Penk ChrisCHRIS PENK (National—Helensville): Thank you very much Mr Chair for the opportunity to speak to the Taxation (Neutralising Base Erosion and Profit Shifting) Bill. I had such a good time—and I know that everyone who heard me would have also had such a good time—speaking to this the other night that I feel moved to do again likewise. I'd like to focus on the implications of the mismatch situation that Mr Bennett has already given a pretty good dissertation on in relation to banking groups—so specifically clause 29C which amends the formula for a banking group's funding debt. The first part of that is simply to add into the formula the punctuation and then the word mismatch"—so the punctuation is the "–" meaning of course a minus. So what we have as the net effect of that is that the formula for a reporting bank to calculate the funding debt of its New Zealand banking group is as follows: the total interest plus interest deductions minus shares and now—the new element—minus the mismatch all divided by days in the quarter. Of course for that to be meaningful we need to examine what the mismatch is. I won't belabour that point because it's already been covered in very good fashion indeed by Mr Bennett but essentially as I understand it from reading the commentary on the bill a mismatch situation is one that gives rise to a denial of a deduction or assessable income. So whether that's effectively a plus or a minus it will be factored into the equation—the formula so-called—to work out the funding debt of a reporting bank as defined in the Act. What then is a mismatch in this context I hear you ask Mr Chair and indeed many others are asking that no doubt. Well the answer to that is provided in this amendment to the bill helpfully so that at subclause (2) we have a new provision paragraph (cb) whereby "mismatch" is defined as being "the same proportion of the financial value of a debt or financial arrangement included in paragraph (a) or (b)" which I will just note briefly is that total interest and also the interest deduction that I mentioned earlier. So having taken that as "the proportion of the total interest expenditure under the debt or financial relationship in the income year that is denied" then one of three scenarios applies. It is either "a deduction in the income year under section FH 3(2)" which broadly speaking is "(Payments under financial instruments producing deduction without income)" or is one of the other two scenarios being "an unrecognised amount" or—broadly speaking again—providing for the matching of deductions from multi-jurisdictional arrangements which I think is pretty clear. But none the less I do have a couple of questions and they I suppose at a reasonably high level are seeking from the Minister—who I acknowledge has obviously put in a lot of care and attention and has some expertise in the area—just essentially an assurance that this particular mechanism where we're adding in a somewhat broad kind of addition to the formula whereby we're trying to catch any kind of situation where a mismatch would otherwise occur really fits the sort of comprehensive nature of the bill. Obviously the whole purpose of the thing is to be as comprehensive as possible and to avoid missing out on any sorts of situations whereby deliberately or otherwise an entity or a group of entities with a parent overseas and a New Zealand operation as well might again deliberately or inadvertently avoid—not to say "evade"—their tax obligations. So the first question is whether that aids the comprehensive nature and the second question goes to alignment. So I just seek the assurance really that this will enable us to say that we have arrangements in this respect that are aligned with Australia and other overseas jurisdictions whom we seek to have similar arrangements to—again for the clarity for the certainty and indeed for the overall international feeling that these kinds of arrangements should be avoided whereby those who can and should pay tax have been managing to avoid doing so. I think that probably concludes my current questions to the Minister and I do look forward to the response."