Bayly Andrew: Taxation (Land Information and Offshore Persons Information) Bill — First ReadingText is incorporated into the Bound VolumeBayly Andrew: Taxation (Land Information and Offshore Persons Information) Bill — First Reading[Sitting date: 25 June 2015. Volume:706;Page:4816. Text is incorporated into the Bound Volume.]ANDREW BAYLY (National—Hunua): It is a pleasure to be talking on the Taxation (Land Information and Offshore Persons Information) Bill. This bill provides wide-ranging measures and controls to ensure that people involved in land transactions are well informed of their obligations and responsibilities. Its provisions give the means for all transactions to comply with our tax laws which should result in improving the fairness in the property market. I do want to note that it is part of a much wider range of packages that the Government has been introducing to address housing issues and to make sure that Kiwis can buy their own home get it and get on the property ladder. Those measures include the HomeStart loans package a valuable contribution and a very generous package that the Government has introduced. It is going to also include the Resource Management Act reforms that will be introduced during the term of this Government. Also significant work has been done around increasing the housing supply including the 84 special housing areas that we have got in Auckland which is a particular area of interest.I do also want to reiterate some of the points that I have said in this House before: in my very own electorate in the Hunua electorate I can point to 10000 sections coming on to the market over the next 6 years so the substantial effort that have been made to address the housing supply is just one of a number of measures that we have put in place. Just turning to the bill I think this is a very smart piece of legislation. First of all it reinforces the tax obligations that people buying and selling properties need to adhere to. Secondly it deals with the perception which has been perpetuated by the Opposition that wholesale numbers of foreign people have been coming into New Zealand and buying and selling our properties. All they have talked about is how we should be putting in place a register but these measures that have been introduced today are much more comprehensive than that. The objective of this bill is essentially confirming the value that this Government places on homeownership and creating the right environment for people to own a home and to build strong communities.As we have heard earlier this year the Government will introduce a brightline test really to just confirm those tax liabilities on residential homes particularly when they are resold. The gains from residential properties that are sold within 2 years are going to be very clear—crystal clear in fact. Unless that property is the seller’s main home; or secondly inherited as part of a deceased estate; or thirdly has been transferred as part of a relationship property settlement—commonly referred to as a divorce—then if you sell your home within 2 years at that point it is assumed that you are essentially a trader. So we have clearly separated out areas that we believe there should be no tax paid on the residential property and that is fair. But if you do not fit within those three criteria then you will be subject to tax changes and in my personal view I believe that is a very balanced approach. The objective of course is to ensure that tax on property is paid when it is effectively due and also to ensure that property speculators are actually paying their full amount of tax. These brightline tests will obviously be subject to review by the select committee but that clarity in my view is absolutely essential and will be a key element of its success.I just want to note that this requirement to pay tax particularly if you are deemed to be a trader is part of the existing tax rules. I have heard some of the Opposition members claim that it is a new tax and all that sort of stuff. It is not. The corollary is that if you buy and sell shares on the stock exchange you are also subject to the same tax rules. This is what we are trying to do around housing. The bill will obviously assist the Inland Revenue Department to reinforce tax obligations. First of all if you are a buyer or a seller you will be required to provide an IRD number at the time of doing the property transaction. This will be part of the conveyancing process so it will involve an independent part of that process and those details will be forwarded to the Inland Revenue Department. Tax residents from another country will also be required to provide a foreign-equivalent of their IRD number and I think that is a very smart move. But I just do note that if you are a New Zealand resident buying and selling your main home or buying what you intend to be your main home you will be exempt from that process.Secondly offshore persons will be obliged to have a New Zealand bank account and you have to do that prior to getting an IRD number. That is a wonderful second part of what is being proposed because not only will that deal with the international anti-laundering laws that New Zealand is a party to but it will really start to bite in terms of making sure that we have got appropriate information on those foreign people buying New Zealand residential homes. I do not know when you last opened a bank account but interestingly I asked someone this morning to just—The ASSISTANT SPEAKER (Lindsay Tisch): Can I just remind the member that the member is bringing me into the debate all the time. It is best to use the third person by saying “When one opens a bank account” or “one does something” as opposed to saying “you”. I have not opened a bank account recently.ANDREW BAYLY: Thank you Mr Assistant Speaker. So if one opens a bank account it is very very difficult and it takes some time. When you go into the bank not only do you have to provide a photo ID or a passport but also you have got to provide in many cases some form of proof of residential address such as a New Zealand utilities bill. Getting the bank to capture that information is the way to make sure that with regard to people who want to get round the system and not be part of the New Zealand laws that information is automatically accounted for and captured by an independent body. The bill also ensures that we deal with people who are essentially cash buyers coming into the New Zealand market who may not want or need to borrow money. It circumvents that by forcing them to actually open a bank account. The other part of it is that there is a requirement for those people to actually get an IRD number and until that information is provided to the bank the bank assumes that you are on the highest tax rate. I also note that the Minister talked about investigating the introduction of withholding tax on people selling property for non-residents. I think that that is another important thing that the select committee will turn its mind to.I want to now just talk about the areas where the exemption will not apply and that is if the home is being bought by a trust or even if a New Zealand resident or someone like that has been acquiring homes but buying and selling them two or three times during the course of the initial 2 years. Those are not grounds for exemption under these rules and this will ensure that overseas buyers and speculators are again captured by the provisions that have been proposed under this bill. A part of the measures also deals with the issue of trusts. Obviously there is concern about not only New Zealanders but foreigners using trusts to hide their interests. As we heard from the Minister today if you use a trust you will be required to provide your IRD number and if anyone holds an interest of 25 percent or more in that trust and they are a foreign resident then they will be automatically captured under these rules. I am glad that the Minister has been proposing that and also what she talked about earlier—that it is easier to set up a trust than to subsequently vest that into new ownership and if there are any subsequent transactions again that is going to be captured in this bill. Again those are excellent provisions.The last thing I want to turn my mind to is the Land Information New Zealand requirement. That is an important further step in capturing that information and having an independent party to record that information. To me this bill is an excellent start towards dealing with this whole issue. I commend the bill to the House.