Options Fairness and equity Efficiency of compliance and Sustainability of tax Revenue administration system 1. Retain Met Not met Met No impact the status quo Completely fair, as the Inefficient to comply with, due to The actual calculation can business proportion of the number of expenses and the be complicated. actual expenses is small amount of tax. Not currently deductible. time-consuming to administer. 2. Optional Met Met Met Small cost single rate for Generally fair, as the More efficient for taxpayers to The actual calculation is Taxpayers with older Vehicles rate will be comply with, due to single rate easier, rates will be vehicles may be able approximately accurate calculation. Also easier to audit, but broadly accurate for most to deduct more than for most vehicles and not otherwise easier to administer. taxpayers, and there is a their actual owners of more However some taxpayers may elect significant cost floor for expenditure, while expensive vehicles can to calculate their deductions under vehicle use. taxpayers with newer elect to deduct based on both this method and the other or more expensive their actual expenses. currently available methods so they vehicles can elect However owners of can claim the greater amount. This not to use the older cars may be able would increase the tax calculations method. The to claim greater for such taxpayers. The measure estimated fiscal cost deductions than their will impact sole traders who use for this option is actual expenditure. their vehicle for both business and $700,000 per year. personal purposes. There are up to 3,500 such taxpayers.
Options Fairness and equity Efficiency of compliance and administration Sustainability of tax system Revenue 1. Retain the status quo Met Completely fair, as the business proportion of actual expenses is deductible. Not met Inefficient to comply with, due to the number of expenses and the small amount of tax. Not currently time-consuming to administer. Met The actual calculation can be complicated. No impact 2. Optional single rate for Vehicles Met Generally fair, as the rate will be approximately accurate for most vehicles and owners of more expensive vehicles can elect to deduct based on their actual expenses. However owners of older cars may be able to claim greater deductions than their actual expenditure. Met More efficient for taxpayers to comply with, due to single rate calculation. Also easier to audit, but not otherwise easier to administer. However some taxpayers may elect to calculate their deductions under both this method and the other currently available methods so they can claim the greater amount. This would increase the tax calculations for such taxpayers. The measure will impact sole traders who use their vehicle for both business and personal purposes. There are up to 3,500 such taxpayers. Met The actual calculation is easier, rates will be broadly accurate for most taxpayers, and there is a significant cost floor for vehicle use. Small cost Taxpayers with older vehicles may be able to deduct more than their actual expenditure, while taxpayers with newer or more expensive vehicles can elect not to use the method. The estimated fiscal cost for this option is $700,000 per year.
2016-ris-bteirm-bill-4.docx