Dunne Peter: Taxation (Tax Administration and Remedial Matters) Bill — In Committee Third Reading 
Dunne Peter: Taxation (Tax Administration and Remedial Matters) Bill — In Committee Third Reading 
[Volume:675;Page:20777] 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I move  
That the Taxation (Tax Administration and Remedial Matters) Bill be now read a third time 
. The bill before us is about simplifying the tax system so that it works more efficiently and operates in a way that reduces compliance costs for New Zealanders thereby providing an environment that supports growth. These are obviously matters of particular interest at a time of global economic uncertainty and it is pleasing that a large number of the measures in the bill were welcomed by members on all sides of the Chamber during the Committee stage. 
One prominent feature of this bill is the proposed abolition from 1 October of this year of gift duty. It is fair to say that that measure did not receive a universal welcome from all members of the Committee and it was probably the cause of the most vigorous debate on this legislation during that stage. In my view however it is right that gift duty which has long since ceased to fulfil its function and instead imposes unjustifiable compliance costs should be relegated to history. It has been around since 1885 and has been largely ineffective in recent years in that it raises barely more than the revenue it costs to operate the system while imposing significant compliance costs on taxpayers. Concerns about the matter can easily be addressed by existing social and other legislation administered by other Government agencies. The review that preceded the decision to abolish gift duty was initially a review of the threshold at which it applied and it became obvious during that review process that there was little point in adjusting the threshold and that the tax was so ineffectual that we should remove it altogether and so it has come to be. 
Although much of the attention during the Committee stage focused on the abolition of gift duty it is worth reminding members that there are a number of other important aspects of this legislation. One such significant proposal will help make our Public Service more efficient. Changes to the secrecy and information-sharing provisions in the tax administration rules will bring the Public Service more into line with today’s customer service expectations and help improve efficiency across the Public Service. The present secrecy rules are too restrictive and do not for instance allow a non-English speaker or someone who has hearing difficulties to have a relative or a friend helping them even if they have the taxpayer’s permission. Clearly a dose of common sense is required. 
The information-sharing amendments in this bill will result in improvements in service provision and accuracy efficiency—by eliminating duplication of effort—and the detection and prevention of fraud. These changes will result in a more efficient Public Service providing services that are more tailored to the customer’s needs. 
The bill also includes a number of proposed changes to the rules on the tax disputes process which complement major changes made by the Inland Revenue Department to the way in which it currently administers the tax disputes process. Our tax system relies on voluntary compliance and it is therefore appropriate that disputes which inevitably arise are resolved quickly and efficiently for both parties. 
The bill also includes a number of matters relating to the recent Canterbury earthquakes. The most significant of these is the introduction of roll-over relief for depreciation recovery income. This will apply to cases where an asset is replaced and the insurance or compensation would otherwise have given rise to such income. The timing of income from the proceeds of business interruption insurance is also being changed with effect from 4 September 2010. The bill also proposes to relieve interest charged on overdue tax for some overseas workers in New Zealand who came here to assist following the earthquakes. These workers have unexpected tax to pay as a result of their stays in New Zealand being longer than anticipated. The Government wants to encourage productive investment in Canterbury and these measures will help to achieve that. Officials are still considering further earthquake-related tax issues and they will be brought to the attention of the House as and when it is appropriate. 
In addition this bill reduces tax for non-residents investing in New Zealand through New Zealand portfolio investment entities. There was some rather technical discussion in the early part of the Committee stage about these particular provisions. I should point out that this is an important set of reforms which is designed to assist New Zealand to potentially become a hub for the investment of international funds. By improving efficiency and removing undue compliance costs this bill helps create an environment that supports growth while maintaining the integrity of our tax system. 
It is significant legislation and substantial effort has been put into it by officials and drafters to get it to this point. I also acknowledge the Finance and Expenditure Committee for its thorough consideration of the bill for its good work and for the recommendations that it has brought forward which have been adopted. I am very pleased to commend the Taxation (Tax Administration and Remedial Matters) Bill to the House.