Faafoi Kris: Taxation (Residential Land Withholding Tax GST on Online Services and Student Loans) Bill — In CommitteeText is incorporated into the Bound VolumeFaafoi Kris: Taxation (Residential Land Withholding Tax GST on Online Services and Student Loans) Bill — In Committee[Sitting date: 12 April 2016. Volume:713;Page:10384. Text is incorporated into the Bound Volume.]KRIS FAAFOI (Labour—Mana): Thank you very much Mr Chair for the opportunity to speak to Part 1 which amends the Student Loans Scheme Act 2011. I want to concentrate my contribution in the first instance to clause 17 which replaces section 114 of the principal Act. The original section was titled “Notification of worldwide income by New Zealand-based non-resident borrowers”. It sounds technical but I will get to the point soon.The CHAIRPERSON (Hon Chester Borrows): Good.KRIS FAAFOI: Thank you Mr Chair. There has been an argument made on this side of the Committee around the principles around a fair taxation system and around the obligations that people who have taken out student loans and have potentially moved overseas have to meet in order to pay their fair share—to repay their student loans back. We want to make sure there is consistency within this piece of legislation and with the taxation system as a whole.Clause 17 which replaces section 144 talks about worldwide income by New Zealand - based non-residents. New section 114(1) states: “This section applies to a New Zealand-based borrower who is a non-resident and who has Schedule 3 adjustments.” I have gone to schedule 3 of the principal Act to see what it might entail if there was a schedule 3 adjustment. In clause 30 of the bill clause 11 of the replacement schedule 3 talks about borrowers who are settlors of trusts. It goes on to say in clause 11(2) that schedule 3 does not apply if a trustee of the borrower’s trust is registered to a charitable entity. I think that many speakers have spoken about that—that the borrower’s trust is solely for the benefit of the local authority. I can understand that.But clause 11(3) of schedule 3 goes on to a very complicated—well not too complicated—formula to ascertain the adjustment within schedule 3 to the New Zealand - based non-resident’s payments in a specific year. The rough calculation is (a + b) ÷ c—I do not want to bore people at home with the detail but I have to because this is the Committee stage—“… where—a is the net income of the trustee of the borrower’s trust for the income year reduced to not less than zero by the amount of the trustee’s income that vests or is paid by the trustee as beneficiary income for the income year”; and b is “the greater of zero and the total of amounts calculated in accordance with subclause (4) for each company in which the trustee of the borrower’s trust and associated persons hold voting interests of 50% or more on the last day of the company’s income year”; and c is “the number of settlors of the borrower’s trust who are alive at any time in the income year including the borrower to which this clause applies.”My point is that that is a hang of a lot of information. I do not entirely understand it all but it is a lot of information to disclose for a New Zealander who has got their interests in a trust who has obligations back to the New Zealand people to pay back money that they have borrowed in order to study. It is a lot of information. We have been talking about the principle of consistency around the obligation to make sure you pay your fair share of income tax and I think there is an inconsistency here about the information that is demanded from someone who is a New Zealander resident overseas who has a trust and has an obligation to pay back to the State their student loan based on what they are earning and let us say a foreign trust where these people have come from overseas set up a trust and all we demand from them is a name.There may be a theme developing here but I think this is one instance in clause 17 where we must take a principled approach to taxation. If we are demanding information of the complicated nature that we have within schedule 3 under new section 114 which is in clause 17 and within this bill why have we not got that same consistency in terms of demanding information from those who hold foreign trusts in New Zealand? That is a question that I would like to pose to the Minister in the chair the Hon Craig Foss. Why is the Government not taking that move for consistency? Why is there not the consistency? I know that it might be a bit complicated for the Government. It might be too complicated for the Government.