Williams Andrew: Taxation (Annual Rates Employee Allowances and Remedial Matters) Bill — Second ReadingText is incorporated into the Bound VolumeWilliams Andrew: Taxation (Annual Rates Employee Allowances and Remedial Matters) Bill — Second Reading[Sitting date: 27 May 2014. Volume:699;Page:18329. Text is incorporated into the Bound Volume.]ANDREW WILLIAMS (NZ First): On behalf of New Zealand First I take a call on the Taxation (Annual Rates Employee Allowances and Remedial Matters) Bill. It is a great pleasure to follow on from Mr Simon O’Connor talking about clubs—the capital club and the corporate club but in the Government’s case it is the Cabinet club—and tax concessions. It would be very interesting to know what sort of tax deductibility there is for donations to the Cabinet club but I am sure they are all tax deductible—Hon Dr Nick Smith: Don’t be jealous. Just because you can’t raise funds.ANDREW WILLIAMS: Indeed. I am sure they are very tax deductible and significant.In terms of this particular bill New Zealand First is supporting it because we are a party that stands for simplifying the taxation system improving on it and streamlining tax matters. We have always said in New Zealand First that there is a need for a total overhaul of the taxation system to try to get more streamlining and to cut out a lot of the red tape that is in there. In this particular case in terms of the employee allowances we support the moves to improve the definition of “accommodation” so that accommodation provided in conjunction with employment would not be subject to tax and that reimbursements are much clearer in terms of accommodation and also to reduce administration costs revolving around employees being accommodated and taking part in work activities. It also refers to meal payments and light refreshments for a work-related activity or event. Again that simplifies things and reduces the amount of red tape around meal payments.This bill will also allow deductions for expenditure on failed or aborted applications for resource consents patents and plant variety rights. Again it is sensible to do that. Some of these situations with patents are long-extended and very risky ventures. It is the same with resource consents. They should rightly have definitions for expenditure if they fail.Also in terms of charities this bill provides for charities that cease to exist or are deregistered. For them it provides for the calculation of tax on accumulated assets from the day the entity is removed from the Charities Register. Again in this situation there can quite often be a situation where what is termed a charity no longer operates but may have built up a sizable asset base and again whether that should be determined in terms of its tax liabilities comes through in this particular bill and rightfully so. We would not want people to miss out on paying their rightful tax simply because they move from a charity into another entity but then try to get away on the basis that it was a charity in the first place.This bill also provides for community housing entities providing affordable housing—that they would be eligible for tax exemption and donee organisation status. Again if we are to support affordable housing and encourage community housing to be developed there is great merit in providing certain levels of tax exemption there. There is no point in the Government supporting community housing—the taxpayers of New Zealand supporting provision for affordable housing—to then turn round and tax that housing to add costs to it when in actual fact we are all trying to deliver it at the lowest possible price.The thin capitalisation rules in this bill will also ensure that foreign-owned companies investing in New Zealand will pay their fair share of tax. They cannot allow excessive gearing of their companies’ New Zealand investments to load their debt in New Zealand in order to limit their tax exposure here. Again this is sensible. We do not want international interests to use this as a soft-touch country to come to load up their debt buy into organisations buy into companies here in New Zealand leverage it to the maximum take maximum tax credits from it and then depart the country at a later date leaving a great tax loss to this country. That will not be permitted under this bill.The other two parts confirm the tax rates for the year. They confirm the annual rates of income tax for the 2014-15 year. It is a very standard administrative area of tax. One concern that New Zealand First has always expressed however is about the 2010 tax cuts that the National Government brought in whereby the very wealthiest top 10 percent of New Zealanders got sizable tax cuts. In the case of the Prime Minister it was something in the order of a $1000-a-week tax reduction. In the case of the then chief executive of Telecom it was $5000 a week in tax cuts that that individual was given on top of his multimillion-dollar salary. That is an area where New Zealand First disagrees with what the Government has done. However in this bill this is confirming the current year’s tax rates and we have to support that in order to ensure that there is continuity of a sound and stable tax system.The last bit of this is the Foreign Account Tax Compliance Act that the United States is bringing in on 1 July 2014—very soon—which basically is a worldwide effort to combat international tax evasion. We have been advised and information has been provided that New Zealand is part of a global signatory to this to ensure that there is tax compliance worldwide and that the New Zealand Inland Revenue Department will be able to hold records for US citizens who are resident here and domiciled here or who are active in business here and that they in turn can provide that information through to the Inland Revenue Service in the United States in situations where they are required to ensure that the appropriate taxes have been paid.It is very much an administrative bill. For everyone tax is something in your life. Tax and death are two of the things that you must have in your life. Two of the things you cannot get away from are tax and death. In that respect New Zealand First will be supporting this bill.