Lotu-Iiga Peseta Sam: Taxation (International Taxation Life Insurance and Remedial Matters) Bill — In Committee Third Reading 
Lotu-Iiga Peseta Sam: Taxation (International Taxation Life Insurance and Remedial Matters) Bill — In Committee Third Reading 
[Volume:657;Page:6641] 
PESETA SAM LOTU-IIGA (National—Maungakiekie) 
: 
 Much has been said about the size of the Taxation (International Taxation Life Insurance and Remedial Matters) Bill. I concur with the remarks of the honourable Minister of Revenue about the work done by the officials. We commend that work as well as the work done by the Minister who in a letter to the Finance and Expenditure Committee stated quite clearly that changes would be put in place in terms of the timing of the legislation. 
The bill addresses a number of areas for change. It provides for the reform of international tax rules. Among other measures it introduces a tax exemption for foreign active income of controlled foreign companies—the CFCs as they have been referred to in this debate already. It also addresses aligning life insurance taxation rules more closely with the actual profits of term life insurance businesses. But the area that I would like to discuss is the introduction of the voluntary payroll giving scheme. 
We all know that New Zealanders are generous with their money and their time. Nielsen Media Research found out that 75.4 percent of the New Zealanders surveyed supported the community and voluntary sector in 2007. They supported that sector either by making committed or ad hoc donations volunteering or through another form of support. The research also indicates that less than one in every five people who donated to charity filed a tax rebate for the donation. Payroll giving represents an opportunity for those who give to gain an immediate tax benefit thus eliminating the need to file a rebate annually. 
Following the introduction of similar legislation and a Government-initiated campaign to promote payroll giving the level of participation in payroll giving in Australia doubled. An initial target that has been suggested is that New Zealand aim to achieve a level of participation comparable to that of Australia. I suggest that we aim to surpass the level of participation in Australia by 2011 the year of the Rugby World Cup when we will also surpass Australia on the rugby field. From research conducted by the Tindall Foundation it predicts that unless the Government and business put significant effort and resource into promoting and encouraging similar participation in this country payroll giving is unlikely to gain traction. 
Payroll giving is about enabling employees to receive the benefit of payroll donations each pay day in real time and without the need to have donation receipts. People who make donations other than through payroll giving can continue to claim a charitable donation tax credit at the end of each tax year. A main concern raised by the Finance and Expenditure Committee was the risk that employers could default in transferring payroll donations to the chosen donee organisations especially in insolvency situations. To address that concern the committee recommended a number of changes to the bill. They included an amendment to schedule 7 of the Companies Act 1993 to confirm that when an employer goes into liquidation and has not passed on employees’ donations to donee organisations the return of those donations to the employees will have the same priority as the payment of their unpaid wages. 
That was a short cameo on payroll giving. We have made a number of other more in-depth changes to our tax regime. The bill supports the emphasis this Government is putting on tax reform and tax policy. It is part of a series of tax reforms that will continue into the future of this term of Government.