.The problem that is encountered by the Commissioner of Inland Revenue is that although the commissioner believes that she already has the power to gather information for policy purposes sometimes tax intermediaries deny it and I'm going to explain why. Section 17B(1)(b) of the Tax Administration Act 1994 provides that A person must when notified by the Commissioner in an information demand provide any information that the Commissioner considers necessary or relevant for any purpose relating to—(b) the administration or enforcement of any matter arising from or connected with a function lawfully conferred on the Commissioner." Now the New Zealand commissioner has a policy role. So the commissioner believes that already she has the right to collect information for policy purposes not just for enforcement purposes. There are tax professionals who act as intermediaries for wealthy individuals who say that that is not a correct interpretation of that section and that the proper interpretation of that section is that the information has to be for administration or enforcement which gives it an enforcement frame rather than a policy frame.So rather than have that battle which we could take up through the courts but it would take years we've chosen to clarify as is clear in jurisdictions like the United Kingdom that information that the commissioner needs for policy purposes can be collected by the commissioner. That's why clause 33 of the bill is present now because the commissioner and the collection of information by the commissioner under section 17B(1)(b) already carries with it the ability to use that information in her view for enforcement processes. So when the provision was drafted to make this clear in clause 33 nothing untoward was thought of the fact that criminal processes could follow from information-gathering because from the point of view of the commissioner that's already the case. Having drafted the clause in that way the mechanisms of Government had a look at it. I concluded as Attorney-General that that's going too far in respect of information gathered for information purposes. That's why I with my Attorney-General hat on put the Bill of Rights report on the floor of the House. That's why the amendment which is the tabled amendment in my name to clause 33 provides that the commissioner cannot use information collected under the proposed new section as evidence in court against the person who provided it.However that restriction does not apply and should not apply to information obtained by the commissioner under any other provision in the Tax Administration Act 1994 such as her main information-gathering power in section 17B.It's recognised that the proposed new section 17GB is primarily focused on obtaining information on tax policy purposes while ensuring that the Government's other information-gathering powers are maintained and not diminished."