Cunliffe David: Taxation (Annual Rates for 2015-16 Research and Development and Remedial Matters) Bill — In CommitteeText is incorporated into the Bound VolumeCunliffe David: Taxation (Annual Rates for 2015-16 Research and Development and Remedial Matters) Bill — In Committee[Sitting date: 01 December 2015. Volume:710;Page:8455. Text is incorporated into the Bound Volume.]Hon DAVID CUNLIFFE (Labour—New Lynn): I rise to take a final call on Part 4 of the Taxation (Annual Rates for 2015-16 Research and Development and Remedial Matters) Bill and wish to address the Committee on the issue of foreign superannuation. Clauses 71 75 96 133 145 213 256 and 266 admittedly span a couple of parts but they are related. May I make two preliminary comments. The first is that we commend the objectives that the Government has set out here to make a number of remedial changes that clarify—I think the operative word is “clarify”—aspects of the rules applying to foreign superannuation interests and ensure that the new rules operate as intended.Members and the Minister will of course know that foreign superannuation has for many years been a bit of a bugbear. Foreign residents who move to New Zealand who have been contributing members to foreign superannuation schemes typically must report those investments to the New Zealand Inland Revenue Department. They forgo their entitlements and they are replaced by New Zealand superannuation in general. There is a lot of fine print around that including whether the migrant to New Zealand has been in a tax-based scheme or a contributory scheme and the tax consequences if their contribution level has been above the minimum. It is around those grey areas that some of these changes are addressed. The second preliminary comment is that it is an absolute honour to be doing some more work in the area of superannuation.The key features of the proposed changes include firstly ensuring that foreign superannuation rules under the foreign investment fund or FIF rules apply to interest acquired when a person was a New Zealand tax resident under domestic law but is not resident in New Zealand under a double tax agreement as can often happen. Secondly the changes reintroduce the exclusion from the foreign investment fund rules for interest in registered Australian superannuation schemes acquired while a person was a New Zealand resident.That provision is a pretty interesting one to reflect upon at this time when New Zealanders who are resident for most of their lives in Australia and are paying into contributory schemes like Medicare Australia and Medicaid in Australia cannot qualify to draw down the benefits of those schemes. Members on this side of the Chamber have been at some pains to point out the inequity in that. People might have been born in New Zealand moved to Australia when they were 2 or 3 years old worked for 40 years paid into the Australian tax system and when they get older they get sick and they cannot qualify because there is no process under Australian law for the vast majority of New Zealanders resident in Australia to qualify for permanent residency.Here in this Part 4 we are reintroducing the exclusion from the foreign investment fund rules for interests in registered Australian schemes acquired while a person was a New Zealand resident. That is we are making it easier for Australians who were New Zealand residents and had interests in Australian schemes to ensure that they do not miss out on the tax benefits in New Zealand and that it is fair and equitable for them. Why is the Government not doing more to ensure that New Zealanders who have lived all their lives in Australia but who cannot qualify for permanent residence are treated with an equal degree of fairness in the Australian system?The third key feature of the foreign superannuation provisions of the bill is to ensure that the schedule method in the foreign superannuation rules applies to lump-sum withdrawals and transfers from a foreign superannuation interest and the sub-point is if the taxpayer has less than $50000 of foreign investment fund interest. Let us translate that into English. What that means is that the schedule method the particular way that the tax rate applies to different levels of investment applies not only to periodic payments like annuities but also to lump-sum transfers. So if someone has a superannuation scheme they can elect either to keep paying into it and when they turn 65 they get an annuity from it or under certain circumstances they may be able to take a lump-sum investment but there has been confusion around the margins—