Webb DuncanDr DUNCAN WEBB (Labour—Christchurch Central): Tēnā koe e te Mana Whakawā. First of all to dismiss Mr Bayly's assertions I am not a property speculator never have been and don't propose to be. But to talk about the property price allocations it's really—I mean and to suggest that this is some tax grab is so utterly misconceived because all that this is is to make sure that as between vendor and purchaser the assets are dealt with in a tax-consistent manner. It's really very simple. So if there's a business being sold which is part building part physical assets—vehicles and what have you—and perhaps some intellectual property—client lists and software—the tax treatment of all of those assets is going to be quite different. We know that people are very careful and plan carefully when they sit down and say to the Inland Revenue This is how much I paid for my building which has depreciated at such and such a rate and this is how much I paid for software which has depreciated at a much higher rate and this is what I paid for a fleet of vehicles"—that there are real tax advantages to be had there.Now the fact of the matter is that the way in which they appear on the vendor's books is probably the best measure of their appropriate tax treatment. Having said that if buyer and seller can agree between themselves what the fair and appropriate allocation of the price across the different asset classes is then that is where it will sit. Now we need a good incentive to make sure that the parties do in fact agree so if they can't reach agreement then the vendor gets to dictate exactly what the purchase price allocation is and so on and so forth. There are a couple of other steps and ultimately it can be decided by the Revenue itself. But at the end of the day it's about making sure that assets don't go through some magical transformation from being intellectual property one day and then land and buildings the next simply because of the tax treatment and the fact that it's tax advantageous as between buyer and seller. As regards the question of the $1 million threshold I acknowledge—and I should actually just take a moment to say thank you to all of the submitters who came along to the Finance and Expenditure Committee and were very fulsome in their submissions and answered the probing questions of the committee—at least like to think they were—and also to advisers who assisted us in this work. This was one question that came up as Mr Bayly noted. Residential properties by and large are not a taxable asset and most people who own a residential property aren't paying tax on them so we can put the threshold very high. But in terms of businesses small businesses even whether it be a cafe in the mall or a mechanic shop they may be being bought and sold for $700000 $800000 but once they hit that $1 million threshold these rules will kick in as they should because the tax on those assets—the tax or the tax deductions claimed for depreciation and the like—can be very significant indeed. So it's quite appropriate that there is a threshold there and $1 million is entirely right. I must say I would be surprised if people with businesses like that who are buying and selling them at the $1 million threshold were not getting professional advice already and were not already allocating purchase price in one way or another. This isn't a tax grab; this is tax consistency. As we know these remedial matters bills—that's really a large part of what goes on: ironing out the wrinkles to make sure that when assets change hands the tax treatment remains appropriate; that there's no undue tax planning going on—which whilst not illegal is really depriving the nation of the revenue it ought to be getting from those transactions. So that's just one small part of this bill and I'm sure some of my colleagues on this side of the Chamber will explore some other parts of the bill. But a very good bill a good committee process—I think it came out of the committee much better than it went in. This is another great addition to the revenue legislation of New Zealand. I commend it to the House."