Woodhouse Michael: Taxation (Transformation: First Phase Simplification and Other Measures) Bill — First ReadingText is incorporated into the Bound VolumeWoodhouse Michael: Taxation (Transformation: First Phase Simplification and Other Measures) Bill — First Reading[Sitting date: 13 October 2015. Volume:709;Page:7158. Text is incorporated into the Bound Volume.]Hon MICHAEL WOODHOUSE (Minister of Immigration) on behalf of the Minister of Revenue: I move That the Taxation (Transformation: First Phase Simplification and Other Measures) Bill be now read a first time. I nominate the Finance and Expenditure Committee to consider the bill. This bill is part of a staged roll-out of the Inland Revenue Department’s Business Transformation programme an ambitious programme that over time will reform the department’s business practices and modernise our tax system. The proposed approach of stages to delivering the reforms were clearly outlined in the Government’s consultation paper Making tax simple: A Government green paper on tax administration which was introduced for public feedback earlier this year. That paper sets out a number of steps that would be necessary to realise the fullest potential of the proposed reforms and the importance of public consultation along the way. The first of these consultation papers Better Digital Services was released in March and more will follow later this year. This bill is part of that process.As the name suggests this first-phase bill deals with some of the more immediate legislative obstacles to making the tax administration system simpler and more certain for taxpayers. It begins our simplification of tax legislation by proposing to remove references to outdated means of communication and allows for future developments in communication technology without the need to revisit individual provisions in the principal tax legislation. That means for example removing outdated requirements for certain communications with taxpayers to be in writing or delivered by post. The purpose of the proposed change is to begin the process of providing modern and relevant rules that will ensure modern electronic technologies can be used in the same way as current paper communications and make it easier for people to manage their tax affairs.With that in mind the bill also contains proposals that will allow for documents such as tax returns to be filed under electronic signature. This will allow tax agents and ultimately taxpayers to submit electronically signed documents to the Inland Revenue Department under circumstances prescribed by the Commissioner of Inland Revenue. Other measures in the bill are part of the process of simplifying current tax rules and making taxpayers’ lives easier. Measures aimed at simplifying the current tax rules for employee share schemes for example follow feedback received earlier this year on proposals to make the rules less onerous for employees participating in these schemes.Employee share schemes are arrangements where employers offer shares in the company to employees and are often used to encourage staff retention and motivation. The value of shares from these schemes is treated as an income substitute under the current tax rules but unlike most employment income is not subject to PAYE. Instead employees who receive share scheme benefits must file a tax return and account for the tax on the value of the shares themselves.Sitting suspended from 6 p.m. to 7.30 p.m.Hon MICHAEL WOODHOUSE: Prior to the dinner adjournment I was espousing the virtues of the excellent changes that this bill will make to employee share schemes. Just to recap these arrangements are subject to taxation but not subject to PAYE so those employees who receive these benefits need to file tax returns and account for the tax on the value of the shares themselves. That can be a deterrent to participation in the scheme. So to simplify these rules the proposal that this bill makes will allow employers to choose to withhold tax on the employees’ behalf as part of their PAYE return.Other provisions are intended to refine certain interactions between taxpayers and the Inland Revenue Department and to make them more efficient. One such proposal will halve the time that taxpayers with personal tax summaries that meet the automatic refund threshold will have to wait for their refund. A further amendment proposes to increase the current threshold for automatic refunds from $200 to $600 which will benefit approximately 400000 more taxpayers.Other proposals in the bill will allow the Inland Revenue Department to share certain information in the interests of efficiency and to provide better services to taxpayers. They include allowing the Inland Revenue Department to supply a KiwiSaver scheme provider with the names and details of members who have transferred out of their schemes and the names of the members’ new providers and providing special tax codes directly to the Ministry of Social Development to help people who receive a New Zealand superannuation or a veterans pension to meet their income tax obligations.These and other measures proposed in this bill have been developed to open the way for a modern tax administration system that will make it easier for people to get their tax right and to receive the social policy payments that they are entitled to. For that reason I commend this bill to the House.