Prosser RichardRICHARD PROSSER (NZ First): I am very pleased—quite excited in fact—to rise on behalf of New Zealand First and on behalf of my colleague Fletcher Tabuteau to take a call on the Taxation (Annual Rates for 2016-17 Closely Held Companies and Remedial Matters) Bill at its second reading. I am excited because obviously as Mr Robertson touched on and Ms Genter as well the minutiae of tax law is a riveting business. Just to have the chance to be enmeshed in it for even a fleeting few moments will serve as a highlight of one's parliamentary career—however long that lasts.New Zealand First will be supporting this bill and for that reason I do not intend to take up too much of the House's time going through it in intimate detail but there are some matters that we feel do warrant being addressed further.Like many omnibus taxation bills this one contains many technical details and quite a plethora of legislative minutiae. As my colleague mentioned in the first reading there are more than 50 changes to amendments across seven pieces of legislation ranging from the Income Tax Act 2007 to the Stamp and Cheque Duties Act 1971. Personally I have not had a cheque book for about 6 years now but I guess some people still use them and cheque duties are therefore relevant.These somewhat weighty taxation tomes contain a multitude of proposed amendments under the umbrella of remedial matters and they do deserve a greater degree of focused attention and consideration by the House. Although I was not present for all the submissions it is apparent that even industry experts were confused at some stages as to which particular taxation bill they were submitting on.This bill makes amendments to aircraft overhaul reserves horse racing prizes GST on second-hand goods and gold the time frame for refunds of overpaid tax losses offset by mineral miners parent tax credit entitlement rules foreign tax dividend payment provisions the disposal of livestock on the sale of a business and the sharing of non-personal information under an approved information-sharing agreement. The list could go on and doubtless it does.The submissions received by the select committee both written and oral definitely informed the improvements to the original legislation. The select committee process even for matters as detailed as this is a fundamental part of our open democracy. It is the process whereby industry and community groups and individuals have the opportunity to voice their opinions and express their concerns.References to the time frame regarding the confirmation of the 2016-17 tax rates in Part 1 of this bill have already been made. We do have to ask how it is that we are determining rates in March for the 2016-17 year. Mr Scott has assured us there will be no increases in tax under this Government only reductions so we certainly hope that such taxes that have been paid thus far under rules that have yet to be set have in fact been completely lawful and we are not going to find ourselves in the situation where we have to come back and pass retrospective legislation to tidy up the fact that actions have been taken without the proper legal framework in place.The bill aims to improve current tax settings within a broad based - low rate framework. That sounds a bit like a sound bite and I guess the electorate will judge that on its merits. The Government's revenue strategy seeks to ensure that our tax system is broadly fair to encourage voluntary compliance. Well that is always good. A bit of carrot is always better than the entire stick.New Zealand First acknowledges that changes in business practices are dynamic and the rate of change in the 21st century continues to accelerate. Amending our tax system so it remains responsive to those changes and fit for purpose is therefore important. The overview of this bill states that the tax treatment of alternative forms of income and expenditure needs to be as even as possible.A significant section of this bill proposes changes to look-through company rules regarding eligibility entry tax deduction limitations debt remission tainted capital gains resident withholding tax and dividends and PAYE for shareholder-employees. My understanding is that look-through companies are the modern equivalent of what used to be loss attributing qualifying companies back in the day when I had anything to do with such matters before handing it over to my accountant because this kind of thing tends to make my eyes glaze over.When I was contracting I said to him: I don't want to do any unnecessary paperwork. I'm going to write one cheque at the end of the year and it can either be for your bill or for the tax department's bill." He took on the challenge. I paid him and that was all taken care of. So I never got deeply involved in it but I understand that the structure of the look-through company was put in place to counteract some of the business practices that had evolved around loss attributing qualifying companies. We are allowing some individuals entities to perhaps pay a little bit less of what society would consider their fair share of the tax burden. Now it appears that the replacement is itself in need of a little bit of tweaking and adjustment. The rule changes are intended to reduce compliance costs yet remain robust and in line with policy intentions and like many other pieces of taxation legislation debated in this House it is imperative that any unintended consequences of proposed rule changes are minimised—if indeed not eliminated.Members of the select committee including the Rt Hon Winston Peters have responded to submitters and made some common-sense amendments like the transitional provision for existing look-through companies. The committee's proposed changes to grandparenting guidelines for charities and Māori authorities that use look-through companies strengthen the legislation as it was originally proposed and that of course we support.The bill also proposed changes to land tainting rules and council-controlled organisations and amendments proposed in the bill to the Income Tax Act 2007 exempt entities controlled by local authorities from the land tainting rules. In its submission in fact the Dunedin City Council supported the officials' view that in the context of local authority groups land tainting rules are overreaching their purpose. Officials have no tax avoidance concerns in relation to land owned with a local authority group.Another significant part of the bill deals with non-resident withholding tax specifically regarding related parties and branch lending. Changes as proposed to the non-resident withholding tax and the approved issuer levy rules are to ensure that they are both applied consistently to economically similar transactions. A new category of non-resident passive income is introduced that being non-resident financial arrangement income. The select committee recommends refining the definition of this which would in turn amend the description of how the non-resident financial arrangement income is calculated.New Zealand First does support Supplementary Order Paper 261 tabled by Minister Collins regarding the depreciation rollover for businesses that were affected by the November 2016 quakes. I also would like at this point to draw the House's attention to Supplementary Order Paper 260 from New Zealand First's deputy leader Ron Mark. The proposed tax deductibility measures in this Supplementary Order Paper would make it clear that the cost of any seismic work may be deducted thereby reducing net income on which tax is levied under the Income Tax Act 2007. We certainly hope that the Government will see fit to see the wisdom in that and support it to the benefit of taxpayers and indeed Government revenues.We agree with the Government's intent regarding this legislation in the main given the select committee's efforts to change the bill reflecting the concerns of submitters. The Government has got this one right and that being the case New Zealand First is happy to support this piece of legislation. Thank you."