Officials’ analysis of the options is set out in the table below. Options Fairness and equity Efficiency of compliance and Sustainability of tax Revenue administration system 1. Status quo Met Not met Met No impact Existing rule applies to all Inefficient to comply with, due The rule is well-established. taxpayers. to the need to track employee However actual calculation payments paid within 63 days of can be time-consuming end of income year. particularly for employers. 2. Optional 63 day Met Met Met Small upfront gain rule Taxpayers will choose whether to More efficient as taxpayers will Taxpayers wanting to No change to overall apply the existing deferred have a choice whether to continue with the existing amount of deduction payment rule or not. Taxpayers continue applying the existing rule will not be affected and over time. will weigh up increased rule or use the information in those not wanting to do the deductions under the existing rule financial accounts. calculation required under against the compliance costs Administratively Inland the existing rule can apply associated with the existing rule. Revenue will not monitor what the simpler rule. option taxpayers elect. 3. Optional 63 day Met Partly met Met Small upfront gain rule for different classes of employee Taxpayers will choose whether to Taxpayers will have a choice Same reasons as No change to overall remuneration apply the existing deferred whether to continue applying the except that taxpayers will be amount of deduction payment rule to different classes existing rule or use the using different timing rules over time. of employee remuneration. information in their financial and deductibility for the Taxpayers will weigh up the accounts for different types of same type of expenditure. benefit of an increased deduction employee remuneration. under the existing rule against the Administratively Inland compliance costs associated with Revenue will not monitor what the existing rule. option taxpayers elect.
Officials’ analysis of the options is set out in the table below. Options Fairness and equity Efficiency of compliance and administration Sustainability of tax system Revenue 1. Status quo Met Existing rule applies to all taxpayers. Not met Inefficient to comply with, due to the need to track employee payments paid within 63 days of end of income year. Met The rule is well-established. However actual calculation can be time-consuming particularly for employers. No impact 2. Optional 63 day rule Met Taxpayers will choose whether to apply the existing deferred payment rule or not. Taxpayers will weigh up increased deductions under the existing rule against the compliance costs associated with the existing rule. Met More efficient as taxpayers will have a choice whether to continue applying the existing rule or use the information in financial accounts. Administratively Inland Revenue will not monitor what option taxpayers elect. Met Taxpayers wanting to continue with the existing rule will not be affected and those not wanting to do the calculation required under the existing rule can apply the simpler rule. Small upfront gain No change to overall amount of deduction over time. 3. Optional 63 day rule for different classes of employee remuneration Met Taxpayers will choose whether to apply the existing deferred payment rule to different classes of employee remuneration. Taxpayers will weigh up the benefit of an increased deduction under the existing rule against the compliance costs associated with the existing rule. Partly met Taxpayers will have a choice whether to continue applying the existing rule or use the information in their financial accounts for different types of employee remuneration. Administratively Inland Revenue will not monitor what option taxpayers elect. Met Same reasons as except that taxpayers will be using different timing rules and deductibility for the same type of expenditure. Small upfront gain No change to overall amount of deduction over time.
2016-ris-bteirm-bill-4.docx