Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Bill

Members, we come now to Part 4. This is the debate on clauses 134 to 204 and Schedule 1, amendments to other enactments. The question is that Part 4 stand part.

Thank you, Madam Chair. Interesting part of the bill, this. There’s three or four areas that we’d like to canvas with the Minister, so appreciably he’s still in the chair.

I think the first one we’re going to pick up on is clause 135, (2) and (3), which is civil penalties in relation to electronic sale suppression tools. And, again, for people listening, this is software that’s designed to falsify, basically, the receipt and how it folds back into the company’s or business’s revenue systems, so it’s a way to minimise tax. So there’s quite a section here that defines that you cannot “… hide, conceal, modify, falsify, destroy, or prevent the creation of a record that—” the person’s required under a tax law to make or keep. Of course, earlier tonight, we talked about the “under $1,000 test” and the “greater than $1,000 test”—or “is, or would be, created by a system that is or includes an electronic point of sale system;”.

And, of course, this also, under proposed new section 141EE—there we are, I’m just finding it here, which I thought I had but I can’t. Excuse me, Madam Chair, I’m just trying to find the clause I was looking for. I know what I was going to refer to. So this is obviously quite a significant issue, but my first point to the Minister is: how significant is this? This is obviously something that’s been inserted into his bill. So what’s the IRD been saying about this issue? Is it now becoming increasingly widespread at point of sale? Is it only a point-of-sale issue, or is it something that is now we’re seeing other mechanisms or methodologies to try and undermine the tax system? I think in proposed new section 141EE, if this is a significant issue, why there is only a $5,000 penalty? Where did that come from? Whether that’s changed or not. Depending on the answer to the first one, the first part of that, whether it’s a significant issue or not, whether, in fact, $5,000, which is an all-encompassing fee, is actually appropriate? What consideration was given to whether or not to change that fee? So, very interested just to hear from the Minister on that particular issue.

Thank you to the member Andrew Bayly for that question. This was something that I didn’t know was a problem until I became Minister of Revenue, that there is software which, I think, originally originates from overseas but is now being modified for use in New Zealand that enables someone who is collecting GST, effectively, on behalf of the Government, because they’ve got a GST-inclusive sale, to use a computer programme to, effectively, corrupt their own computer records so that when the revenue goes and does an audit of the firm, the computer record appears to show lower receipts and therefore lower GST due. What this change to the law does is to create an offence to use that software and also to supply that software, or to—

My apologies, Minister. This debate is interrupted. It is time for me to report progress on this bill.

Progress to be reported.

House resumed.

The committee has considered the Taxation (Annual Rates for 2021-22, GST, and Remedial Matters) Bill and reports progress. I move, That the report be adopted.