Options Fairness and equity Efficiency of compliance Sustainability of tax system Revenue and administration 1. Status quo Met Not met Partially met No impact Shareholder-employees The current system has The fairness of the status quo who receive salaries from compliance costs which are approach supports sustainability, companies, and which is of significant concern to but the degree of concern around not taxed at source, are business and government. the compliance costs of provisional liable to pay provisional tax does not support sustainability. tax, just as who receive other income not taxed at source are 2. Met Partially met Met No impact companies to pay tax as agent Fairness will be This option allows This option is both fair and reduces (provided this option is for maintained provided shareholder-employees to be the compliance cost impact of implemented in a way which employees. rules are implemented in entirely removed from provisional tax. ensures that no revenue leakage such a way that tax paid on provisional tax. However, occurs.) Monitoring is likely to behalf of related parties is calculations of The non-compulsory nature means be required in initial years. paid at the time that those underlying tax liability are it is unlikely to be opposed by related parties would have still required, to enable the business. paid it themselves if these correct amount of tax to be rules had not applied. paid on their behalf. Some companies will also compliance costs in determining whether to opt into these rules or not.
Options Fairness and equity Efficiency of compliance and administration Sustainability of tax system Revenue 1. Status quo Met Shareholder-employees who receive salaries from companies, and which is not taxed at source, are liable to pay provisional tax, just as who receive other income not taxed at source are Not met The current system has compliance costs which are of significant concern to business and government. Partially met The fairness of the status quo approach supports sustainability, but the degree of concern around the compliance costs of provisional tax does not support sustainability. No impact 2. companies to pay tax as agent for Met Fairness will be maintained provided rules are implemented in such a way that tax paid on behalf of related parties is paid at the time that those related parties would have paid it themselves if these rules had not applied. Partially met This option allows shareholder-employees to be entirely removed from provisional tax. However, calculations of underlying tax liability are still required, to enable the correct amount of tax to be paid on their behalf. Some companies will also compliance costs in determining whether to opt into these rules or not. Met This option is both fair and reduces the compliance cost impact of provisional tax. The non-compulsory nature means it is unlikely to be opposed by business. No impact (provided this option is implemented in a way which ensures that no revenue leakage occurs.) Monitoring is likely to be required in initial years. employees.
2016-ris-bteirm-bill-4.docx