Bennett David: Taxation (Annual Rates for 2015-16 Research and Development and Remedial Matters) Bill — Second ReadingText is incorporated into the Bound VolumeBennett David: Taxation (Annual Rates for 2015-16 Research and Development and Remedial Matters) Bill — Second Reading[Sitting date: 20 October 2015. Volume:709;Page:7385. Text is incorporated into the Bound Volume.]DAVID BENNETT (National—Hamilton East): It gives me pleasure to speak on the Taxation (Annual Rates for 2015-16 Research and Development and Remedial Matters) Bill in its second reading. Just following on from the previous speaker the Hon Clayton Cosgrove we have Inland Revenue officials here so I am sure that they will look into the matters that have been raised by the previous speaker. The issues around the corporate entities that he raised are quite complex and I know that that member read the instructions he receivedvery well but there certainly will be a further degree of looking at it by the officials to make sure that those rules are actually what is intended and therefore achieve their purpose. With GST and bodies corporate it is a difficult area especially when it comes to property transactions and look-through companies—something that of course the Minister and the Inland Revenue Department will take a great interest in to make sure that they have it right. That was one of the three big issues in this bill.One of them is that of GST and bodies corporate which we have just touched on. Another one—the big one—is the research and development cash-out tax credits. Essentially that was something that was mentioned in the Budget as previously mentioned by the Minister. Basically it enables a cash-out rate of 28 percent of losses from research and development expenditure in any given year up to certain thresholds with a $500000 limit for the first year. That will increase by $300000 over the next 5 years to $2 million. You can cash-out at a lower rate of course if that is the amount that has been spent. There are certain tests around that: around the loss by the company its total expenditure and also its labour costs as a proportion. It is to help start-up firms that are engaging in intensive research and development and it is a mechanism by which they would be able to claim through a cash-out tax credit any losses that may have been justified under research and development in certain circumstances.The second area that was looked at was in regard to GST in bodies corporate—that was just to address some of the uncertainty in the rules around bodies corporate. The previous speaker has raised another issue that he feels has a further degree of uncertainty and we will certainly be looking at that to make sure that that does not actually eventuate in the manner in which that speaker has said. This bill would look at resolving some of the problems around property transfers in this area. It can be a difficult area with bodies corporate and the nature of the different transactions so there would always be an element of ongoing legislation to make sure that the legislation keeps up with the market progress in this area as well. It is just that bodies corporate are primarily tax neutral for GST purposes so it is not really a question of whether they are registered or not. So the proposed amendments look at the tax base in that area.The third area is the child support reforms. The last speaker mentioned that as well in regard to the system issues around creating the new computer system which is part of the Business Transformation project and also some of the costs that may be involved. That is a huge project for New Zealand and for the Inland Revenue Department and so it is important that we get it right. I think we need to congratulate the Minister on the way that he has had a very open process with the select committee so that the Opposition parties are well aware of how that project is going. There are the child support reforms—again mentioned in the Budget—and the large intent of those is to try to make sure that the New Zealand taxpayer recovers the child support payments that are due. We are trying to simplify the administration of the scheme to try to reduce the debt that may be held and reduce some of the administration and compliance costs involved.Those are the three big areas of the bill. There are other subsidiary areas of the bill as well which cover off some more technical tax matters. We look forward to this bill progressing through the House. I think most parties will be in support of it but we will certainly look into the issues raised by the previous member to make sure that they are also covered by the legislation. Thank you.