Mallard Trevor: Taxation (GST and Remedial Matters) Bill — In Committee Speaker Recalled In Committee Procedure Third Reading 
Mallard Trevor: Taxation (GST and Remedial Matters) Bill — In Committee Speaker Recalled In Committee Procedure Third Reading 
[Volume:669;Page:16116] 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 Without commenting on your judgment Mr Chairman which I will strongly support I say to members opposite that Part 2 of the Taxation (GST and Remedial Matters) Bill which are amendments to the Income Tax Act 2007 is already without the Supplementary Order Paper a very substantial part. But coming into the bill by way of a Supplementary Order Paper a massive change in taxation policy for New Zealand has been brought. It is a most inappropriate way of doing it and because it has not gone to a select committee the precedent has always been that there will be an extended debate on those matters. The Speaker’s rulings have regularly been over many years that when legislation has not gone to a select committee the Committee of the whole House stage is extended. 
David Bennett 
: When did you become the Speaker? 
Hon TREVOR MALLARD 
: The ignorant upstart from Hamilton who knows nothing about the way Parliament runs should know that when bills do not go to a select committee there is an extended hearing at the Committee stage. I say to members that I thought we were cruelly cut off after 2.5 hours on Part 1 and Part 2 is much more substantive especially because this part imports the loss attributing qualifying companies in. As I indicated to the Minister in the chair earlier I noticed an issue very late last night. I have been focusing on it only this morning and there are a lot of questions and without wanting to bring the Chair into the debate at all there are some interesting questions on the handling of livestock in the bill. I want to know whether—I see a look on the face of the Chairman who has no idea— 
The CHAIRPERSON (Eric Roy) 
: The member must not bring the Chair into the debate or his speech will be terminated. This is an important part of the bill. I will not tolerate that. 
Hon TREVOR MALLARD 
: It is an extremely important part of the bill and one of the reasons it is important is the effect it will have on farmers and on sharemilkers as their loss attributing qualifying companies are unwound. To be fair to the Minister it is mentioned in the bill but we do not know how it is to be applied because the House has not had the benefit of a select committee hearing. 
I do not know—and the Minister in the chair the Minister of Revenue may want to give me a nod or a wink if he wishes—whether Federated Farmers were consulted on the effect on livestock of the unwinding of the loss attributing qualifying companies. The Minister is finding out; the officials are not sure. I would be surprised if they were and I would be surprised if Federated Farmers had got their heads around this important taxation change for them. Normally of course a bill goes off to a select committee. I am looking at Damien O’Connor; I will wise him up and I am sure he will want to take a couple of calls now that we have identified the qualifying area. The Minister may like to tell us whether Federated Farmers have been apprised of the changes that will affect their members as a result of the undoing of the taxation arrangements for loss attributing qualifying companies and the new arrangements. I ask what the implications are for sharemilkers of the exit exemptions for example. What happens when there is a date difference between the taxation year for the sharemilker and the dates that apply in this bill as far as the unwinding of the loss attributing qualifying companies is concerned?  
Dates for sharemilkers are particularly important. Their years are different years for reasons that those of us who have lived in rural areas understand. They have their changeover and their years are quite properly lined up in that way. But there is no sign that that has been taken into account in the large section of amendments that are sitting in Supplementary Order Paper 187.  
There are a number of formulae in this part of the legislation. Under the heading “Deduction” in new section DB 65(2) which is to be inserted in the Income Tax Act 2007 by new clause 30BA on the Supplementary Order Paper there is a calculation involving a starting pool where a figure of 0.02 is used. It is then multiplied by the number of whole months over 12 which obviously works out the proportion of the year. I ask the Minister where that figure of 0.02 has come from. I have been looking for the definition of the starting pool and I have been unable to find it defined within the legislation. I am happy for the Minister to point it out. I have worked my way around taxation legislation in the past but I have not yet been able to find in this Supplementary Order Paper a definition of starting pool and I have not been able to find it in the substantive amending legislation either.  
There is a figure of 0.02 which I presume is 20 percent—I presume it is a 20 percent depreciation factor. But if deductions are no longer available for depreciation then I am not sure of the relevance of that figure or of the figure of 0.15 that is used later in the legislation as well. I think these are relatively reasonable questions and I am sure members on my side—although having said that I think that earlier on they have had the wool pulled over their eyes once or twice as they have been dealing with this legislation—would have been able to work their way through the legislation and gain some understanding of the answers to them. But when looking at this Supplementary Order Paper as I have done I do not think we have got it right. The proposed new clause 41D which is proposed to be inserted in the bill by Supplementary Order Paper 187 relates to the attribution rules calculation for amalgamated companies. For amalgamated companies involved in loss attributing qualifying companies that are moving to the see-through arrangements we have some calculation rules for attribution. If we as a Parliament are to be passing these attribution rules then it is important that we understand them and know that they are right. I am not saying they are enormously complex but it would be good—and it certainly would happen at a select committee—if people were able to work their way through them fully understand them and make sure that we are doing the right thing.  
We have to decide what we are doing as a Committee of the whole House. We are meant to be approving the detail of this bill. Until quite recently we would have been going through it on a clause by clause basis or even as we did when I was first here on a line-by-line basis working through and making sure we were satisfied that we understood what we were passing into law. It is fair to say that often there would have been a smaller group of people looking at it—people who had the technical expertise—but they would have almost certainly done it on the basis that it had been to a select committee and that has not happened here. If we look at the proposed new clause 41H which is to be inserted in the Income Tax Act 2007 as part of the proposed new clauses 41B to 41N on the Supplementary Order Paper it inserts new section HA 7B “Grandparenting requirement” after section HA 7 of that Act. It states: “A qualifying company must have been a qualifying company at the end of the income year before the first income year that starts on or after 1 April 2011.” I ask how that affects people who are sharemilkers. Which year is it as far as sharemilkers are concerned?