Bennett DavidHon DAVID BENNETT (National—Hamilton East): Thank you Mr Chair. It's great to be able to talk on this bill as well and I just want to focus on one part of it and that is the hybrid and branch mismatch arrangements.Hon Member: I'm looking forward to this.Hon DAVID BENNETT: You should be looking forward to it. A hybrid or branch mismatch arrangement can result in a deduction with no corresponding taxable income for the Government or it could result in a double deduction so in both cases the Government could lose out on revenue. So of course in this legislation which is there to increase Government revenue it has sought to deliver a solution in regard to these issues. Now the solution that's been proposed in the original bill was a very comprehensive solution that is based on the OECD approach and is very generalistic. The submissions were to have a much more specific regime that took into account the New Zealand environment and how things operate here and how our commercial arrangements are structured. It is good that the committee has taken on board those submissions in many cases and delivered some good outcomes that actually have a much more rational approach that takes into account how New Zealand commercial affairs operate rather than seeking to have a comprehensive approach just because it is easier to do so.So let's have a definition of a hybrid and branch mismatch arrangement. That's a cross-border arrangement that exploits the differences in the tax treatment of an instrument entity or branch under the laws of two or more countries." I remember doing a member's bill which was very similar to this that looked at the international treatment under the different laws. It was a bill that the Hon Chris Finlayson took great delight in as well because he was very much involved in that in his legal practice. So as I say that can actually potentially lead to a deduction without any corresponding taxable income to the Government or even in the case of a double deduction which is even less income coming to the Government.So let's have a look at some of these changes that were proposed by submitters and were taken on by the committee and actually accepted—and that's a rare thing in our select committee process to actually see but actually it did happen in this case. So the first one that we'll look at—and this is probably one of the smaller ones—is the transitional period. In this case this was a submission of the Chartered Accountants Australia and New Zealand and the Corporate Taxpayers Group and was accepted in part subject to officials' comments. The officials agree that a transitional period would help taxpayers comply with parts of the rules and situations where another country's rules are implemented part-way through the taxation year and that's particularly relevant in the case of the entity-based rules due to possible interaction of other countries' dual inclusion income rules and New Zealand's surplus assessable income concept. So that is very much taxation-speak but effectively to actually see that the officials see that this should be accepted in part takes into account that there is a bit of an issue there and that needs to be recognised and taken into account through this legislation. So a transitional period was submitted. It should be included in the measures in relation to other countries implementing hybrid and branch mismatch rules particularly Australia—and our biggest trading partner is Australia so that makes a lot of sense—and the advisers and the committee have come to a point that actually takes partly into account that request.Another one was to widen the corresponding hybrid mismatch legislation. Now that submission was accepted and there was an appropriate change made to the definition of hybrid mismatch legislation to clarify that comprehensive anti-hybrid rules are not required. Another one where there has been a submission—in this case it was a submission from KPMG—[Time expired]"