30 Apr 2020

Whoosh! Kablam! Tax relief

From The House , 6:55 pm on 30 April 2020

On Thursdays at Parliament MPs get their own version of the trailers you see before the main feature at cinemas. Or used to see at least. Remember cinemas?

The Leader of the House Chris Hipkins is Parliament’s version of cinema’s “In a world where…” trailer voice.

“...The Government has undertaken not to advance most aspects of its normal legislative programme at this time. The House will consider… the Covid-19 Response (Further Management Measures) Amendment Bill, ...There are likely to be other bills on immigration and remuneration.”

I miss cinemas.

Image of happy male friends sitting in cinema watch film eating popcorn

Photo: 123rf

Among the main points the Government is still pausing policy legislation to concentrate on Covid-19. Select committees are Parliament's (rather than Government's) though and still working, so there’ll be a tidy backlog of second readings pending when things get back to slightly-more-normal.

Other than the trailer for next week (actually called the Business Statement) and a testy Question Time, Thursday was all about Covid-19. And after the daily business Parliament went into urgency to pass a tax relief bill. The Covid-19 Response (Taxation and other Regulatory Urgent Measures) Bill.

The Bill hopped, skipped and jumped through three stages of consideration without debate, but paused for a brief debate at the third and final reading. ACT party leader David Seymour described it as “legislating at the speed of light.”

It was fast. Parliament TV nearly required batman-style captions: WOOSH! POW! KABLAM!  

Whoosh! A bill speeds on its way.

Whoosh! A bill speeds on its way. Photo: VNP / Phil Smith

The Bill was not long drafted and MPs will be crossing their fingers that there aren’t any errors of the sort they might have spotted in a more sedate consideration.

Such haste is sometimes described as un-democratic but governments don’t just decide to jump to warp speed unilaterally. Skipping debates is pre-agreed among the parties at the Business Committee. Determinations of the Business Committee require the agreement of at least the two major parties, and usually more besides. 

The Bill does a few different things and business owners should definitely investigate their options, but chief among them is this: Businesses will be able to estimate losses for the 2019-20 and 2020-21 and offset them against tax on profits in the preceding year.

Ultimately their tax burden will be the same but they can reduce their tax burden now rather than waiting for it to balance out in a year or so. 

Labour MP Grant Robertson in the House

Labour MP Grant Robertson in the House Photo: VNP / Phil Smith

Finance Minister Grant Roberston noted during Oral Questions that New Zealand has been trying to provide cash help as fast as possible.

“What New Zealand has done is front-loaded the fiscal stimulus and the fiscal response that we've done. So I think in the [2019-2020] financial year that we're in now, around 70 percent of New Zealand's response will be spent, whereas in Australia it's around 33 percent.”

Like Parliament’s previous allowance of stimulus cash, this Bill was also passed unanimously by Parliament. Each party noted they had their own highlights and concerns, and elements they might not have supported in the best of all possible worlds.

National MP Paul Goldsmith 21 Feb 2018

National MP Paul Goldsmith Photo: VNP / Daniela Maoate-Cox

“We are supporting this bill.” said National’s Paul Goldsmith, “It's… with a little bit of anxiety because it is a bill dealing with taxation changes. Normally, you would want to spend a lot of time making sure that you get it right because just about every time you go anywhere near the Tax Act, you find that you make more mistakes than you don't and you have to come back and fix them. And so in a perfect world we would have had more time.” 

Green MP Chloe Swarbrick in Select Committee

Green MP Chloe Swarbrick in Select Committee Photo: VNP / Phil Smith

The Green’s Chloe Swarbrick highlighted one of the minor (non-tax) amendments also included in the Bill.

“...bringing forward the commencement date of the Credit Contracts Act, and this is a really important thing, particularly for cracking down on loan sharks by way of enabling us to protect our most vulnerable consumers, who are often exploited by those seeking to exploit that vulnerability, that need for immediate access to cash. So, of course, the Greens are incredibly in favour of that amendment.”

ACT party leader David Seymour

ACT party leader David Seymour Photo: ©VNP / Phil Smith

ACT’s David Seymour was unenthusiastic of the Credit Contracts Act, but did have advice for the Government on the tax provisions.

“...there's going to have to be some really good communication about how this works, because we've seen it with the case of the business loan guarantee. It's taken three or four weeks before it's emerged what some of the details are and how much is really guaranteed and where in the order of creditors the Government and the Crown versus the borrower actually falls.”

The Bill passed unanimously and will now receive the Royal Assent.