Dunne Peter: Taxation (Livestock Valuation Assets Expenditure and Remedial Matters) Bill — First Reading 
Text is incorporated into the Bound Volume 
Dunne Peter: Taxation (Livestock Valuation Assets Expenditure and Remedial Matters) Bill — First Reading 
[Sitting date: 29 November 2012. Volume:686;Page:6975. Text is incorporated into the Bound Volume.] 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I move  
That the Taxation (Livestock Valuation Assets Expenditure and Remedial Matters) Bill be now read a first time. 
 I nominate the Finance and Expenditure Committee to consider the Taxation (Livestock Valuation Assets Expenditure and Remedial Matters) Bill. Like most economies ours has been battered by the global financial crisis. Consequently the Government’s focus has been on positioning it for the future to take advantage of global economic recovery. In that context it is right that the tax system should ensure that all taxpayers pay their fair share of tax thereby reducing our national debt burden. At the same time it is also appropriate that the tax system seeks to minimise the burden it places on business. This bill contains measures that are aimed at both those objectives. To that end the bill proposes to tighten the rules relating to the tax deductibility of expenditure relating to assets such as holiday homes boats and aircraft that the owner uses both privately and to earn income. 
The Government has no argument with people owning and enjoying such assets. These tax changes are not a form of envy politics but really about getting a fair outcome. It is a principle of our system that a person is allowed a tax deduction for expenditure if it is incurred in deriving their income or in the course of carrying on a business. But unfairness arises because owners claim that the house is available for rent during significant periods of the year when it is actually unoccupied. That provides them with a basis for claiming tax deductions for expenses relating to the period the property is empty. If the owner holds the asset primarily for private enjoyment this is simply a taxpayer-subsidised asset and it is very difficult to justify. Members may recall that this proposal was part of the Budget 2012 announcements. 
Also raised at the time was a change to livestock valuation rules which made elections to use the herd scheme generally irrevocable. That again was a question of fairness. So a key component of this bill includes supporting provisions proposed to the livestock valuation rules that made elections to use the herd scheme generally irrevocable. We had made the policy decision earlier; this bill puts that decision into effect. What this bill does also is propose one exemption to the core herd irrevocability rule that we enacted as part of Budget 2012 and sets out new rules for the disposal of herd scheme livestock. 
The bill also makes some important GST changes to rectify a problem with our tax laws that disadvantage businesses that compete globally. Under the existing GST rules a non-resident doing business in New Zealand can incur GST as an economic cost and this makes our goods and our services less competitive. Our international competitors provide ways of reducing this cost and frankly so should we. So the bill proposes to allow certain non-resident businesses to register for GST and claim import tax deductions for GST incurred on approximately the same basis as a resident registered person. Also of note in the bill are changes to the time periods for claiming refunds under the Income Tax Act 2007; provisions to ensure that expenditure on trees and plantings for erosion shelter and water protection purposes is tax deductible; and some provisions to address anomalies that have been highlighted by the kiwifruit Psa virus issue. 
Donee status is proposed for three organisations: the Hunger Project New Zealand OneSight New Zealand and the Fund for Timor. 
Finally the bill introduces a range of remedial amendments including a better alignment of the primary sector amortisation rules with the general depreciation rules the elimination of tax treatment mismatches to certain foreign currency hedges and correcting a minor and unintended change to the tax treatment of MPs’ allowances. 
I want to advise members that I intend to release a Supplementary Order Paper to this bill which will cover two main matters. Broadly speaking those matters are changes to the tax treatment of car parks and the inclusion of more non-cash benefits in social assistance calculations and lease inducements and surrender of payments. The Government has already made announcements in respect of its intentions with regard to both of those matters. My intention is that the Supplementary Order Paper will be released in sufficient time to allow it to be considered by the select committee alongside the other provisions of this bill and for submissions to be called on those provisions as well as the provisions in the bill. 
So these are the main features of this legislation. Taken together they will help strengthen our tax system and support our economy. They are consistent with our overall objectives of making the tax system fairer modernising its provisions to keep pace with the times and making it easier for taxpayers both personal and corporate to comply with and meet their obligations. Against that backdrop I am very pleased to commend this bill to the House.