Woodhouse Michael; Parker DavidHon MICHAEL WOODHOUSE (National): I'm not normally one who would play around with titles of bills but this is definitely an example of where the legislation we are passing—what's on the tin is not what's inside because this bill is called the Taxation (Annual Rates for 2020-21"—OK we've done that—"Feasibility Expenditure"—OK we've done that—"and Remedial [Measures]) Bill". And so in order for the title to match what we are about to do passing into law a massive extension to the brightline test one would need to consider that remedial matter something that needed to be remedied. It's not something that needs to be remedied. So I think this bill needs an addition to those three strands. Put a fourth leg on the stool and let's call it what it is "Remedial Matters and a Capital Gains Tax by Stealth Bill" because there is no doubt that the Government having promised—the Prime Minister having stood up in the Beehive Theatrette and saying "While I am Prime Minister a capital gains tax will not be introduced." and the Minister of Finance saying publicly I think on 9 September 2020 "Will there be changes to the brightline test? A one-word answer 'No.' " Andrew Bayly: But you forgot the laugh.Hon MICHAEL WOODHOUSE: Oh and a "Ha ha!" Yes that's right—a nervous laugh "Ha ha"—something like that. I'm not very good at mimicry especially not with the Minister of Finance. But let's be very clear. This bill is not describing what we are doing now. I referred to Ms Turner's very excellent advice to the committee the select committee and I want to turn to that again. In respect of purchase price allocation it's relevant to an amendment a tabled amendment that I'm about to put on the Table and I appreciate the Clerk's assistance with the drafting because I hadn't noticed that the Minister had already amended the commencement date for section 40 of the Act and that's in relation to purchase price allocation. Bear in mind Ms Turner's comments that she made which I quoted in Part 2 to the significant changes and the risk of unintended consequences is "it is impossible to identify and deal [with] every practical situation to which … changes may apply. … For these reasons I concur with the cautious approach recommended by officials." Well that rings a bit hollow right now.In respect of that purchase price allocation she made a very interesting point at 4.4 of her report: "The proposed rules are detailed and complex and the consequences of not knowing of their existence misunderstanding them or ignoring them are not pleasant particularly for purchasers." And then she goes on to talk about the time frame: "That timeframe"—the stated application date is 1 April bear in mind—"is physically impossible." So what she recommended to the committee was that the application date of 1 April would apply to commercial land and buildings including fit-out and that the application date of 1 April 2022 apply to the other asset classes and that the intervening period be used for two purposes being education and fine tuning of the proposals. Now the Minister has in his Supplementary Order Paper 23 as I understand it delayed the implementation of section 40 until 1 July 2021 as a partial nod I think to those concerns. I don't think that goes far enough. I think Therese Turner's advice to the committee was very sage. These are complex changes to the manner in which purchase price allocation goes and I think it behoves this committee of the whole House to give tax agents and stakeholders every opportunity to educate their clients because the consequences of getting that wrong are extreme and they could have whole purchase prices disallowed because of their failure to comply with these new provisions at least until those things are sorted out. I think it would be only fair because remember IRD used to have as its strapline "It's our job to be fair." Well it's only fair to give those clients of tax agents every opportunity to understand their obligations so that they can avoid the pitfalls that are being introduced potentially by section 40. So just to summarise this is the "Capital Gains Tax by Stealth Bill" and the purchase price allocation commencement date in my view should be 1 April 2022. Hon DAVID PARKER (Minister of Revenue): I thank the member the Hon Michael Woodhouse for his contribution. He is correct that the Supplementary Order Paper changes the commencement date for the purchase price allocation provisions to 1 July this year which would leave three—and thereafter it applies to transactions entered into after that date. So from 1 July onwards those provisions kick in and vendors and purchasers have to agree on a purchase price allocation in accordance with the new rules. The advice that we have received and accepted on the Government side is three months is enough for people to get their head around that. It does have significant financial consequences of many millions of dollars every month actually. The revenue gain or the reduced revenue loss I perhaps should describe it as is predicted to be $170 million over three years. So three years being 36 months you can see that it's more than a million dollars a month and therefore we'll be voting against the member's proposal to change that commencement date for purchase price allocation to 1 April next year and we'll be sticking with the proposal that's in the Supplementary Order Paper of 1 July this year."