Little Andrew: Taxation (Annual Rates Employee Allowances and Remedial Matters) Bill — In CommitteeText is incorporated into the Bound VolumeLittle Andrew: Taxation (Annual Rates Employee Allowances and Remedial Matters) Bill — In Committee[Sitting date: 17 June 2014. Volume:699;Page:18590. Text is incorporated into the Bound Volume.]ANDREW LITTLE (Labour):I want to comment on just two aspects of Part 2 of the Taxation (Annual Rates Employee Allowances and Remedial Matters) Bill. One is relating to out-of-town accommodation for limited duration projects or for out-of-town secondment which the Minister of Revenue referred to. The other part I want to talk about is the confusion that will arise in relation to the tax-free status of some meals paid for by the employer and the conditions surrounding that.I will turn briefly to the first point I want to talk about which is the issue about out-of-town accommodation which an employer can provide for employees if they are on a project of limited duration or on a secondment. The Minister pointed out as the bill says that whereas provision of accommodation of this nature would be taxable as income to the employee providing it meets the conditions of a limited duration project out of town or a secondment out of town it would not be taxable according to this bill in one case for 2 years for the secondment or 3 years for the project of short duration that is out of town and there is an exemption or at least the possibility of an extension in exceptional circumstances.The problem with that is there is nothing in this bill that says that an employee in that situation cannot for example take their spouse with them on that secondment or for that period out of town. They can get their accommodation tax-free rent their own home that they own in the town of their origin and effectively enjoy the fruits and the benefits of all of that. So there is a loophole here that is apparent from a reading of the bill. I am surprised that the Minister with his vast army of officials did not pick that up when he talked longingly about greater fairness for all. There is an obvious loophole there that those whose spouses cannot relocate with them for 2 years or 3 years depending on the nature of the out-of-town employment must continue to maintain a home and they do not get the benefit of that additional income as well as the tax-free status for the additional accommodation. I simply point that point out.The next point I want to raise is in relation to the payments for work-related meals. The conditions for these to be exempt from income tax are that the employment duties of the employee require them to work away from the employer’s workplace and then there are some other aspects of the provision as described for food and drink. It includes “food and drink that the employee consumes at a conference or training course:”. Well there are many organisations of a region-wide nature or nationwide nature that organise training conferences in-house on their own premises and those training conferences are attended by some people who work in that office. I know that having worked for a national union. We would run training courses at our premises—it might be Auckland it might be Wellington it might be Christchurch—and at those training courses we would provide a meal a lunchtime meal and if they had to stay overnight a meal in the evening. But those training courses would be attended by people in Auckland Wellington or Christchurch respectively as well as those who are outside of those cities or regions.This part of the bill would require the union to provide some tax administration to those who are domiciled in the city in which the training course is being held but to provide a tax-exempt meal to those who are coming from out of town to the same training course. I think that that will cause confusion and I think that the Inland Revenue Department is going to have to develop some sort of policy of turning a blind eye. Unfortunately the last person of public office to be wilfully blind to an important piece of law was John Banks and look where that ended up. Look where that got him. Many employers will be looking around thinking “Gee well we don’t want to be accused of wilful blindness. We too will be found guilty. We may not have our convictions entered at the time but we will be found guilty of having transgressed our revenue laws.” That will be causing alarm amongst the halls of employers big and small.The question was put that the amendments set out on Supplementary Order Paper 455 in the name of the Hon Todd McClay and the following amendment in his name to Part 2 be agreed to:in clause 74(11) replace “Subsections (1)” with “Subsections (1A)”.Amendments agreed to.Part 2 as amended agreed to.