Options Fairness and equity Efficiency of compliance and Sustainability of tax Revenue administration system 1. Status Met Not met Met No impact quo for premises The business proportion Inefficient to comply with, due to Generally sustainable. of actual expenses is the number of expenses and the However the actual deductible. amount of tax. calculation can be complicated. 2. Optional Met Met Met cost single rate for The rate should be More efficient for taxpayers to The actual calculation Taxpayers could elect premises fairly accurate and comply with, due to single rate is easier. to use this method only taxpayers will still have calculation. Also easier to audit, but if it increased their the option to deduct not otherwise easier to administer. deductions compared based on actual However some taxpayers may elect with the actual cost expenses. Some to calculate their deductions under method. There is taxpayers may be able both this method and the actual cost insufficient data to to claim greater method so they can claim the estimate this cost, deductions than their greater amount. This would however it is expected actual expenditure. This increase the tax calculations for to be fiscally is not expected to be such taxpayers. The measure will immaterial due to the significant however, impact sole traders who use their small variance in utility due to the small premises for both business and charges. variance in utility personal purposes. There may be up charges. to 3,500 such taxpayers. 3. Met Met Met No impact Single The rate for utilities etc More efficient for taxpayers to The calculation is There should not be any rate for should be fairly comply with, due to single rate easier than the status fiscal cost or savings, as premises accurate across calculation. The measure will quo. the rates will be set taxpayers and the more impact the same number of
Options Fairness and equity Efficiency of compliance and administration Sustainability of tax system Revenue 1. Status quo for premises Met The business proportion of actual expenses is deductible. Not met Inefficient to comply with, due to the number of expenses and the amount of tax. Met Generally sustainable. However the actual calculation can be complicated. No impact 2. Optional single rate for premises Met The rate should be fairly accurate and taxpayers will still have the option to deduct based on actual expenses. Some taxpayers may be able to claim greater deductions than their actual expenditure. This is not expected to be significant however, due to the small variance in utility charges. Met More efficient for taxpayers to comply with, due to single rate calculation. Also easier to audit, but not otherwise easier to administer. However some taxpayers may elect to calculate their deductions under both this method and the actual cost method so they can claim the greater amount. This would increase the tax calculations for such taxpayers. The measure will impact sole traders who use their premises for both business and personal purposes. There may be up to 3,500 such taxpayers. Met The actual calculation is easier. cost Taxpayers could elect to use this method only if it increased their deductions compared with the actual cost method. There is insufficient data to estimate this cost, however it is expected to be fiscally immaterial due to the small variance in utility charges. 3. Single rate for premises Met The rate for utilities etc should be fairly accurate across taxpayers and the more Met More efficient for taxpayers to comply with, due to single rate calculation. The measure will impact the same number of Met The calculation is easier than the status quo. No impact There should not be any fiscal cost or savings, as the rates will be set
2016-ris-bteirm-bill-4.docx