Edmonds Barbara; O'Connor GregHon BARBARA EDMONDS (Labour—Mana): Thank you Mr Speaker. It's a pleasure to be able to rise for the second reading of the Taxation (Annual Rates for 2023-24 Multinational Tax and Remedial Matters) Bill. This particular bill has had two fathers and one mother. The two fathers: it first started in the office of the Hon David Parker. I then became its mother and took over the bill as it was progressing through the last stages of the previous Government. Then the final father who will be shepherding this bill through the rest of the stages is the Hon Simon Watts. So I just want to make it really clear that there will be parts of this bill that this side of the House will absolutely agree with and we will provide our support for this second reading; however the last bit that is on the Table by the new Minister of Revenue the new father we will have a lot to say on during the committee of the whole House stage so I hope the other side of the House is ready for some good debate.I do want to take this opportunity to thank the Inland Revenue officials who have worked on this bill and the drafters that sit within the Inland Revenue Department. A lot of them are actually colleagues that I have worked with in my previous career. They are good folk and they have been able to do their best with this bill and the changes that the Finance and Expenditure Committee (FEC) wanted.I also want to take the opportunity which is covered briefly in our report to thank the independent specialist adviser Therese Turner. Now for any members who have been in this House for a longer time basically for any tax bill that has come through this House in the last 15 years I would say Therese Turner has been the independent adviser for the select committee and has provided some of the best advice that I've seen. I have a little bit of bias because I went to tax camp with Therese Turner in my first—yep tax camp; that one time at tax camp! I went to tax camp with Therese Turner—Rawiri Waititi: Were there flutes?Hon BARBARA EDMONDS: Well you know! So I went to tax camp with Therese Turner. She basically managed to distil what I had learnt in taxation law in university over 12 weeks into five days. It was intense and it was definitely a really good reminder of the reason why I chose to become a tax lawyer. So I want to mihi to Therese Turner thank her and thank her husband Ian for supporting Therese to be able to do a stellar job for New Zealand and for our Parliament.So going back to the bill I'd like to acknowledge actually the Government members of the Finance and Expenditure Committee. They've come on to the bill at quite a sort of a difficult stage but the work that we did within the select committee particularly on the revision-tracked version of the bill was very cordial. So I want to acknowledge those members because it's not easy just picking up a tax bill sort of part-way through the process and then basically listening to a lot of long hours of submissions and being able to work cordially with the other side. So I just want to mihi to them as well.One of the elements of this particular tax bill is the Global Anti-Base Erosion (GLoBE) model rules. For a long time there's been what's called the base erosion and profit shifting policy work that's been happening in the OECD in Paris. Inland Revenue has been sending people to be part of the working group to basically remove the ability to arbitrage between different jurisdictions for tax purposes. So the GLoBE rules that this particular bill brings in remove another element of that arbitrage. We had a number of submitters come to the committee because what this particular bill says is that we will enforce these new particular rules but with reference to the OECD guidelines. So that's basically what this bill does. We had a number of submitters come to FEC saying that well actually it shouldn't be in reference to the OECD rules because if the OECD changes the rules and then here in New Zealand we don't agree with them we don't really have an ability to be able to change that quickly. However some of these submitters said that actually we should just have those particular rules in this primary legislation.However the advice from officials and actually through a number of submitters—because the FEC worked really cordially together and we tested the other submitters as they came through—was that because the way that arbitrage is happening across different tax jurisdictions can happen quickly the OECD who basically have a full unit that works with the different countries can make those changes and New Zealand can input into that process through the working group. So the committee agreed with officials which is why it's still by reference in this particular revision-tracked version.However the FEC did say to officials that we want to ensure that people have certainty of those rules and we asked them where they will publish them. They advised that it would be in a web page the tax information bulletin but basically we were comforted by the fact that actually Inland Revenue would do their job to make sure that taxpayers here—because it's only if you earn a significant revenue that you would come within these new GLoBE rules. The Inland Revenue basically said Well actually we have case managers for a number of those significant enterprises and we will make sure that they can comply with these rules even if the OECD in France changes it."One of the things that we did look at was around the application date of those GLoBE rules and the select committee—the bill when it was introduced it was through Order in Council. However through our deliberation as a select committee we decided actually we believe that we should have an application date within the bill. So that is a change from the bill that was introduced to this revision-tracked version. So the FEC has recommended amending the bill so that the income inclusion rules part of the GLoBE rules under tax profits rules apply from 1 January 2025 and the domestic income inclusion rule applies from 1 January 2026. So that's a small change which even though it looks small on paper and in our report back is actually a bigger change because previously it was through regulation.The trustee tax rate: this side of the House believed when we introduced some of the changes actually a couple of years ago—the trustee tax rate was at 33 percent. Basically what the Hon David Parker said to his officials at the time was "Keep an eye on this change between 33 percent and 39 percent." which is the top personal tax rate which they had changed in the 2024-25 tax year. So he said to his officials "Just keep an eye on that. If you think that we need to change it for integrity reasons then we will look at doing so." So therefore that's why this particular bill does include an increase to 39 percent to align with the top personal tax rates from the 2024-25 tax year.One minor change though that came out strongly through the submitters who came to the Finance and Expenditure Committee was that they were saying "If you don't put in a threshold there's going to be a lot of compliance cost for barely any revenue." So the recommendation that came out quite strongly from submitters was that we should bring in a threshold of $10000. The committee did have some good debate on it and basically we agreed with those submitters which is the change that you'll see in this bill which is a de minimis rule—so that's for trusts that have under $10000.There's a couple of changes there around the disabled beneficiary trust rule and again it's to make sure that they're not being over-taxed. That is a change which we believed as a committee needed to be done—especially for those who are beneficiaries of trusts and who are disabled to make that compliance a little bit easier for them as well.A really important change that is in this bill—which I have seen through various roles probably over the last maybe eight years—is the taxation of backdated lump-sum payments. This bill changes the way that backdated lump-sum payments from ACC and the Ministry of Social Development (MSD) are treated. So basically rather than a person getting a lump-sum payment and they're getting fully taxed on the year that they received that backdated lump-sum payment this bill changes it to look over the four previous tax years. We believe that this was bringing greater fairness into the system because a lot of these ACC clients and MSD clients through no fault of their own were absolutely eligible for these backdated payments and we just thought to be able to treat it a bit more fairly you'd look back over the four years.So just to finish off probably the last bit which is at the time I was the mother of the bill the taxation rollover relief for the 2023 North Island floods—I want to thank the Minister for agreeing to that particular Supplementary Order Paper (SOP). That was introduced after the bill was introduced but we could allow for submissions on it through releasing that SOP. I want to thank the Hon Simon Watts because one of the early deliberations of the committee was whether he was going to accept it or not; he did accept it. I believe for those who were in the North Island floods in those particular areas who have already had a difficult time some of this rollover relief will be absolutely pivotal for them.So I do support this bill at the second reading. We will have a lot to say in the committee of the whole House. I commend this stage to the House.ASSISTANT SPEAKER (Greg O'Connor): Thank you. And just for the clarification of members the previous speaker spoke on an amendment that had actually gone through the committee so she was able to speak at some detail about that amendment."