Neutrality* Efficiency Certainty and Effectiveness and Fiscal impact simplicity fairness* Compliance costs Administration Option 1: Increased - GST Decreased - the need to No change - IRD Increased fully Increased - ensures that Decreased – – recovery is less apportion deductions is monitors taxpayers’ taxable businesses consumption is estimated $10 allowing a influenced by the source reduced or the compliance with the would not need to taxed once. million per annum deduction for of capital. calculation of the rules (as with other apportion costs. Tax fiscal cost. capital raising deductions simplified. tax rules). obligations are therefore more transparent. Meets objective Meets objective objective Meets objective Meets objective Option 2: status No change - incentive to No change - some No change - IRD No change No change - denial of No change. – obtain funding in ways relating to both capital monitors taxpayers’ businesses would need deductions leads to GST quo that enable GST raising and other compliance with the to determine which being imposed multiple recovery, such as from activities of the business rules (as with other costs relate to capital times in supply chain. overseas. may need to be tax rules). raising, and which Tax cascade overtaxes apportioned. costs relate to other the consumption. activities. Partially meets objective Meets objective Meets objective Meets objective Does not meet objective * = Key objective
Neutrality* Efficiency Certainty and simplicity Effectiveness and fairness* Fiscal impact Compliance costs Administration Option 1: allowing a deduction for capital raising Increased - GST recovery is less influenced by the source of capital. Decreased - the need to apportion deductions is reduced or the calculation of the deductions simplified. No change - IRD monitors taxpayers’ compliance with the rules (as with other tax rules). Increased – fully taxable businesses would not need to apportion costs. Tax obligations are therefore more transparent. Increased - ensures that consumption is taxed once. Decreased – estimated $10 million per annum fiscal cost. Meets objective Meets objective objective Meets objective Meets objective Option 2: status quo No change - incentive to obtain funding in ways that enable GST recovery, such as from overseas. No change - some relating to both capital raising and other activities of the business may need to be apportioned. No change - IRD monitors taxpayers’ compliance with the rules (as with other tax rules). No change – businesses would need to determine which costs relate to capital raising, and which costs relate to other activities. No change - denial of deductions leads to GST being imposed multiple times in supply chain. Tax cascade overtaxes the consumption. No change. Partially meets objective Meets objective Meets objective Meets objective Does not meet objective * = Key objective
2016-ris-archcrm-bill-04.docx