Willis NicolaNICOLA WILLIS (National): The more I analyse this bill the more concerned I am and the more I fear that the lack of a select committee process is going to land the Minister of Revenue with court cases and with a very unhappy set of stakeholders who have not even had the chance to consider some of the significant implications of this bill from a compliance and tax-filing perspective. I want to use this contribution to take you through some of measures that the Minister of Revenue has snuck into the back of this bill which have nothing to do with increasing the top tax rate have nothing to do with the mandate that Dr Deborah Russell spoke of earlier granted on the campaign trail but are entirely new measures designed to equip him with the tools he needs to go on a fishing expedition for more information about the way trusts run in New Zealand. The trust implications of this bill are enormous. It is remarkably complicated and it will definitely raise costs for people.The Minister should listen up because the texts have started to come in. We may not have had a select committee process in which tax experts and those impacted by this bill and those with trusts are able to discuss what it will mean for them but there are tax experts out there they've got a copy of the bill they're reading it and they've started texting me because they are very concerned. So I'd say to the IRD officials sitting over there you might have a very busy day tomorrow if this bill is to pass because there is a lot of concern in our community. This is precisely the sort of bill that should go to a select committee. I hear from tax experts that their suspicion is that the Minister is basically on a fishing expedition to find out how much wealth is in trusts and to see if he can cook up new ways to tax it. He wants all the information. It is a backdoor route to monitor the tax compliance of trusts.Now the first thing we need to understand is that when he talks about Oh we need to compare what behaviour happens now that we've put up the top rate with what happened before" of course the reality is there is nothing to compare it with because this information has never been asked for before. So there's a significant rationale flaw in the Minister's argument. The second thing we have to appreciate is that he is changing the law to get information about trusts but it is highly unlikely to be helpful actually from a tax point of view. Instead if we look particularly at new section 59BA in clause 35—and members opposite should look it up because this is actually a very detailed section—the new law of section 59BA which sets out numerous requirements that everyone involved in a trust is now going to have to file annually the commissioner doesn't just get these by discretion; the commissioner is "obliged" to get this brand new set of information. So this isn't a set of discretionary powers to allow the commissioner to have a look if there could be an issue; this is a new obligation to collect a huge host of new information about trusts. And the Minister I don't think has been entirely upfront in explaining why that is and for what purpose that is and I am concerned and I am not the only one. There are many in the tax and broader commercial community who have cottoned on to what is happening here and who will be sending that Minister emails and messages tomorrow.Let's go through how this bill actually strengthens the powers of the commissioner. It introduces an amendment to ensure "the Commissioner of Inland Revenue can collect information solely for tax policy development purposes" and I think that's a pretty broad mandate isn't it? "For tax policy development purposes"—for any new tax policy development for any new tax idea the Inland Revenue Department now have a new power in this bill to go off and collect information. That is a very broad net a very wide power. Then there is a further information-gathering measure to collect more information from trustees in order not just to see if the top personal rate of 39 percent is working but also—and this is set out very explicitly—"to provide better information to understand and monitor the use of structures and entities by trustees".So here we have in what's meant to be a bill about raising the top rate a little exploration a little bit of a fishing expedition by the Minister of Revenue who wants to know a bit more about trusts. And we know the back story here Minister—we all heard you back in Opposition when you put trusts out there as the big bogeyman—but I'd invite you to reflect on the Tax Working Group which your own Government put together which said there weren't major issues here. But what you're prepared to do—what the Minister is prepared to do—is to create a massive compliance burden for every trust in the country a huge new revenue boost for every tax lawyer in the country just so that he can have a little bit of a nosy—not just a little bit of a nosy a massive nosy. And I'd be interested to hear later on in this debate whether Inland Revenue Department have quite cottoned on to what the compliance requirements of this will be for them and how many new people they'll be having to hire to make sure that every trust in the country files this incredibly detailed list of new information.Let me turn now to clause 33 because this in its entirety is the clause which inserts new section 17GB "Commissioner may require information or production of documents for tax policy development". So we're not just saying information that you might already have in your office; we're saying we can now have a commissioner asking you to produce particular documents because the Minister of Revenue is a bit excited about a new idea. They must produce any information that the commissioner deems relevant—any information that the commissioner deems relevant; this is a very wide scope to this power—"relating to the development of policy for the improvement … of the tax system."Returning to new section 59BA this imposes a new obligation for a trustee to make a return of information for a trust—so a new form of compliance—and as my colleague Michael Woodhouse pointed out earlier very significantly and I will invite the Minister to address this later on this includes a retrospective power because new section 59BAB in clause 35 gives a power to the commissioner to as of the passing of the bill require trustees to provide information for income years as far back as 2013. So what he's doing is he's saying that the IRD is now going to have a power that never used to exist that means they can go back seven years to anyone with a trust in New Zealand and say "I demand this information" even though at the time that those activities were happening this power didn't exist. So this section 59BAB creates a retrospective power.Then I just want to spend a little bit of time on new section 59BA around compliance because the return for a trustee in each tax year now under this bill must be in the form prescribed by the commissioner. So when we go through what sorts of things the Minister is interested in here we can see that he is digging into information about the distributions being made to a whole host of taxpayers. So this isn't just about people who manage trusts or are trustees; it's about anyone who has ever had a distribution from a trust. That is a large number of New Zealanders and I would like the officials to start thinking about this because in the committee stage we will be asking from this side of the House exactly how many thousands of New Zealanders you think could be caught up in these new section 59BA powers. Because here's the information that people who have had a distribution from a trust will now be required by the Commissioner of Inland Revenue to provide: name date of birth jurisdiction of tax residence tax file number taxpayer identification number of the beneficiary who receives the distribution; the name date of birth jurisdiction of tax residence tax file number taxpayer identification number of each person having a power under the trust to appoint or dismiss a trustee to add or remove a beneficiary or to amend the trust deed; or any other information required by the commissioner.The purpose of my contribution today has been to highlight that when we say this bill is adding a bit more compliance we're not just indulging in rhetoric; this is a very specific set of new powers and I don't think the Minister has done a good enough job of justifying these powers. And what I would invite him to consider is: if this bill is really what he says it is which is that it has a purpose of raising revenue and doing more for your distribution then why not just say "Well yes all of these other new powers aren't necessary today. They should go to a select committee so that we can get advice on what they'll actually mean in practice." Why don't you Minister remove clause 35 altogether as a good faith initiative to show that you will invite experts and those affected to consider the compliance implications of this bill. These sections cast a very wide net; they imply that the Minister wants to dig into a huge host of tax measures. They will be corrosive to trust in the commission and corrosive to trust in the Government's tax intentions and we will continue to oppose this bill."