Guy NathanTAXATION (ANNUAL RATES FOR 2016-17 CLOSELY HELD COMPANIES AND REMEDIAL MATTERS) BILLThird ReadingHon NATHAN GUY (Minister for Primary Industries) on behalf of the Minister of Revenue: I move That the Taxation (Annual Rates for 2016-17 Closely Held Companies and Remedial Matters) Bill be now read a third time. It has been the Government's ongoing focus to steadily reduce inconsistencies in our tax system to improve and strengthen and also update our tax rules. Ensuring that our tax rules work well in practice helps to keep compliance costs to a minimum which in turn helps our economy to grow and prosper. The bill continues that overall focus.A number of items in the bill are business-friendly and were favourably received by the private sector during the consultation phase of the proposals. Chief amongst the business-friendly measures proposed is the change to the look-through company rules and the dividend rules as they apply to closely held companies. Closely held companies are a significant proportion of the total number of companies in New Zealand so reviewing their tax treatment is very important. The proposals aim to simplify the current rules by addressing a number of complexities raised by the private sector. We must always aim to uphold the integrity of the tax system so there are always proposals to tighten the eligibility rules for an entity electing to become a look-through company. A decision by a small business to convert to a company must be made for sound business reasons and not simply to gain a tax advantage.Following on from the Government's recently released package of base erosion and profit shifting proposals this bill continues the Government's focus on international taxation matters. Changes are proposed to the non-resident withholding tax and approved issuer levy rules to ensure the rules for the tax treatment of interest earned in New Zealand by foreign lenders remain robust. Briefly they aim to ensure that the non-resident withholding tax rules apply as intended to related party debt or equivalent arrangements; also that non-resident withholding tax is paid on related party debt rather than the approved issuer levy and to ensure that anomalies are corrected which currently can be used to circumvent non-resident withholding tax or the approved issuer levy.The bill also contains a number of measures to ensure that the tax rules continue to work as intended and do not impose unnecessary compliance costs on taxpayers. These range from refinements to the GST rules through to mainly technical amendments that aim to ensure that the tax rules are clear and apply as intended. The proposed changes to the debt remission rules for example address a problem that can arise under the current debt remission rules when a debt is remitted between associated parties.The bill also adds 14 charities to the list of donee organisations with overseas purposes in schedule 32 of the Income Tax Act of 2007. Donors to those charities will be eligible for tax benefits on their donations effective from 1 April 2016. Finally the bill sets the annual rates of income tax for the 2016-17 tax year.These are the main features of this bill. It is a good bill. I would like to thank everyone involved and I acknowledge the officials for their contribution in developing the policy and drafting the detail of this legislation. I would also like to thank the organisations and individuals who made submissions on the proposed legislation and of course the Finance and Expenditure Committee for its consideration and good work. I commend this bill to the House.