Upston Louise: Taxation (Land Information and Offshore Persons Information) Bill — First ReadingText is incorporated into the Bound VolumeUpston Louise: Taxation (Land Information and Offshore Persons Information) Bill — First Reading[Sitting date: 25 June 2015. Volume:706;Page:4796. Text is incorporated into the Bound Volume.]Hon LOUISE UPSTON (Minister for Land Information): I move That the Taxation (Land Information and Offshore Persons Information) Bill be now read a first time. I nominate the Finance and Expenditure Committee to consider the bill. At the appropriate time I intend to move that the bill be reported to the House by Monday 17 August 2015 and that the committee have authority to meet at any time while the House is sitting except during oral questions during any evening on a day on which there has been a sitting of the House and on a Friday in a week in which there has been a sitting of the House despite Standing Orders 191 and 194(1)(b) and (c).This bill will authorise some of the measures announced in Budget 2015. The package of measures will ensure that people buying and selling residential property for profit including overseas buyers and short-term speculators pay their fair share of tax. It will not unfairly impact on New Zealand owner-occupiers who have worked hard to buy their family home but it will help enforce the perfectly reasonable and fair expectation that anyone who has obligations to pay tax in relation to their property should pay that tax. That is in fact the current tax law and it applies equally to New Zealanders and overseas buyers. However this law has been difficult to enforce and that is what we are here to change.This Government is committed to ensuring fairness by pursuing those attempting to avoid paying tax. This bill will give the Inland Revenue Department the information it needs to enforce the rules. From 1 October all offshore investors and New Zealand residents buying or selling property that is not their main home must provide a New Zealand IRD number as part of the land registration process. If a person is resident for tax purposes in another jurisdiction they will also have to provide the tax identification number or TIN issued to them by that country. This will help the Inland Revenue Department identify people who are trading property for the purposes of making gains in the New Zealand market and it will allow us to provide information to overseas tax authorities in line with existing New Zealand legislation ensuring taxpayers’ compliance with tax obligations both in New Zealand and overseas.Under this legislation conveyancers will collect tax information from purchasers and vendors of property as part of the conveyancing processes prescribed by the Land Transfer Act 1952. Property vendors and purchasers will be required to provide their IRD number and if applicable the equivalent overseas IRD number and in doing so prepare and sign a statement affirming that the information they have given is correct. Conveyancers will be required to provide this declared tax information before certifying the property transfer. Conveyancers will not be required to certify the accuracy of the information provided. The onus will be on the purchasers and vendors to provide accurate information.Although those buying or selling their main home are exempt from the tax information requirement the legislation will require trustees to provide the trust’s IRD number. People have a choice regarding whether they hold property through a trust and we think it is preferable from a simplicity and integrity perspective that trusts always provide an IRD number. All of this tax information will go to Land Information New Zealand or LINZ which in turn will provide the information to the Inland Revenue Department. Tax information provided to Land Information New Zealand is personal information. It will not form part of the land transfer register administered by Land Information New Zealand and individual taxpayer information will not be publicly available.However the bill does make provision for the publication by Land Information New Zealand of aggregated information relating to the tax residency of persons undertaking property transactions—for example statistics describing the relative number of transactions by persons who are tax resident in other countries compared with those who are not. This will not be the same as a register of foreign ownership because there are many New Zealand citizens who are tax residents of other countries but they are not foreigners. But the collated tax residency information will provide a useful additional layer of information to inform debate about property ownership in New Zealand.We are serious about these measures and for those who knowingly supply false or misleading tax information there will be stiff penalties. Under the bill it is an offence to intentionally provide false or misleading tax information. Any person convicted of this will be liable for a fine not exceeding $25000 for a first-time offence or $50000 for subsequent offences. Regulations will be made to describe land transfers and parties that are exempt from providing tax information in addition to the main home tax exemption. Such exemptions will be made only where the requirement to comply is impractical or involves high compliance costs or where there is a low risk of tax avoidance.Here is another key point: this legislation will mean that before being issued an IRD number offshore persons will need to have a New Zealand bank account. This means that any offshore person looking to obtain an IRD number will first be subject to New Zealand’s anti - money-laundering rules. To prevent offshore individuals from circumventing the rules by using a New Zealand company or trust the offshore person definition also includes look-through rules from the Overseas Investment Act to treatas offshore New Zealand trusts or companies that are owned or controlled 25 percent or more by offshore individuals. The bill also obliges a person other than an individual to provide a bank account number in the event that they become an overseas person at a later date. That prevents a situation whereby for example shares in a New Zealand company with an IRD number are sold to an offshore person to avoid the application of the rule.This Government is committed to ensuring fairness by pursuing those attempting to avoid paying tax. The public will have an opportunity to comment on the legislation through the select committee process. However in order to have this regime in operation by 1 October a shorter than usual select committee time frame is necessary.In particular it is imperative that we align the implementation of these measures with the brightline test announced by the Government in Budget 2015. The brightline test will require income tax to be paid if a residential property other than the seller’s main home is bought or sold within 2 years. The brightline test will apply to properties bought on or after 1 October. The early report-back date will ensure that we can have in place the regulations that are necessary to support this legislation by 1 October. As I mentioned a moment ago these regulations will describe land transfers and parties that are exempt from providing tax information in addition to the main home exemption.The measures being introduced by this bill will assist with the enforcement of tax compliance rules without unfairly impacting investors buying with a long-term view of renting their property to tenants or New Zealand owner-occupiers who have worked hard to buy their family home. I commend the bill to the House.