Tremain Chris: Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill — In Committee 
Tremain Chris: Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill — In Committee 
[Volume:644;Page:13714] 
CHRIS TREMAIN (National—Napier) 
: 
 I take the opportunity in this urgency debate to speak to Part 2. This part specifically deals with amendments to the Tax Administration Act 1994. I want to use my 5 minutes to ask the Minister in the chair the Hon Peter Dunne about the way in which this policy will be introduced particularly in respect of clause 175 with the insertion of section 139AAA and the new proposals around the late filing penalty for GST returns. I know that it is a matter of some interest or more than some interest for many constituents around the nation. I know that Parekura Horomia’s constituents throughout his electorate will be interested in this particular issue and I look forward to the Minister taking a call about the late filing penalty for GST returns. Maori businesses and Pakeha businesses will be impacted by this will they not Mr Parekura? 
Hon Darren Hughes 
: Mr Parekura! 
CHRIS TREMAIN 
: Mr Horomia. They will be impacted by it. Many small businesses around this country deal with taxation and the taxman. They know that dealing with taxation—the filing of GST returns fringe benefit tax returns PAYE returns resident withholding tax and provisional tax—creates large compliance costs for them in terms of getting their returns done. The key issue is whether we are creating a regime that will enhance the provision of these returns or will exacerbate the provision of these returns. That is the point I am making. Although we write into legislation the particular penalties that may accrue here we are actually changing the system quite dramatically from what it was. 
In clause 175 which inserts section 139AAA into the Tax Administration Act we are changing the system so that a business that is working on an invoice basis will be charged $250 if it has a late return. If it is working on a payments basis or on more of a cash basis then it will be charged $50 for the late filing of a return. This is particularly in relation to GST. That changes the system somewhat from what it is currently. Those late filing charges have not been placed on taxpayers when they put in their returns but there has been an assessment of the revenue that would be taken. In that regard the Inland Revenue Department has not been lenient—“lenient” would probably not be the correct term—but it has been helpful. I know of certain situations where businesses—for example my own business—have put in tax returns and for one reason or another they may have been late. Often in small businesses that happens accidentally not because there is any purpose to try to defraud the department. I remember one time when on holiday I asked someone else to do a particular return for me and it was just never done. In those situations the department has been lenient and has come back and allowed us to put in the return as long as it was within a particular time. With these fines we will see a fine of $250 or $150—whack! This will happen as soon as a business is late in putting in a return. 
I just want to know from a policy point of view how the department will deal with those late returns. I know that small businesses around the nation will be interested in this matter. Minister Horomia’s constituents will be interested in it as well so I ask the Minister in the chair Peter Dunne to take a call on that. 
I guess the key point I am making is that although we may relax penalty regimes or change them to encourage compliance and try to decrease compliance costs it will do nothing if the Inland Revenue Department is pernicious in throwing these fines into place and starts getting small businesses’ backs up. These people pay most of the tax in this country. Not only do they pay provisional tax fringe benefit tax and GST but also they employ the majority of people in this country. Those employees pay a significant proportion of tax in this country and on that basis it is very important that the Inland Revenue Department stays onside with small businesses. They are a key part of our nation and that is why I am asking how the department will deal with the situation where a return is late. Will it be Draconian in the implementation of the $250 fee for a person working on an invoice basis and will it be hard on a taxpayer on the $50 basis?