Dunne Peter: Taxation (Canterbury Earthquake Measures) Bill — First Reading Second Reading In Committee Third Reading 
Dunne Peter: Taxation (Canterbury Earthquake Measures) Bill — First Reading Second Reading In Committee Third Reading 
[Volume:672;Page:19022] 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I move  
That the Taxation (Canterbury Earthquake Measures) Bill be now read a first time. 
 This bill is necessary because our tax laws were never designed to cover such extraordinary circumstances as have befallen the people of Canterbury in the last few months. The bill provides relief and support through the tax system to both the people and the businesses of Canterbury as they seek to recover from the earthquakes. This bill will provide income tax and gift duty relief on trading stock that a business has donated from 4 September 2010 up to 31 March 2012 for the purpose of relief from the adverse effect of the Canterbury earthquakes. This relates to those situations where a number of businesses have provided trading stock from their own businesses to assist those affected by the earthquake and to help with the necessary recovery efforts. Ordinarily such donated trading stock would attract tax as a person disposing of trading stock for less than market value is deemed to have disposed of that stock at market value. This is an anti-avoidance measure and although there are good reasons for its existence in normal circumstances this bill provides for tax relief for such donations in relation to the earthquakes. 
Similarly the bill proposes making tax-free certain welfare contributions provided by employers to their employees within 8 weeks of either the original 4 September 2010 earthquake or the 22 February 2011 earthquake. Many employers have responded with praiseworthy charitable instincts to provide their employees who are affected by the earthquakes with a range of welfare benefits including cash goods and accommodation. Current tax law often treats such benefits as income and therefore tax would be payable on those benefits at this time. Imposing such tax however on welfare payments to these people in these extraordinary circumstances seems quite inappropriate and it would result in arbitrary outcomes depending on the nature of the benefits provided. The Government is proposing several parallel tax exemptions using the Ministry of Social Development’s job loss cover payment which was at the rate of $400 a week tax-free for 8 weeks as a basis. 
Another measure the bill proposes is a practical one to extend the availability of the redundancy tax credit which had been due to end on 31 March to 30 September this year. Members will recall that the redundancy tax credit was repealed following Budget 2010 but had been extended following the September 2010 Canterbury earthquake. The tax credit was designed to ensure that people were not moved into a higher tax bracket due to their receiving a redundancy payment. This extension is not limited to redundancy payments resulting from the Canterbury earthquakes; the provision is being generally extended. 
The bill also provides reassurance to families who rely on Working for Families tax credits. The definition of “income” for Working for Families was broadened from 1 April this year to include cash gifts the payment of expenses and certain other payments. This could also include donations of cash or provisions to support a relative who had been affected by the earthquakes. The amendment proposed in this bill would apply in relation to an event that meets the criteria for an emergency event including the Canterbury earthquakes. Under the amendment the Commissioner of Inland Revenue will be authorised to recognise the emergency event and to ignore the support provided by relatives to affected families when determining Working for Families tax credits. I point out—because I know that at least one party in the House has raised this as an issue of concern already—that the definition of an emergency will be that contained in the Civil Defence Emergency Management Act 2002 and the discretion being applied to the Commissioner of Inland Revenue will be in relation only to the particular event not to whether a particular payment made in response to that event qualifies. 
By removing unnecessary obstacles and tax compliance burdens at this challenging time the changes the bill introduces are designed to help the people and the economy of Canterbury recover. The Government has been committed from the outset to providing assistance to the people of Canterbury and this bill follows measures already in place. Members will recall for instance that on 28 March this year the Commissioner of Inland Revenue was granted through Order in Council the discretion to extend statutory tax dates so that businesses are not unfairly penalised for failing to meet tax obligations. In addition further earthquake-related depreciation changes will be brought to the House for consideration later this year. Those measures and the measures contained in this bill are practical ones. They are designed to provide much-needed help through the tax system and a measure of certainty to the people of Christchurch and Canterbury generally as they recover from the appalling events that they have been subject to in recent months. The aim fundamentally has to be to help those earthquake-stricken residents and businesses of Canterbury get back on to their feet and to help the people of Canterbury and the region as a whole play again in the future before too long the dominant role they have played in large areas of national life in the past. With a great deal of pleasure I commend this bill to the house.