Huo Raymond: Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill — In CommitteeText is incorporated into the Bound VolumeHuo Raymond: Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill — In Committee[Sitting date: 18 February 2014. Volume:696;Page:15994. Text is incorporated into the Bound Volume.]RAYMOND HUO (Labour): Thank you very much Mr Chair.Paul Goldsmith: Really looking forward to this!RAYMOND HUO: Well why not stand up and take a call? Why not? Mr Goldsmith is the chairman of the Finance and Expenditure Committee as I understand. I am very much looking forward to his contribution.Dr Megan Woods: Take a call.RAYMOND HUO: Take a call. OK I will do it quickly and let us look forward to the contribution from the chair of the Finance and Expenditure Committee. Thank you very much Mr Chair for this opportunity to contribute. The Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill has lingered on the Order Paper fora very long time. I believe my learned colleague will correct me if I have got it wrong. I believe that this bill is a result of what has been known for quite a while as a telephone book bill. Labour supports this bill but with some reservations. This bill as my colleague said in her earlier contribution is largely uncontroversial apart from the foreign superannuation changes and I will come to that point later on.Of course changes are needed and these proposals have the great merit of simplicity and should eliminate the uncertainty of treatment which has been a problem since first identified in 2006. The principal issue that was unclear was whether foreign superannuation schemes were subject to the foreign investment fund or the so-called FIF regime and the tax treatment on transfer.The legislation largely follows the proposals set out in the Inland Revenue Department issues paper that was released in July last year but also incorporates some of the submissions made in respect of the issues paper. The new rules will take effect from 1 April 2015 although there are some retrospective clauses in this bill and we will come back to that Supplementary Order Paper later on at some later stage of the Committee of the whole House.Under the proposed legislation interests in non-Australian foreign superannuation schemes will no longer be taxed on an accrual basis under the foreign investment fund regime or if a transfer represents distribution from a company or a trust. In terms of the problems with the foreign superannuation changes the first issue is that it will apply to all transfers even those made into a locked-in scheme such as a KiwiSaver fund. In this case it is proposed to allow the taxpayer to withdraw an amount up to the value of the tax due from their KiwiSaver scheme. This sounds good but it ignores the fact that where the transfer is made from a UK pension fund withdrawing funds would possibly either invalidate the transfer or trigger a 55 percent tax charge in the United Kingdom. Probably Mr Goldsmith could answer that question in his contribution. How can a person who makes a transfer but who cannot access their transferred funds until a later date be said to have somehow derived income—The CHAIRPERSON (H V Ross Robertson): Part 1.RAYMOND HUO: Back to Part 1. The other issue relates to the treatment of transfers made prior to the commencement of the new rules.Paul Goldsmith: He’s got no idea—he’s got the wrong speech.RAYMOND HUO: Take a call Mr Goldsmith. But one thing that I believe Mr Goldsmith will agree with me and with other members on is that this bill as it is presented in its current form represents a huge mismanagement.