Cosgrove Clayton: Taxation (Bright-line Test for Residential Land) Bill — In CommitteeText is incorporated into the Bound VolumeCosgrove Clayton: Taxation (Bright-line Test for Residential Land) Bill — In Committee[Sitting date: 10 November 2015. Volume:710;Page:7845. Text is incorporated into the Bound Volume.]Hon CLAYTON COSGROVE (Labour): I give you an absolute commitment that I will not crack any jokes. I do note in passing Assistant Speaker Mallard’s ruling last week when he allowed as you have Mr Chairman very generously quite a bit of latitude where questions were posed on a piece of legislation and Ministers failed to answer any of those questions.But moving on I want to deal with a critical part of the proposal and this is in regard to the 2-year period when it starts and finishes. The Taxation (Bright-line Test for Residential Land) Bill proposes that the 2-year period should start on the date of registration of title rather than the date of entry into the sale and purchase agreement. On the face of it you may argue that that is a logical way to go until you actually look at what submitters were particularly critical of. They were critical of this part of the bill because it differs in the general definition used for purposes of the land provisions in the Income Tax Act. I suppose in plain English that means again because of the rushed and hashed nature of this legislation that definitions that have no case law attached to them and that are not consistent with the Income Tax Act have been put in here.I will give another example. In its submission to the Finance and Expenditure Committee on the issue of coherence with current land rules Chartered Accountants Australia and New Zealand submitted that “The concepts underlying the bright-line test and other reforms and the definitions relied on should be consistent with those in current land rules.”. So essentially in plain English again it is saying that the definitions you put in this piece of legislation should be consistent if you like with the Income Tax Act—I would have thought that the Inland Revenue Department would have said “Yes that makes sense” because we have an abundance of case law in respect of a whole host of definitions—and in respect of the Land Act because again we have a whole host of case laws around the definitions. But hey presto in a sort of David Bennett turbo-boosted special we ram this thing through and there is a total inconsistency in definitions.I would have thought that when you have Chartered Accountants Australia and New Zealand ringing alarm bells around this the Government would have looked at it and said: “Hang on we’ve got to get this right.” I do not blame the Inland Revenue Department officials because they are under instructions from Ministers but you have got to say that this legislation breaks new ground in the level of critique from the private sector taxation profession right through from—as my colleague talked about—the definition of “main home” to the exemptions around farmland and to a whole host of aspects that colleagues have debated here tonight.As I said in my first contribution tax law at its essence has to be simple for people to understand it has to be transparent and very rarely should it ever be retrospective. But we have a whole series of definitions and new terms here that have essentially been invented. The difficulty is going to be as the Chartered Accountants Australia and New Zealand pointed out that this whole piece of legislation lacks coherence and lacks any sort of case law around it. There is an invention of new law. In the old days this sort of stuff would have never got from the Inland Revenue Department to the Minister’s desk. No disrespect to the officials; it would have never landed on the Minister’s desk and if it did certain officials—learned officials who had 30 or 40 years’ experience—would have kicked this for touch and would have said: “Minister there is no way on this God’s earth that this legislation is actually going to work; it’s out.” We have had a litany from revenue Ministers whether it be the car-park tax that got booted or the tax on computers that got booted—it was a laughing stock—and now we have this.Although on this side of the Committee we say that we commend any measure minimal though it may be to crack down on property speculation and give folks not only in Auckland but right around the country the ability to get into their first home and have a fair go you have got to say—and it is not just politicians saying it. Discount everything we say on the Opposition; just discount it and throw it out in the bin if you want but you have got the profession speaking from the New Zealand Law Society to Chartered Accountants Australia and New Zealand to Ernst and Young and on and on it goes. These folks generally I think are not political. They are pretty honourable people they are very learned in their profession and they have said through nearly every aspect of this bill—the definitions of “main home” the farmland and the definitions that I have called out—that it simply will not work.