Woodhouse Michael: Taxation (Residential Land Withholding Tax GST on Online Services and Student Loans) Bill — Third ReadingText is incorporated into the Bound VolumeWoodhouse Michael: Taxation (Residential Land Withholding Tax GST on Online Services and Student Loans) Bill — Third Reading[Sitting date: 03 May 2016. Volume:713;Page:10726. Text is incorporated into the Bound Volume.]Hon MICHAEL WOODHOUSE (Minister of Revenue): I move That the Taxation (Residential Land Withholding Tax GST on Online Services and Student Loans) Bill be now read a third time. For the benefit of the members I will briefly recap the three main items contained in this bill.This bill proposes a new tax a residential land withholding tax as a means for collecting tax under the brightline test on the sale of New Zealand residential land by offshore vendors. Members will recall that this new tax is the third component of the Government’s suite of changes to address tax compliance in the property market. The brightline test introduced earlier ensures that the gains on property bought and sold within 2 years are taxable. This new tax is aimed at offshore vendors because it can be difficult for the Inland Revenue Department to collect tax from the proceeds of such sales from foreign owners with no or limited presence in New Zealand. The new residential land withholding tax will therefore be collected by the conveyancing agent from the offshore seller at the point of sale and becomes payable from 1 July 2016. There will be an exemption for disposals of inherited property as well as relief for property transfers as part of a relationship agreement. The residential land withholding tax supports the effectiveness of the brightline test and contributes to the integrity of the tax system.I now turn to the GST measure in this bill. The strength of our GST rules is that the tax is applied equally and with very few exceptions. This helps to ensure that the tax is fair efficient and simple. However GST is not currently collected on most cross-border services and intangibles including internet downloads and online services. Therefore this bill proposes that GST be applied to cross-border remote services and intangibles including e-books music videos and software purchased from offshore websites supplied by offshore suppliers to New Zealand resident consumers by requiring the offshore supplier to register and return GST on these supplies. This would come into force on 1 October 2016. New Zealand is not alone in seeking to address the issue and the proposals are in alignment with the OECD guidelines and similar rules that apply in other countries including the European Union. The proposals in this bill also align with Australia’s proposed rules. The proposed amendments are sound measures that will address the non-taxation of cross-border purchases of intangibles maintain the broad base of New Zealand’s GST system and also help to level the playing field for domestic and offshore suppliers.The third item in this bill aims to help ensure that student loan borrowers living in Australia meet their loan obligations. Most student loan borrowers do the right thing and repay their student loans but borrowers living overseas have a lower rate of compliance than those living in New Zealand. Not surprisingly keeping in contact with borrowers is an important way to keep borrowers engaged with their loan obligations. This bill therefore contains a proposal to allow current contact information on student loan borrowers living in Australia to be shared between the Inland Revenue Department and the Australian Taxation Office.In bringing this bill to its third reading I thank the policy officials and drafters who worked on the detail of the bill the organisations and individuals who made submissions on the proposed legislation and the Finance and Expenditure Committee for its consideration and recommendations. I commend this bill to the House.