Options Fairness and equity Efficiency of compliance and Sustainability of tax Revenue administration system 1. Retain the Not met Not met Not met No impact status quo The application of UOMI Taxpayers will continue to experience Some taxpayers will will continue to have a uncertainty in the application of UOMI to continue to view penal effect rather than a them, creating compliance costs. provisional tax in a use of funds effect. negative with the current rules providing The application of UOMI to uncertainty as to the taxpayers who use the total tax liability standard method will including interest. continue to have an impact on fairness aspects. 2. Increase the Met Met Met This measure will cost $47 safe harbour million over four years. threshold to Provides more fairness to For smaller taxpayers, reduces compliance Provides more $60,000 and those taxpayers who have costs of having to deal with provisional tax certainty for taxpayers expansion of limited tax knowledge by and unexpected UOMI costs. on the application of safe harbour removing uncertainty as to UOMI. from UOMI to the application of UOMI for Inland Revenue will have less relatively small amounts of administration from taxpayer contact individuals tax. around provisional tax as this proposal will reduce the number of taxpayers subject to interest.
Options Fairness and equity Efficiency of compliance and administration Sustainability of tax system Revenue 1. Retain the status quo Not met The application of UOMI will continue to have a penal effect rather than a use of funds effect. The application of UOMI to taxpayers who use the standard method will continue to have an impact on fairness aspects. Not met Taxpayers will continue to experience uncertainty in the application of UOMI to them, creating compliance costs. Not met Some taxpayers will continue to view provisional tax in a negative with the current rules providing uncertainty as to the total tax liability including interest. No impact 2. Increase the safe harbour threshold to $60,000 and expansion of safe harbour from UOMI to Met Provides more fairness to those taxpayers who have limited tax knowledge by removing uncertainty as to the application of UOMI for relatively small amounts of tax. Met For smaller taxpayers, reduces compliance costs of having to deal with provisional tax and unexpected UOMI costs. Inland Revenue will have less administration from taxpayer contact around provisional tax as this proposal will reduce the number of taxpayers subject to interest. Met Provides more certainty for taxpayers on the application of UOMI. This measure will cost $47 million over four years. individuals