Russell Deborah; Watts SimonHon Dr DEBORAH RUSSELL (Labour): Thank you Mr Chair and thank you for that direction. In that case—CHAIRPERSON (Greg O'Connor): No it's not a direction it's just an observation. Hon Dr DEBORAH RUSSELL: An observation Mr Chair. I do want to move on to one of the other really significant measures in this bill and there's quite a lot to talk about it with respect to it and that is the changes to the trust rate. Now the trustee tax rate at the moment is 33 percent but in the bill as drafted the trustee tax rate—applying from 1 April next year provided the bill goes through in time—will change to 39 percent. That aligns the trustee tax rate with the top personal income tax rate.But of course trusts are set up for many purposes and in some cases trusts are set up for people with disabilities. There were many submissions on it but one of the things that changed as the bill went through the select committee process was a change to enable a particular rate for beneficiaries of trusts for disabled people. Now the trustee tax rate for a trust that is for a disabled person at the moment is set at 33 percent; it was thought that 39 percent was overreach. A lot of submissions came in on that and the select committee agreed with that and the trustee rate for beneficiaries of a disability trust was set at 33 percent. I want to direct the Minister's attention to clause 39 inserting new section HC 39(2). It talks about who can be included in a beneficiary trust. It has to be one or more beneficiaries who are all disabled beneficiaries. What I want to ask in the first instance is: if we have a trust why isn't it possible to have non-disabled beneficiaries of that trust as well? So this trust has got a pretty tight definition; the beneficiaries have to be disabled persons. But why can we not have non-disabled people who are beneficiaries of that trust as well?Related to that of course people with disabilities may be beneficiaries of other trusts. So we can imagine a situation where a person with a disability is the beneficiary of a disability trust or a disabled beneficiary trust but they might also be a beneficiary of another trust. Who knows what it might be; it might be a family trust it might be a trust that owns a business and the business operates through the trust structure and so on. There are many sorts of trusts or trusts used for many purposes. A disabled person could be the beneficiary of a disabled beneficiary trust but they could also be a beneficiary of other trusts.So in respect of the disabled beneficiary trust they would have a tax rate of 33 percent but if they're a beneficiary of another trust has consideration been given to allowing some of that trustee income to be taxed at that lower tax rate which is sitting in there for disabled beneficiary trusts? I hope the Minister can see the question I'm asking and it is: if we're trying to ensure that a person with disabilities is taxed at an appropriate rate—done through a disability beneficiary trust—then why not for other trusts of which they happen to be a beneficiary as well just because they're not disabled beneficiary trusts. Hon SIMON WATTS (Minister of Revenue): Yeah no problem. I think I got a handle of what was being outlined there. It seemed like a quite a complex web of trustees and beneficiaries but quite simply the definition in regards to what is qualifying within a disabled beneficiary trust is that the person must be disabled and there is a definition in regards to that within the fact they need to be in receipt of a child disability allowance a supported living payment disability allowance or a jobseeker health conditions and disabilities allowance for longer than six months.The simple reason—to the member's question around in effect the ability for someone who is not disabled and why they can and can't be in that—is that the rules are set up to ensure that non-disabled persons don't in effect benefit from the exemption that we have provided. I think that's not unreasonable. The exemption that the select committee thought through and worked on pretty extensively—and I understand there was a reasonable number of submissions from stakeholders in this regard and the select committee landed with some modifications and amendments to the original bill—but I think they landed in a pretty sensible place and the tyres were kicked pretty hard in this area that you know the trade-off is that the ones that need to benefit from this exemption are those that are disabled and those that are non-disabled should not be able to benefit.