Robertson Grant: Taxation (Annual Rates for 2015-16 Research and Development and Remedial Matters) Bill — In CommitteeText is subject to correctionRobertson Grant: Taxation (Annual Rates for 2015-16 Research and Development and Remedial Matters) Bill — In Committee[Sitting date: 10 February 2016. Volume:711;Page:8885. Text is subject to correction.]GRANT ROBERTSON (Labour—Wellington Central): I am sure my colleague Stuart Nash will take another call on Part 4 of this bill but I was so anxious to get to my feet to work my way painstakingly through each clause in Part 4 of the bill. Actually I am not going to do that. What I am going to do is pick out a couple of clauses that I think will be of interest to members and those watching at home and actually seek some assistance from the Minister in the chair.The first matter is one that I think he may be able to help us with in light of some of his recent policy forays and that is clause 224. What clause 224 does is repeal section 24O of the Tax Administration Act. Section 24O of the Tax Administration Act as I am sure most members of the House know obligates employers in the agricultural horticultural or viticultural industries to provide the Inland Revenue Department with information about employees who are covered by an exemption certificate or a special rate certificate. These requirements according to the officials when they came to advise us in the Finance and Expenditure Committee on this would have imposed unreasonable costs on employers and the Inland Revenue Department while not being effective at identifying non-compliant employees and accordingly the provision is to be struck out.What makes this clause interesting is that this clause was actually brought in in an amendment bill in 2008-09 and was never actually implemented. So the clause was actually brought in in order presumably to right a wrong of some description. Presumably there was a concern that in the agricultural horticultural or viticultural industries there were employees who were not complying with their tax obligations.What this clause does—it is actually retrospective and commences in 2008-09 even though the clause was never actually implemented. It is a strange one. I do wonder whether the Minister in the chair Michael Woodhouse with his vast knowledge and experience of the dangers inherent in various forms of farming agricultural and horticultural work working with animals and dangerous critters like worms may be able to give us some advice on the question of why that clause came in in the first place and how it was that it came not to be implemented.Although we on this side of the Chamber have no desire to maintain within the law provisions that are irrelevant or are not being used or do not serve any particular purpose I can see in these industries that there is the potential for certain types of employees to be on contracts that are less than normal and to not perhaps be paying tax in the right way. Any members of the House who follows closely some of the activity online around the appalling conditions that are being offered to workers in the agricultural industry will know of jobs being put on websites that are calling for somebody to be working 55-hour and 60-hour weeks with very poor pay rates and very poor support and conditions. It would not surprise me at all to find out that the kinds of employees who were to be covered by section 24O of the Tax Administration Act which is being repealed by clause 224 of this bill are actually exactly those kinds of workers. They are not being employed in a proper way and are not in fact paying tax in a proper way.The original intent of the clause that is being repealed here might well have had a great deal of validity. I do not think from my memory of our discussion of this bill in the select committee that we had a great deal of focus on this. But now that I look at this clause in the bill I see that we are repealing a very very specific section. This is not all employees who work under an exemption certificate or a special tax rate certificate; it is just employees in the agricultural horticultural and viticulture industries. This has been done with intent and we are now removing it but I do not think with sufficient explanation from the Government as to why that is.This is a serious matter—the idea that people will not be meeting their obligations to the Inland Revenue Department because they are working under a special tax rate or an exemption certificate—and yet today we take away under this bill the ability of the Inland Revenue Department to obligate employers in those industries to provide information about that. So I would ask the Minister in the chair perhaps to give a little bit of advice about how it is that this clause came to find its way into the Tax Administration Act and then magically a few years later to be taken out. Bear in mind that this is a clause—and we will come back to this in the title and commencement debate—that has in fact been implemented retrospectively from as far back in this case as 2008-09.I just want to refer to a couple of other clauses and perhaps give one example to contrast with the one that I have just made and that is in clause 237 of the bill which repeals section 92AAA of the Tax Administration Act. It requires the commissioner to issue a determination on the cost of timber incurred. This provision I am sure you will be aware was introduced when the cost of timber was recorded in a separate account and carried forward to be offset against future forestry income. The cost of timber now is deductible in the year it is incurred without the need for the commissioner to make such a determination.That is a good example of a clause that is clearly redundant. There is now another way of achieving the same aim of section 92AAA of the Tax Administration Act. It is now possible to deduct the cost of that timber in the year that it was incurred so we can see there why the section is being repealed under clause 237. I cannot say with the same confidence why it is that those specified industries of horticulture agriculture and viticulture where there was clearly some doubt about the compliance of employees in that area—why that section is being repealed. However clause 237 does certainly make sense to me in that regard.In the remaining time that I have in this call I want to focus on clauses 234 235 236 and 241 all of which relate to the dispute resolution process. I want to say at the outset of talking about these that the Labour Party supports the changes in these clauses. What they are designed to do is to make the most efficient possible dispute resolution process managed by the Inland Revenue Department. The two issues that are being dealt with here both fall to the question of when a dispute resolution process is seen to have been initiated.In clauses 234 and 235 in particular what they do is clarify that the Commissioner of Inland Revenue’s response period when a taxpayer is late in issuing a disputes document starts from the time when it is decided that exceptional circumstances exist and the taxpayer’s late dispute document is to be allowed. This is to deal with an issue that has arisen around particular people who are involved in dispute resolution processes believing that the process itself has not begun until the Commissioner of Inland Revenue has made contact with them. These clauses clarify that. They clarify that the commissioner does have discretion around the exceptional circumstances clause and they do clarify for those people involved in dispute resolution as to when the process begins.Clauses 236 and 241 ensure that truncation is allowed in a taxpayer-initiated dispute after the taxpayer has issued a statement of position without requiring the commissioner to first issue a statement of position. This is very important for the average taxpayer. They have got a dispute. They are the one initiating it. It is not the Inland Revenue Department. They are the people who can state the position and then the disputes process can be initiated. Under the current law there has been an understanding that there would need to be a statement of position issued by the Commissioner of Inland Revenue. That is not required now.This is actually an exceptionally good move for those people who find themselves in error. There are constituent MPs in the House who will know of constituents who have found themselves locked in disputes with the Inland Revenue Department. This will mean at least at the very beginning of the process that if a taxpayer has initiated that disputes procedure they can get on with it right away.There are good elements to Part 4 where we are tidying up other Acts that are affected by the changes in here but I really just want to return to my very first point which is that there was a very very specific change made in 2008-09 around those people who were working under special tax certificates or exemptions in those three industries. We have not seen a reason from the Government as to why that has been changed. I think it is probably timely for the Minister with his extensive knowledge of these industries to get up on his hind legs and tell us why that has happened.