Officials’ analysis of the options is set out in the table below. Options Fairness and equity Efficiency of compliance Sustainability of tax system Revenue and administration 1. Retain the status Not met Not met Not met No impact quo Existing rule treats Inefficient to comply with Generally sustainable as the existing companies like other due to having to register and rule treats close companies like other companies who provide pay FBT when close companies that provide fringe benefits. benefits to their companies provide sole However close companies can However close companies are benefit to their structure motor vehicle arrangements often similar to sole traders and to minimise or avoid FBT liability. partnerships that use different rules. 2. Option for close Met Met Met fiscal cost companies to use motor vehicle Provides an option to enable More efficient as close Generally sustainable as provides a Attributable to a expenditure rules close companies to be treated companies will have a choice choice for close companies as to how reduction in the same way as a sole trader whether to register for and they account for the private use of a FBT paid over when accounting for the use of pay FBT or use the motor motor vehicle by their time. a motor vehicle. vehicle expenditure rules.
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. Retain the status quo Not met Existing rule treats companies like other companies who provide benefits to their However close companies are often similar to sole traders and partnerships that use different rules. Not met Inefficient to comply with due to having to register and pay FBT when close companies provide sole benefit to their Not met Generally sustainable as the existing rule treats close companies like other companies that provide fringe benefits. However close companies can structure motor vehicle arrangements to minimise or avoid FBT liability. No impact 2. Option for close companies to use motor vehicle expenditure rules Met Provides an option to enable close companies to be treated the same way as a sole trader when accounting for the use of a motor vehicle. Met More efficient as close companies will have a choice whether to register for and pay FBT or use the motor vehicle expenditure rules. Met Generally sustainable as provides a choice for close companies as to how they account for the private use of a motor vehicle by their fiscal cost Attributable to a reduction in FBT paid over time.
2016-ris-bteirm-bill-4.docx