Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill

This is a debate on clauses 4 to 126 and the schedule.

I am surprised the Minister of Revenue did not beat me to his feet again. The Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill, which we have in front of us, does introduce a number of changes. He was very keen to rush it through the select committee, announcing it just before Christmas with a report-back date in early February that saw many of the larger tax agencies huffing and puffing because they were not happy that the changes made in this bill were being rushed through this House. This Minister is keen to see these changes go ahead. He is keen to see his tax legislation put through.

It is a wonder that he did not have with him also a Supplementary Order Paper to introduce the changes that he announced by press release last Friday, which would see double taxation on some bodies corporate in terms of their GST payments, which will cost some of them millions of dollars and, interestingly, is very similar to the case that was taken against Muldoon when he cancelled the superannuation scheme in the 1970s. Muldoon announced, of course, by press release that he was going to roll back the scheme and that members did not need to contribute to it any more. And we know that that saving scheme would today be worth $200 billion to $300 billion had it been kept and that New Zealand’s retirement savings would be a lot sounder and a lot deeper and a lot more beneficial if that had happened.

💬 Simon O’Connor: Forty years ago.

This Minister is doing the same things that Muldoon did, and it is a shame that he cannot learn those mistakes of history from 40 years ago, as my colleague opposite says. It is a shame that he is repeating those same mistakes of 40 years ago and making tax policy changes by press release. Certainly, tax practitioners have spotted it. They are uncomfortable with it. It is not good practice to try to change the law without actually having the checks and balances.

That is also reflected in this particular law that we are passing through the Committee now, because we see already that the Minister is bringing some Supplementary Order Papers to correct mistakes that were in the bill already that the Finance and Expenditure Committee did not have time to process. We had, through the select committee process, various people—learned tax people—saying to us: “Look, if we had a bit more time, we might have ironed this out or we might have debated the principles a bit more. Why on earth are we introducing these strange rules around trusts, around employee allowances and so on, that do not seem to add up and have not had the full input that they should have in a tax bill that is properly consulted on?”. What happens then is that Parliament ends up spending a whole lot of time correcting mistakes.

Another recent example of that, of course, is with the child support legislation that this Minister had to reverse out of. After the Government had put through a law that said that child support payments will be calculated on a different basis, we had the Government taking more of Parliament’s time to reverse those changes out because it was decided that it was too hard to put them into effect. That, of course, cost millions of dollars of taxpayer money to do that, to bring in a law and to take it out again. That is irresponsible, frankly, and it shows that the Government does not really have a vision for where the tax system could go and should go, it does not have an oversight of the development and implementation of policy that it ought to have, and we know a lot of that goes back, of course, to the Inland Revenue Department computer system.

I am worried about some of the changes here in Part 2 and whether, in fact, they will be able to be implemented, because we know that the technology that the Inland Revenue Department relies upon was put in place in 1993. The technology that the Inland Revenue Department relies upon is a lot older than Google. It is a lot older than Facebook. In fact, the technology of the department’s computer system is a decade older than Facebook, and very few companies, businesses, or Governments rely on computer technology that is over 20 years old to collect taxation. That means that it is very hard for customers to interact, for ordinary taxpayers to interact, with the tax department. And voluntary business compliance is dropping. It is interesting to note that on the Inland Revenue Department website the statistics for voluntary business compliance run out in 2012 when other statistics are carried through to 2013, and one wonders why that might be. It is a trend that is not happy. It does not reflect well upon the Government.

I have recently heard more reports of people not getting through on the phone lines, finding it incredibly frustrating to get through to the Inland Revenue Department, and a lot of this hinges on a department that has not been well supported by this Government. The Minister knew that the Inland Revenue Department computer system needed upgrading when he came into office. And this computer system is what will be relied upon when this legislation is introduced. When it is put through the House, it will be relied upon to make it happen for people in the world outside. But 5 years on, nearly 6 years on under this Government, we know that over $50 million has been spent on international consultants to try to work out what needs to be done there, and they have reached the point that they are now saying at the Inland Revenue Department that what the National Government was told when it came into office 6 years ago is, in fact, what needs to happen now. It has got nowhere—nowhere, effectively—in 6 years.

Back in 2012 John Key said: “You don’t want to be held up by a lack of technology. You don’t want your tax system held to ransom by a lack of technology.” Mr Key promised that he would be getting on to it straight away. Well, over 2 years have passed since he made that statement, and still no progress. We have a new Minister who is getting up to speed with the system, with the portfolio. We hope for good things, although in Part 1 he is hiding his lamp under a bushel in presenting advice to this Parliament about why these changes are good. We will look forward to him in Part 2 perhaps explaining how they will be implemented with this dated technology in place, and we look forward to what assurances he can give us that they can actually be implemented, so that we are not back here in Parliament again removing the legislation because it, embarrassingly, cannot be implemented because the Minister has not given the Inland Revenue Department the support it needs to get on with the project of redeveloping that computer system that we know we all need.

New Zealand, of course, is not the only country in the Western World that needs a tax system. We are not unique in that regard. Western countries replace their tax systems. This Government, for some reasons, has sat on its hands for 6 years knowing, when it came into office, that it was already dated technology, and it has seemingly done nothing except hand over money to contractors from offshore, to big multinationals, to develop plans, to rehash those plans, and to really take us not very far at all. This Government needs to get on with that, because it is a problem that future Governments will hold. If the tax system cannot do its duty, we will not be able to afford the schools, the hospitals, the roads, and the infrastructure that we all rely upon in this country to have a prosperous future. We have had those things in the past. We have had a functional tax system in the past. This Government has been neglecting it. I worry that the items listed in Part 2 of this bill will not be able to be implemented, because of this Minister’s lack of attention to the Inland Revenue Department’s tax system.

And he is not unique there. His predecessors must carry most of the blame. But I would like to hear from this Minister a credible time frame and some kind of indication about when our tax system is going to be working properly, when tax simplification is going to happen, and when a capital gains tax could be practically implemented. So far from this Minister there has been nothing except platitudes and a commitment to the status quo. Even his Prime Minister has said that change could not be made in the system. Even his Prime Minister has said that, over 2 years ago. So I am looking forward to his contribution.

Of course, we also know that alongside that ancient computer system is an increasing record of privacy leaks. There was the big privacy leak issue in 2012, where 32 serious breaches happened at the Inland Revenue Department, and we know that a year on there was a 500 percent increase. So that is also about this computer system, which is the computer system that will be implementing this legislation, which will have privacy implications. Mr Chair, you are rightly bringing me back to the bill itself. These privacy implications in the bill, because we are dealing with employment matters, with wages, and with other items that are significant tax rates, the amounts of tax paid, Inland Revenue Department numbers—all of those things are intimately entwined in the legislation we are passing and affect each and every New Zealander. The Inland Revenue Department holds our most sensitive information, and so when it is enacting these parts of the bill, we see that the department will be handing over its information. The department will be required to make disclosures—the department holds that information—about the nature of a charity, for example, about its records. Everything that is in this bill—housing trusts, and their nature, and so on—is all held by the Inland Revenue Department and can be released improperly if the computer system is not up to date.

We also heard in the select committee a number of presentations where concerns were raised about the trust rates for housing—the discretionary ability of the Minister to choose which tax rates should apply to which trusts, and which would be deemed to be worthy housing trusts with a social benefit, which are charitable, and which would be deemed not to be. This discretionary power is very, very unusual in terms of the Minister’s responsibilities. I am interested to hear what the Minister will say about that, what his view about it is, and why that discretion should be allowed for a Minister. It seems pretty odd that the Minister should be having such arbitrary powers, and certainly that was raised by tax experts along the way.

This Minister, as we know, is new to the role, so he will have some fresh thinking. We are looking forward to hearing what that is. We have already challenged him to tell us about the default capital gains tax that he has said stands in place of the capital gains tax that Labour would introduce. He has not engaged on that in Part 1, but by the way he is scrawling notes now, I am hopeful that we will get a more fulsome response in Part 2 and some pearls of wisdom from a new Minister keen to make his mark, keen to show that this Government will make a difference, will upgrade the computer system, and give some kind of clarity around time frames, around the nature of the upgrade, and around the costs involved. Even that has not been clarified yet—whether it is going to be $700 million, as Bill English once said, or a billion dollars, as I think Mr Dunne said, or up to $1.5 billion as somebody else, maybe Mr Key, once said. These are things that we need some certainty about as taxpayers, to know that our tax system is being looked after, that our private details will be secure, that the tax system will be functional into the future, flexible, able to respond to a changing international tax environment where multinational tax avoidance is becoming a bigger and bigger issue, and functionally able to do the very basics that it has historically done.

When the Minister speaks about community housing entities, I do wish to hear him explain why there should be such a wide range of discretionary powers to approve or disprove charitable exemptions. That really does give the Minister the effective right to confer lower taxes on some, but not all, taxpayers, and that seems to be bad law. Frankly, that is bad law. This is to be done under guidelines that are not even proposed in the legislation. Mixed housing areas look set to be excluded. This cuts across the efforts to attract teachers, doctors, and other professionals into areas with prohibitive housing prices. These changes made in the legislation will have social impacts, and the Minister is responsible for making decisions about who pays what rate of tax. That is not defined in the legislation. It is very unusual—it is very unusual—and the tax experts said that with some more time these things could have been ironed out. But the Minister has been rushing this through the House. Perhaps there is a lack of back-planning and perhaps there is a bit of a shambles in the handover, as his predecessor lost his ministerial role over an issue around privacy, ironically, when we also have these privacy breaches at the Inland Revenue Department.

But the Minister will tell us, I trust, about how these anomalies are in there, like a trust supplying housing to teachers in a remote housing area appearing to be granted an exemption, while a school that houses teachers will not. If one set up a trust for tax accountants, it may well have a tax-exempt status, and yet it would be hard to argue that there was a social good or a charitable purpose, although the tax accountants might argue that.

💬 Andrew Little: Make it a religion.

A religion. Yes, well, tax is a religion for some, so I guess there are possibilities there. But seriously I do look forward to the Minister explaining why he should have these discretionary powers, why he should be able to confer lower tax rates upon some citizens and not others, and where this will all end. This is a piece of legislation that could have been better. It is a piece of legislation that will no doubt come back to the House to be amended, over time, because of the rushed nature and because of the inability of the department at times to implement things because that computer system is out of date, because of this Government’s lack of attention to detail.

On this side of the Chamber we want a more positive future. We want every New Zealander to have the knowledge that this tax system is functional. We want it to be collecting the taxes fairly, where they are due, as they fall, including from multinational companies. We want a New Zealand that has the resources to support good schools, hospitals, and all of those other basics that New Zealand needs.

I am happy to take a call on Part 2 of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill. As I indicated in my speech on Part 1, I am particularly interested in the issues around the changes to the tax treatment of accommodation, and Canterbury migrants’ meals and rest breaks, and clothing. I am particularly interested in those, because although we support them, and I think the Finance and Expenditure Committee had a good look at these issues, it does bemuse me somewhat that we are able to do something in a tax bill that we are not able to do in other bills. For example, in the accommodation area, there are pages and pages describing what “accommodation” means. It seems to me to be fairly interesting that we are going to the extent of having to describe the accommodation, the purpose of the accommodation, what a workplace is, and so on.

But the particular thing that I am interested in, and the Minister of Revenue might be able to help me, is why accommodation is tax deductible under this bill for people who have temporary accommodation because of work, but why it is not—I might be wrong; you might be able to correct me on this, Minister—tax deductible for workers who come here and work under the Recognised Seasonal Employer scheme. In fact, what happens with workers who come here and work under that scheme is that they are paid the minimum wage minus accommodation. That is something that this Government changed, I think under Minister Coleman when he was the immigration Minister. Under Labour, it used to be that it was the minimum wage plus accommodation, so it could not be deducted in the way it is. I am interested in why the Minister thinks that is acceptable and why there should be a difference for those workers when you are talking in this legislation about people who work in agriculture in particular.

I think the other things that are interesting about these provisions are around meals. I would be interested to know a little bit more from the Minister about why he thinks it is acceptable that we have meal provisions or tax deductions for meals for workers who are working outside of their normal hours. I am pleased to see that you did away with the requirement for them to work 7 hours—for that to be acceptable. But I am interested in why he thinks meals are tax deductible or should be tax deductible for these workers, yet we have another bill on the Order Paper, which luckily, thanks to John Banks—I never thought I would utter those words—will not see the light of day before the end of this Parliament, and that actually does away with meal breaks for the majority of workers throughout the country. It makes it very difficult for them.

So on the one hand we have one set of treatment in terms of taxation for people who work away from home and are required to have meals, and then we have a totally different approach to workers who work in their normal workplace. The Government will be campaigning, and John Key said he is going to campaign on it, actually, on whether those workers are actually entitled to meal breaks and rest breaks at all. So I am quite interested in that. I would be interested in some responses about why there is a different treatment for one group of workers and not another. Do not get me wrong—overall we support these changes.

The other thing is about clothing. There is some interesting stuff starting to occur with the legislation that the Government is proposing around health and safety changes and clarification about what health and safety clothing requirements are. I had someone contact me the other day who said that he works in a car cleaning service and a lot of the time he spends his time outside in the snow, often in Queenstown, and outside in the rain or during the day, and his employer is arguing with him, saying that he should not have any sort of clothing provided to him, and he does not give him a clothing allowance. Arguably, many of us would say that that is a breach of the Health and Safety in Employment Act. But, again, what I am saying here is that under this bill there is one set of rules for one set of workers and under another piece of legislation that seems to be completely inconsistent with this, there is another set of rules. So I am interested in the Government’s approach to this.

I am also interested in how it has described workplaces in Supplementary Order Paper 455, which is being proposed by the Minister and would exempt offshore crew. I would appreciate an explanation about that, why that was necessary, and why that was not included in the original legislation. I genuinely want to understand how this will work and how it will work for people who are required to work away from home on vessels, perhaps on trains and aeroplanes flying around the country, but also on how it would work if it has any impact on people who are just doing their ordinary day’s work trying to earn a living, many on minimum wage, and who get no tax exemptions for any of these things at all. As I say, I genuinely want to understand why there seems to be an inconsistency in the approach of this Government between one set of workers and another. I would really appreciate the Minister’s explanation.

Maybe it is because the workers you are talking about here tend to be people who are able to stay away. I am looking at section CW 16D, which is about “Accommodation expenditure, conferences and overnight stays”. Are you sure those things should be tax deductible? The fact of the matter is that there are not many people on the minimum wage who actually get to have any tax benefits when it comes to issues around overnight stays and conferences. In fact, most of them will be working all sorts of hours, having to get on the bus and go home after working 12-hour working days, and they get no tax deductions.

Or take another case of the home-care workers whom I have talked about before in this House, who go from home to home looking after older people or people with disabilities, and in between their jobs they hop in their cars and they drive from one place to another. They pay their own petrol. They do not get paid wages for that and they get no tax exemptions for that. So there is nothing for those workers. Yes, the Minister is looking confused, but it is actually true. It is actually true.

💬 Andrew Little: The Minister doesn’t understand workers.

Well, that is true—that is true. That horrifies me because these are the women whom we are relying on to look after people in their homes so that older people or people with disabilities can stay in their homes. They get paid for the hours they are actually in the home. It might be 1 or 2 hours. In fact, those workers cannot even have a tea break. They are not allowed to have a meal break because it would be considered an abuse of their powers to sit down and have a cup of tea with the client, so they do not get tea breaks at all. As I said, there are some inconsistencies.

Overall, I always support things that move in the direction of making sure that workers are better off. I do think that Part 2 of this bill does that. But I am interested, as I said, as I keep saying, in the inconsistencies. Another group of workers are farm workers. Mr Chair, I am sure you are familiar with them. We have a lot of issues—[Interruption] You are not? OK. You are from Invercargill but you are not familiar with all those Filipino farm workers down in South Canterbury who had been imported to New Zealand to do their job. There is a real issue around farm workers as well, and accommodation comes into that. Accommodation is often seen as part of the wages. There are some appalling stories starting to emerge from that, and it does shock me that we are relying in primary production on migrant workers being paid low wages and actually being ripped off.

So I think there is a lot for us to consider in Part 2 of this bill. As I said, it is great that we are making some progress on it and Labour is supporting it, even though we have questions about it, but I do think the Government needs to think about a whole lot of other things.

It is a pleasure to take a call at this stage in the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill. I am certainly happy to provide some clarification and answer a few of the questions that Darien Fenton raised. Can I start, though, by saying that, in particular, Part 2 of the bill is where most of the change in the tax system held in this bill will take place. I am pleased to hear that the Opposition is supporting it, because this is about fairness, both to those taxpayers who will be provided greater clarity and, in some cases, will not need to pay tax where they are currently, but also to other New Zealand taxpayers who now will be sure that everybody is paying their fair share of tax. I thank David Clark for his contribution. His heart did not seem quite in it, though, because I know he is very supportive of this part of the bill, but I guess that when one is in the Opposition, one needs to oppose more than one supports. At least the votes will be on the right side of the ledger when it comes time to vote on this bill.

There are just a couple of points here for Darien Fenton and for others around accommodation. Largely, the tax system says that when one earns income one must pay income tax on it. If you receive something in kind instead of a cash payment, in lieu of the income you would have earned, then that is also taxable. So somebody who earns a set amount every week but has an employer who says: “Well, you can have accommodation and I’ll pay you a little bit less and you’ll be better off because you won’t be declaring the accommodation because I’m giving it to you rather than cash and charging you for it, so you won’t pay tax on it.”—well, that may be of benefit to that worker but not to all other workers who are not in that situation. They just receive their wages and have to pay tax on it. When they go home and pay their mortgage or rent, they are paying from the position of using money that is already taxed. So what we do is say that when you look at all of the income you earn, be it cash that is received weekly or fortnightly, or other things that are given in kind instead of receiving that cash payment, it is treated as if it was cash and must be taxed. As Ms Fenton has said, that is fair to taxpayers who may not receive some of these benefits—although I am not sure they will always be benefits—that some other workers or taxpayers will.

The challenge we have, though, is what happens if you are living in a house, you are receiving a wage, you are paying tax on it, you are paying your rent from income that has been taxed, and your employer says: “We need you to go away for 6 months and work away from your home.” Well, you would have two places of work and, therefore, you would have to pay tax twice, or your employer says: “I’m sending you away for 6 months; I will meet the cost there.” Well, we do not want to double tax that person, because they still have their home that they are paying for. They will often have their family there. So what we are doing with this bill is providing clarification that if they are away for up to 2 years, if the employer is providing them with an accommodation benefit and it is to meet the actual cost of accommodation—no more than that—then that will not be taxed. We do not want to tax them twice; that would be unfair to them.

The reason we have said 2 years is because that is a reasonable period of time. There is enough flexibility so that the employers and employees will not be overburdened with having to deal with the tax system. We also believe that after 2 years if you are still away working, coming back on the odd weekend, actually at that point your relationship with the place where you work has probably changed and, therefore, to be fair to other taxpayers, there could or should be a tax implication there. But we have also recognised that there will be situations where maybe somebody does need to be away for more than 2 years, and if it is a special project it can be up to 3 years. This will change during that period of time if you move your family and that becomes your new place of residence, or if you actually say: “I am living here now, not at the last place.” Then your situation will change and you would be taxed on that, and that is an obligation the employer has.

We have also recognised the great challenges in Canterbury. This is a unique and different situation—very difficult—and we have put in place rules that say that for up to 5 years workers who are involved in the rebuild in Canterbury can be tax exempt for their accommodation. It steps down over a period of time.

💬 Darien Fenton: Does that include migrants?

That is anybody who will be in Canterbury for the rebuild purposes—not if you are there selling a car but if you are part of the rebuild; anybody employed there will be availed of this.

Where it is slightly different, though, is the Recognised Seasonal Employer Scheme, which was raised. Somebody who comes to New Zealand on a Recognised Seasonal Employer Scheme will have a place to reside and work from, and that is their place of residence while they are in New Zealand. As with any other taxpayer in New Zealand, if they are receiving accommodation instead of income, it must be taxed. In this case, if they then have to move down the road to work and there is overnight accommodation, they are put in a motel, they say they have to go for a conference—I know they would not, but it is the same principle—we would not expect them to be taxed twice in that case, if the employer is providing them with a benefit. They are not earning extra income; they are just having some of their costs met.

When it comes to valuation, it is very fair. We have said it is fair rental value. We do not want the Inland Revenue Department to overestimate or the taxpayer or their employer to underestimate; we want to strike a balance that is fair to all taxpayers, and I believe that has been done. Two other changes particularly are specific valuation rules for ministers of religion. They have relied upon an accommodation or an agreement with the Inland Revenue Department for many years. We have decided to take any uncertainty away and to put that into law—to codify it for them—and we have also provided clarification for the New Zealand Defence Force.

When it comes to meal payments, if you are provided with meals or you are provided with an allowance for meals for up to 3 months because of work-related travel or something else that is different, that is tax exempt, but thereafter it would not be. The reason for this is that if you are at a conference and you have to have a meal, we would not expect you to pop home and make your lunch. But after 3 months I think that is fairly reasonable. When it comes to clothing, the Inland Revenue Department and the Income Tax Act are interested in the tax situation. So whether or not an allowance is provided is secondary. If it is, we now have clearer rules that will decide where taxation is appropriate and where it is not. Primarily, if you are provided with an allowance or a uniform for that allowance, then actually that is part of the nature of your work and you are not taxed on that. It is a tax-free allowance.

There are some exceptions to this, though, and certainly in the case where somebody is provided with an allowance for plain clothes where they might also have a uniform, or they have the uniform, they are tax exempt for that, but they are provided with a plain clothing allowance. Previously, there has been uncertainty about whether, if you have a uniform and receive funds for other clothing, it should be taxed, but there will be situations, including with the New Zealand Police, where I think that is not appropriate, so we are providing clarification there so that only those who should be paying tax will be.

The final point I want to raise is around deregistration of charities. There has been a lot of confusion. This too is about providing certainty to charities so they know their obligations should they be deregistered, choose to be deregistered, or are deregistered because they are no longer of charitable purpose. This really goes to what those obligations are. Primarily, the most important thing for other taxpayers is if there are a number of assets that have been acquired by that charity that had a tax-free status and is no longer a charity, what happens to those assets? Well, simply, they either have to be passed to another charity or tax must be paid on them, and so this just clarifies that.

This is an important part of the bill. It is extremely taxpayer-friendly, and in many cases reduces red tape in compliance, but in providing certainty it also provides fairness to those who avail themselves of some of these tax concessions. Equally, it will also be fair to taxpayers who do not, so they can be sure that those who are receiving those allowances are only doing so specifically because it is different in their everyday life, and where it is not we expect them to pay tax, and they will be paying tax. Thank you.

I want to comment on just two aspects of Part 2 of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill. One is relating to out-of-town accommodation for limited duration projects or for out-of-town secondment, which the Minister of Revenue referred to. The other part I want to talk about is the confusion that will arise in relation to the tax-free status of some meals paid for by the employer, and the conditions surrounding that.

I will turn briefly to the first point I want to talk about, which is the issue about out-of-town accommodation, which an employer can provide for employees if they are on a project of limited duration or on a secondment. The Minister pointed out, as the bill says, that whereas provision of accommodation of this nature would be taxable as income to the employee, providing it meets the conditions of a limited duration project out of town or a secondment out of town, it would not be taxable, according to this bill, in one case for 2 years for the secondment or 3 years for the project of short duration that is out of town, and there is an exemption or at least the possibility of an extension in exceptional circumstances.

The problem with that is there is nothing in this bill that says that an employee in that situation cannot, for example, take their spouse with them on that secondment or for that period out of town. They can get their accommodation tax-free, rent their own home that they own in the town of their origin, and effectively enjoy the fruits and the benefits of all of that. So there is a loophole here that is apparent from a reading of the bill. I am surprised that the Minister, with his vast army of officials, did not pick that up when he talked longingly about greater fairness for all. There is an obvious loophole there that those whose spouses cannot relocate with them for 2 years or 3 years, depending on the nature of the out-of-town employment, must continue to maintain a home, and they do not get the benefit of that additional income as well as the tax-free status for the additional accommodation. I simply point that point out.

The next point I want to raise is in relation to the payments for work-related meals. The conditions for these to be exempt from income tax are that the employment duties of the employee require them to work away from the employer’s workplace, and then there are some other aspects of the provision, as described, for food and drink. It includes “food and drink that the employee consumes at a conference or training course:”. Well, there are many organisations of a region-wide nature or nationwide nature that organise training conferences in-house, on their own premises, and those training conferences are attended by some people who work in that office. I know that, having worked for a national union. We would run training courses at our premises—it might be Auckland, it might be Wellington, it might be Christchurch—and at those training courses we would provide a meal, a lunchtime meal, and, if they had to stay overnight, a meal in the evening. But those training courses would be attended by people in Auckland, Wellington, or Christchurch respectively, as well as those who are outside of those cities or regions.

This part of the bill would require the union to provide some tax administration to those who are domiciled in the city in which the training course is being held, but to provide a tax-exempt meal to those who are coming from out of town to the same training course. I think that that will cause confusion and I think that the Inland Revenue Department is going to have to develop some sort of policy of turning a blind eye. Unfortunately, the last person of public office to be wilfully blind to an important piece of law was John Banks, and look where that ended up. Look where that got him. Many employers will be looking around thinking “Gee, well, we don’t want to be accused of wilful blindness. We too will be found guilty. We may not have our convictions entered at the time but we will be found guilty of having transgressed our revenue laws.” That will be causing alarm amongst the halls of employers big and small.

The question was put that the amendments set out on Supplementary Order Paper 455 in the name of the Hon Todd McClay, and the following amendment in his name to Part 2, be agreed to:

in clause 74(11), replace “Subsections (1)” with “Subsections (1A)”.

Amendments agreed to.

Part 2 as amended agreed to.

Part 3 Amendments to other enactments