Bennett David: Taxation (Land Information and Offshore Persons Information) Bill — First ReadingText is incorporated into the Bound VolumeBennett David: Taxation (Land Information and Offshore Persons Information) Bill — First Reading[Sitting date: 25 June 2015. Volume:706;Page:4800. Text is incorporated into the Bound Volume.]DAVID BENNETT (National—Hamilton East): It is great to follow from that bush lawyer Clayton Cosgrove who tells us everything about the taxation system which we had no idea of! I just want to go back to a moment in Labour’s history. There is a moment in Labour’s history that everybody should be aware of when they look at this debate and this is a moment from last year actually—18 November. It is a very very important date for the Labour Party.I just want to read a couple of quotes. The first quote is: “I’ve made a judgment that the superannuation policy and the capital gains tax policy have been problems for us and are two reasons why a lot of people have not voted for us and therefore we need to review them.” That is the first quote. The second quote from the same person is: “We will have a review process. We will go through that. I will argue my case in the forums of the party but my firm view”—that is his firm view—“is that we should not go into the 2017 election with those policies on our slate.”That was Andrew Little on 18 November. That is why the Labour Party does not know what to do with this bill—because the Labour Party members previously had been talking about taxing property. They wanted taxes on all kinds of properties for anything and everything and now when it comes to actually looking at doing some constructive legislation in this area they do not want to be part of it because Andrew Little has pulled away from that. They know that Andrew Little does not want this legislation and so the Labour Party is trying to get out of it. This legislation is actually really good for New Zealanders. It is good for the tax system and will provide more information—Hon Clayton Cosgrove: I raise a point of order Mr Speaker. It is a simple matter of information. We did say we are supporting the bill. The member may want to listen to us.Mr DEPUTY SPEAKER: It is not a point of order.DAVID BENNETT: That is the bush lawyer’s attempt at being funny but about all he can do is raise points of order because that is all he knows. It is a great thing when you get the Labour Party members having to raise points of order because that shows that they do not understand what is going on. They have to resort to points of order to try to get their message through.This bill is actually quite good for our tax system. It brings in two of the Budget property tax proposals that will come into effect. The first is that buyers and sellers of property will be required to provide their IRD numbers at the time of the property transfer. That means that those who are tax residents in another country will also have to provide a tax identification number from their home jurisdiction and there will be an exemption for New Zealand residents’ main home. That basically covers most New Zealand purchasers who will be purchasing their main home but if you have got subsequent purchases or if you are an international purchaser you will have to provide some form of identification whether that is a New Zealand IRD number or a tax identification number from the home jurisdiction.The second thing that this bill does is ensure that our anti - money-laundering rules apply. We will require overseas people to have a New Zealand bank account to get a New Zealand IRD number. This will also apply to New Zealanders who have been out of the country for 3 or more years. So effectively this is an attempt to get that money to go through get transferred through a New Zealand bank so there is a record there. That will enable us to be able to delve more deeply into the source of that money should there be any issues around money-laundering.Further legislative changes are also in the pipeline and the Government is to soon release a public consultation document seeking views on the introduction of a brightline test on 1 October this year. Under this new test gains from residential properties sold within 2 years of the purchase will be taxed. Unlike what the previous speaker Clayton Cosgrove said there will be people who will try to gain from any tax system as you would expect but there is a set rule—Phil Twyford: That member knows all about that.DAVID BENNETT: —and that 2 years is the set rule. What did you say?Phil Twyford: That member knows all about that.DAVID BENNETT: No I do not know all about that and that member better watch what he says because that member would have no idea about the tax system either. This is the member who actually is Labour’s housing policy spokesperson. Why did he not lead off this debate? [Interruption] If housing is so important to the Labour Party why are you not leading off this debate? This member would have no idea of housing and so I would like to see him in this debate come out with the Andrew Little policy around housing as well. That would be lovely to see.Mr DEPUTY SPEAKER: Let us get back to the bill.DAVID BENNETT: Yes. Under this new test gains from residential properties sold within 2 years of purchase will be taxed unless the property is the seller’s main home as we talked about before—that is the main exemption for New Zealanders; if it is their main home they will not be taxed or of it is inherited from a deceased’s estate or is transferred as part of a relationship property settlement. So that covers the examples where there may be inherited property or there was a relationship breakdown.Most people in New Zealand do the right thing—they pay their tax. This legislation will not have any impact on them because there is already a test out there in our tax system around the intention of purchase. If you intend to purchase and sell within 10 years then that is taxable. That is something that has been around forever and a day. Many New Zealanders pay their tax under that system quite conveniently and they do it without any pressure. There are some whom the Inland Revenue Department has to pressure to do so and it investigates them but this bill will give a very sensible rule a very open and just rule so that people know that if you buy or sell within 2 years then you can look forward to being under the tax system. That is what you would expect because if you had a long-term purchase intention—Iain Lees-Galloway: Two years and 1 day isn’t that long to wait.DAVID BENNETT: Two years is what?Iain Lees-Galloway: Two years and 1 day isn’t that long to wait.DAVID BENNETT: Two years and 1 day—so that is the Labour Party trying to game the system. That is what it does. It will try to game the system. But for anything under 2 years you would expect to pay the tax because your intention would not necessarily have been to hold that property long term and that is no different from the current system now whereas if you have an intention to sell then you would be taxable within 10 years. So this just puts into the market a time frame that makes it very obvious that if you buy or sell within 10 years then you are within the legislation and therefore are more likely to be treated as taxable.The tighter tax rules are also expected to take some of the heat out of the Auckland market. We hear stories constantly about people buying and selling properties in very short periods of time to make exponential profits.Phil Twyford: It’s called a housing crisis. I have yet to hear those words tumble from the member’s mouth.DAVID BENNETT: The member who could not actually do the first speech for the Labour Party is interrupting again. It would be great to see that member do a speech and actually say what he thinks rather than what the other members are telling him to say.This bill includes those two measures that we have already talked about which will help the Inland Revenue Department enforce tax obligations. When the property is transferred the Inland Revenue Department number will be collected by conveyancers provided to Land Information New Zealand as part of the conveyancing process and then forwarded on to the Inland Revenue Department. As part of that process the conveyancing of any property there will be that transfer of information so that the Inland Revenue Department has the information to then record it. People who are tax residents overseas will also be required to provide that.When we look at offshore persons as defined in the bill they need a New Zealand bank account before getting an Inland Revenue Department number. That is important as we want to make sure there is no tax evasion and as it is a predicative offence for money-laundering we have got to be careful that we have rules around that so that we can give the enforcement agencies the most strength that they will need to enforce the rules around money-laundering. That will bolster the effectiveness of both the tax system and also the anti - money-laundering regime.This bill is an important part of an approach to taxation in New Zealand. It is not a great change from the system that already exists in the sense that if you buy or sell a property within 10 years and your intention was to sell then you are taxable. This provides a test that is easy and convenient and it is something that all purchasers will be well aware of. If you buy or sell within 2 years then you will automatically be considered to have the intention of resale basically and therefore that would be taxable.The test itself when it comes out in October will be interesting in terms of how it will be done. There are always opportunities within the tax system where people try to take advantage of it but a set date of 2 years gives guidance to New Zealanders that buying or selling within that period of time will inflict some taxation. It also creates the information that we will have on overseas purchasers and it will help to counter any money-laundering. So this is an important piece of legislation. It is contrary to Labour Party policy. Labour is supporting it only as far as its referral to the select committee. We look forward to Labour members having a moment of change of heart and actually supporting it all the way through the House. Thank you.