Option 4: Maintain the status quo. Does not give rise to a fiscal cost. Does not reduce compliance costs. No legislative change is required. Would not resolve concerns over technical errors in the rule. The deduction limitation rule: Option 1: Repeal the rule in part Allows for quick use of previously restricted deductions. Does not address the tax impact of having deferred the (refer option 2 above) and release deductions in the interim for the few owners (around 1%) that If the rule is amended or previously restricted deductions Avoids the compliance and administrative costs associated with have suspended deductions. repealed, what should happen to in one lump at a particular point. re-stating past periods. previously restricted Requires legislative changes. deductions? Gives rise to a fiscal cost of $17m in the 2017-18 year. This is due to the fact that deductions will no longer be restricted and can be offset against owners’ other income. Option 2: Repeal the rule in part Allows for the recognition of previously restricted deductions. The need to re-state past periods increases compliance and option 2 above) and require administrative costs. Overall, the increased administrative restatement of prior period returns Addresses the tax impact of having deferred the deductions in the and compliance costs are unlikely to outweigh the benefits to on the basis that the rule had not interim for the few owners (around 1%) that have suspended the few owners (around 1%) that have suspended deductions. existed. deductions. In other words, the economic costs are likely to outweigh the economic benefits. Requires legislative changes. Fiscal cost, as per option 1 above, except the 2017-18 cost would be spread retrospectively across past periods. Option 3: Repeal the rule in part Spreads the fiscal cost. Requires legislative changes. option 2 above) and gradually release previously Does not create additional compliance and administrative costs Minor additional compliance and administration costs restricted deductions over three incurred in re-stating past periods. relative to full release of deductions in 2017/18. years. For some, may not be much different than full release in 2017/18, Delays utilisation of deductions that have been effectively when there is insufficient other income to apply deductions against. Gives rise to a fiscal cost, as per option 1 above except the effect may be spread across three periods.
Option 4: Maintain the status quo. Does not give rise to a fiscal cost. No legislative change is required. Does not reduce compliance costs. Would not resolve concerns over technical errors in the rule. The deduction limitation rule: If the rule is amended or repealed, what should happen to previously restricted deductions? Option 1: Repeal the rule in part (refer option 2 above) and release previously restricted deductions in one lump at a particular point. Allows for quick use of previously restricted deductions. Avoids the compliance and administrative costs associated with re-stating past periods. Does not address the tax impact of having deferred the deductions in the interim for the few owners (around 1%) that have suspended deductions. Requires legislative changes. Gives rise to a fiscal cost of $17m in the 2017-18 year. This is due to the fact that deductions will no longer be restricted and can be offset against owners’ other income. Option 2: Repeal the rule in part option 2 above) and require restatement of prior period returns on the basis that the rule had not existed. Allows for the recognition of previously restricted deductions. Addresses the tax impact of having deferred the deductions in the interim for the few owners (around 1%) that have suspended deductions. The need to re-state past periods increases compliance and administrative costs. Overall, the increased administrative and compliance costs are unlikely to outweigh the benefits to the few owners (around 1%) that have suspended deductions. In other words, the economic costs are likely to outweigh the economic benefits. Requires legislative changes. Fiscal cost, as per option 1 above, except the 2017-18 cost would be spread retrospectively across past periods. Option 3: Repeal the rule in part option 2 above) and gradually release previously restricted deductions over three years. Spreads the fiscal cost. Does not create additional compliance and administrative costs incurred in re-stating past periods. For some, may not be much different than full release in 2017/18, when there is insufficient other income to apply deductions against. Requires legislative changes. Minor additional compliance and administration costs relative to full release of deductions in 2017/18. Delays utilisation of deductions that have been effectively Gives rise to a fiscal cost, as per option 1 above except the effect may be spread across three periods.
2016-ris-archcrm-bill-11.docx