Ross Jami-Lee: Taxation (Residential Land Withholding Tax GST on Online Services and Student Loans) Bill — In CommitteeText is incorporated into the Bound VolumeRoss Jami-Lee: Taxation (Residential Land Withholding Tax GST on Online Services and Student Loans) Bill — In Committee[Sitting date: 12 April 2016. Volume:713;Page:10394. Text is incorporated into the Bound Volume.]JAMI-LEE ROSS (National—Botany): I appreciate the opportunity to answer a few of the points made by our colleagues on the other side of the Chamber. I just want to say at the outset that the Finance and Expenditure Committee worked pretty well together on this bill and we came to a few conclusions that were cross-party and I think were good for the overall legislation and the point that we landed in.I do want to answer a few things that some of our colleagues have raised though. I always enjoy following Fletcher Tabuteau and being able to answer some of the points that he has raised. He basically said that (1) the brightline test is not working—well it only came in late last year. And (2) this tax is not sensible or practical—I think that might have been the word that he used. Well apparently not taxing people is what they would prefer; I do not know that that is really a position the New Zealand public would agree with. And (3) he spoke about the amount of money that it would bring in and he was saying that it was not going to be a high amount of money. Well quite frankly it does not matter how much money comes in; it is about ensuring that overseas purchasers of property and offshore persons are paying their tax appropriately.That is what this is all about. It is not about making huge amounts of money for the Government; it is about ensuring that overseas purchasers of property are paying their fair share. The easiest way that we feel we can target those people who are offshore persons and who could find it easier to avoid paying tax because they are offshore is to tax them by way of a residential land withholding tax. That is what this is all about. It is not about making huge amounts of money. So a residential land withholding tax will ensure that there is greater compliance with the tax obligations that those offshore people have.In terms of the brightline test it was put in specifically to ensure that those who are speculating on property are taxed appropriately. There is already the intentions-based test that has always been there and so I reject the claim that Mr Nash made that if someone purchased a property prior to October 2015 they would not be subject to tax if they speculate on it and sell the property. That is not true because they will still be subject to tax if they have speculated and their intention was to make a capital gain on that property. The date used here is simply to ensure that we have a line in the sand. Whether that line in the sand was October 2015 1 January 2015 or whatever date you put in there there is always going to be a point at which you could say: “Well if somebody purchased a property before that date then they won’t be subject to x y z.” The reality is that the intentions-based test has always been there is still there still applies and always will still apply and that this is separate from that.Stuart Nash: But if it works why are we doing this?JAMI-LEE ROSS: Well if it works—the reality is that the Government took some action because there were claims by the media claims by the public and concern by the public that offshore people speculating on property were not being taxed appropriately. So we changed the law and put in place the brightline test to ensure greater compliance. But the intentions-based test has always been there will still be there and does still apply to a purchase made in September or prior to October—so Mr Nash’s claim is incorrect there.Mr Tabuteau’s claims that the brightline test does not work—he had some interesting claims around that because he said that the number of offshore people buying property declined after the brightline test came in. I would have thought that actually means it had some impact and it actually was working. So Mr Tabuteau I do not think we can make that claim.Finally I just want to touch on the point that Mr Nash made around the liability of conveyancers and them having to rely on the information provided to them by the individuals whom they are tasked to work with and act on behalf of. I guess we always have to come to the point where we consider complexity and how difficult we made it in ensuring that there was compliance. We could have made the tax agents and the conveyancers liable for ensuring the information was correct but that would have added a huge amount of complexity that quite frankly would be unnecessary for most of the people who are involved in this. By ensuring that the liability did not lie with the conveyancers and that they could rely on the information that they were given by their clients it reduces some of the complexity but those people are still subject to other aspects of the Income Tax Act around providing documents fraudulently. So if there was evidence of that happening no the conveyancers would not be liable but the Inland Revenue Department would still have the ability to go after the people providing fraudulent information. I think the provisions that are in Part 2 that the committee arrived at where we made some changes around the definition of “offshore person” and landed in that space where 25 percent meant an individual or a company or group of people were not considered offshore but over—[Bell rung] Mr Chair.The CHAIRPERSON (Hon Trevor Mallard): Jami-Lee Ross.JAMI-LEE ROSS: I just want to finish off this point: that we arrived at the 25:75 split where 25 percent meant that they were not considered offshore but 75 percent or over and above 25 percent meant they were considered offshore which I think was a good space that the committee landed at. I think it has improved this bill considerably.