﻿Mr SPEAKER: Question No 7, Grant Robertson.
GRANT ROBERTSON (Labour—Wellington Central)
to the Minister of Revenue:
Why was the review of foreign trusts proposed by IRD
in 2014 not undertaken?
Hon MICHAEL WOODHOUSE (Minister of Revenue):
The view at the time was that this would have required
the Inland Revenue Department (IRD) to dedicate significant resources
to an area that did not affect NZ’s revenue base,
and that other issues on the tax work programme were deemed
more important by both IRD officials and the then Minister.
At the time, the Government made it clear that a future review
was possible if it appeared that NZ’s regulatory settings
may facilitate inappropriate behaviour in other jurisdictions,
and that is what the Shewan review is.
Grant Robertson: Is it correct that in its 15 August 2013 paper,
accepted by the Minister of Revenue and the Minister of Finance,
IRD identified a review of foreign trusts as one
of a series of initiatives that should be “a key focus”
in the tax policy work programme?
Hon MICHAEL WOODHOUSE: There was a reference in that 2013 document
to a review of the tax treatment of foreign trusts,
at about paragraph 22, after a very, very long list
of the other work that was considered high priority by IRD.
It also said that the decision to proceed with any proposals
for reform relating to base erosion and profit shifting
needs to be evaluated more generally in the context
of all of the Government’s priorities on the tax policy
work programme—that is what the Government did.
Grant Robertson: Further to that answer, is it correct
that in a report dated 14 November 2014 and entitled
Timeline for BEPS-related tax policy work Inland Revenue lists,
under the heading “Action Plan Items”, “Review taxation of foreign trusts”,
with a date of December 2014 for that?
Hon MICHAEL WOODHOUSE: Yes it did, and it also included things
like strengthening the non-resident withholding tax rules,
which would have positively affected the NZ tax base;
GST on online purchases, which would have positively affected
the tax base, and it proceeded with those things,
because that was good for the NZ taxpayer.
The other is not and could have been negative.
Grant Robertson: When the Minister told foreign trust
industry representatives in January 2015 that the Government
had no plans for a review of foreign trusts, why did he
not tell them that it was actually already on the IRD work programme?
Hon MICHAEL WOODHOUSE: The IRD work programme had a massive list
of things that it was doing.
The question of the review of foreign trusts was a footnote
amongst the significant Business Transformation project,
loss grouping, resident withholding tax,
non-resident withholding tax, the brightline test,
PAYE deductions, the business tax green paper, and many, many others.
Those are the things that were proceeded with.
Grant Robertson: I seek leave of the House to table Appendix A
of the IRD report dated 14 November 2014,
Time line for BEPS-related tax policy work, which includes
a list of 1, 2, 3—
Mr SPEAKER: Order! [Interruption] Order!
The document has been well described. I will put the leave.
Leave is sought to table that particular IRD time line
dated 14 November 2014. Is there any objection?
There is none.
Grant Robertson: Is it not true that IRD had, in fact,
already started a review of foreign trusts
because it considered it a key focus, but only after
the Prime Minister directed his close confidante to the Minister,
who shut down the review?
That is actually what happened, is it not?
Hon MICHAEL WOODHOUSE: In respect of the second part
of that question, absolutely not.
Mr SPEAKER: Question No 8.
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