Rurawhe Adrian; Woodhouse MichaelTAXATION (ANNUAL RATES FOR 2020-21 FEASIBILITY EXPENDITURE AND REMEDIAL MATTERS) BILLIn CommitteeDebate resumed.Part 2 Amendments to Income Tax Act 2007 (continued)CHAIRPERSON (Adrian Rurawhe): Tēnā rā tātou katoa e te Whare. Members the House is in committee on the Taxation (Annual Rates for 2020-21 Feasibility Expenditure and Remedial Matters) Bill. The question the committee has been considering is that Part 2 stand part. The Hon Michael Woodhouse had the call and has four minutes remaining.Hon MICHAEL WOODHOUSE (National): Thank you Mr Chair and can I begin firstly by apologising to the committee of the whole House. In the start of this intervention prior to the maiden statements I was referring to my tabled amendment to GST provisions and I realise that actually that is in Part 3 so I will pause my comments around GST on global roaming charges until we get to the appropriate part of the debate. But my central point remains: my surprise and disappointment that Labour members would seek a closure motion on a part of the substantive matters in which we haven't even commenced debating. We have spent a considerable amount of time on new additions to Part 2—that is the Government's announced brightline tests—and that's as it should be.Hon Scott Simpson: So how's that democratic?Hon MICHAEL WOODHOUSE: Well that's a very good question Mr Simpson: Not very." would be my answer given that the changes were signalled at 9 o'clock this morning and in urgency without any sort of—Hon Scott Simpson: No public notice.Hon MICHAEL WOODHOUSE: —of public notice public submissions on this and no apparent communication or consultation with the tax community we are going to be ramming this through under urgency. But there is going to be a broader debate I think now not only on the Supplementary Order Paper but on the substantive issues that have been considered by the Finance and Expenditure Committee and by submitters and I want to start by referring to the amendments to new sections GC 20 and GC 21 of the Income Tax Act set out in clause 40 that of purchase price allocations. This was when it came in to the committee quite a punitive change where should there not be agreement on the allocation of purchase and sale price between the vendor and the purchaser then effectively the tax department had the right to effectively rule out and consider at nil value the purchase price essentially removing the deductibility of the expenditure—probably depreciable expenditure so it would be depreciation deductions over time. And rightly so the committee recommended and the Government's agreed that that wouldn't be a permanent change and that the bill as it now is that we're considering—completely rewrote those clauses to include the fact that it could be treated as nil until the purchaser and the vendor came to some agreement. So if the deduction was disallowed in one year it could still be deducted in the future once that agreement was reached. I think that's appropriate. What still confuses me though is the degree of breach of that clause because it has in one particular issue an exception to subsection (6)(c) of new section GC 21. New section GC 21(11) states it doesn't apply to "an item of purchased property that is an item of depreciable property if—(a) the original cost of the item for person A is less than $10000; and (b) the total allocated amount for the item and for any identical property is less than $1 million;". Now "depreciable property" excludes in the definition buildings effectively. The previous Government has ruled out the depreciation expense as a tax deduction. And so effectively if I understand this correctly—and I'd just like the Minister to clarify this—regardless of the perception of an exclusion a carve-out for property valued at less than $1 million that isn't going to include any property whatsoever. I just want to make sure I have that understanding of the section accurate."