Senate

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)

Chapter 9 - Regulation impact statement - extended due dates and GST changes

Scope of this regulation impact statement

9.1 Treasurers Press Release No. 7 of 22 February 2001 announced measures which will ease the compliance burden for taxpayers in the PAYG system and simplify and streamline small businesses GST payment and reporting arrangements.

9.2 This RIS deals with the measures in the package relating to:

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GST returns ^[F1] and payments (Schedule 1);

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extended due dates for reporting and paying indirect taxes, PAYG withholding, PAYG and FBT instalments, and deferred company instalment obligations on the business activity and instalment activity statements ^[F2] ; and

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associated changes to approved forms and reporting.

9.3 The GST measures that are the subject of this RIS are complemented by amendments to remove the liability of some taxpayers for PAYG instalments and extend the availability of ATO calculated quarterly PAYG. A separate RIS deals with the changes which are specific to PAYG instalments.

Policy objective

9.4 The objective of the GST measures and the extension in due dates for reporting and paying BAS obligations is to achieve a significant and ongoing reduction in reporting costs and the compliance burden. This is intended to be achieved by simplifying and streamlining GST payment and reporting arrangements, and by providing additional reporting choices for entities, particularly small businesses, who are required to lodge activity statements under the new tax system.

9.5 As information collected on the GST return is essential to the integrity of the new tax system, the changes are also intended to avoid unduly risking the integrity of the system. Taxpayers will continue to provide sufficient information, in a suitable timeframe, to ensure that necessary appropriate compliance verification can continue.

Implementation options

9.6 The implementation option was outlined in Treasurers Press Release No. 7 of 22 February 2001. The GST changes in the package which are the subject of this RIS will ease the reporting burden for taxpayers who lodge their BAS quarterly by:

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simplifying the approved form of the BAS, permitting partial completion of approved forms where the Commissioner permits this, and permitting quarterly lodgers to lodge some data annually if they so wish;

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extending the due dates for lodgement and payment of obligations that are notified on a quarterly BAS or IAS, thus providing additional time to prepare returns and make payments;

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permitting quarterly, rather than monthly, GST returns and payments to be lodged by most entities with substituted accounting periods;

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providing a quarterly instalment option, with a requirement to lodge GST returns annually, to most quarterly lodgers;

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requiring taxpayers who average their income tax to pay only the final 2 instalments for the financial year if they choose to pay GST instalments; and

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giving the Commissioner clear authority to permit taxpayers to correct minor errors in a GST return by making appropriate changes in the next return.

Eligible entities will be advised of the availability of these new options by the Commissioner.

Simplified BAS

9.7 The streamlined reporting and payment arrangements will see a simplification of indirect tax reporting requirements from the third (January-March) quarter of the 2000-2001 financial year.

9.8 From that quarter, businesses who currently return GST quarterly may:

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continue to provide full quarterly reports of actual GST information. These businesses will report actual GST collected and paid (1A and 1B) ^[F3] , sales/turnover (G1), exports (G2), other GST-free sales (G3), capital purchases (G10) and non-capital purchases (G11); or

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provide a simplified quarterly report of only GST collected and paid (1A and 1B) and quarterly sales/turnover (G1). Businesses that choose this option will be required to lodge an annual information report showing exports (G2), other GST-free sales (G3), capital purchases (G10) and non-capital purchases (G11). This report is to be lodged at the same time as their annual income tax return, but no later than 28 February 2002 for those who do not lodge income tax returns.

9.9 From the January-March 2001 quarter, some businesses have the additional option of paying a quarterly GST instalment explained in paragraphs 9.19 to 9.22, followed by an annual GST return to be lodged at the same time as their annual income tax return. In the first (2000-2001) financial year, and for those who do not lodge income tax returns, the annual return is due no later than 28 February. This return will include actual GST collected and paid (1A and 1B), sales/turnover (G1), exports (G2), other GST-free sales (G3), capital purchases (G10) and non-capital purchases (G11) for the year.

9.10 Businesses will use the existing BAS to report and pay their GST for the January-March 2001 return, but with a reduced requirement to include information. From the fourth quarter, the quarterly BAS will be replaced by a new quarterly form which will use simpler language and have fewer labels to complete. The calculation sheet will be available as a separate worksheet, for those businesses who use the calculation sheet method to report their GST.

9.11 Businesses which lodge monthly will report on the new form from June 2001.

9.12 While these measures are mainly changes to the Commissioners administration of the approved form, there are associated amendments to this Bill which remove the requirement to state a net amount in the GST return and permit the Commissioner to require further returns which may require information for more than one tax period.

Extended due dates for quarterly payers

9.13 The quarterly due dates for lodgement and payment of indirect tax and other obligations reported and paid using the BAS will be extended for all entities which have any obligations reported on the BAS.

9.14 The extended due dates will apply to all of the following liabilities which are reported on the BAS:

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GST;

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luxury car tax;

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wine equalisation tax;

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PAYG withholding;

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PAYG instalments;

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GST instalments;

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FBT instalments; and

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deferred COIN.

9.15 Currently, the quarterly reports and payments for these obligations are due 21 days after the end of that quarter. Some businesses, particularly small businesses, have experienced difficulty in collating the required information in that timeframe, particularly in the case of the 21 January deadline. To overcome these difficulties, the due date for lodgement of the BAS and payment of BAS obligations will be extended by one week, with the exception of the Christmas quarter, in which case the deadline is extended by one month and one week to allow for the close down or holiday which many small businesses take during January.

Due dates falling on a Saturday, Sunday or public holiday

9.16 The measures will address uncertainty which has existed in relation to the time by which an obligation must be satisfied where the due date specified in the law for meeting that obligation falls on a Saturday, a Sunday or a public holiday. The law will be amended to provide that the obligation may be met on the next following day which is not a Saturday, a Sunday or a public holiday.

Quarterly returns for substituted accounting periods

9.17 Entities that have substituted accounting periods for income tax purposes are currently required to lodge monthly returns, even if their turnover is below the threshold for lodging quarterly. From 1 July 2001, these entities will be able to lodge quarterly returns if their turnover does not exceed the quarterly threshold of $20 million.

9.18 Entities will be able to take advantage of this concession from the commencement of the first quarterly period in the 2001-2002 income year. However, entities which meet the monthly turnover threshold will still be required to lodge monthly returns.

GST instalment option

9.19 The quarterly instalments option, which is similar to instalment arrangements under PAYG and FBT, will allow most taxpayers with a GST turnover of $2 million or less to pay quarterly GST instalments for a financial year and submit only one return on an annual basis.

9.20 The intention behind the $2 million instalment turnover threshold is to restrict eligibility for the quarterly instalment system to the smallest enterprises. Microbusinesses derive the greatest benefit from being relieved of their obligation to calculate GST amounts on a quarterly basis. This threshold was determined in consultation with business and is intended to provide the vast majority of quarterly GST payers with access to quarterly instalments, while excluding those quarterly payers from whom the largest amounts of revenue were derived; and who generally have more sophisticated business systems than microbusinesses, and better access to professional advice.

9.21 Entities which choose the quarterly instalment option will pay either a quarterly amount that has been advised to them by the ATO, or they may vary the amount for the quarter.

9.22 The amount of each instalment is either an amount worked out by the Commissioner or a varied amount of the taxpayers own choosing. Where the variation results in an underestimate of tax payable a penalty will apply in certain circumstances

Averaging entities

9.23 In view of the seasonal nature of their income, entities which average their income tax have a simplified payment schedule whereby they will only be required to lodge the final 2 quarterly instalments.

9.24 This simplified payment schedule reflects the particular difficulty in forecasting production levels early in the financial year for these taxpayers, and the volume and value of production is the primary determinant of the GST liability for these entities. For example, many primary producers do not derive the bulk of their income until the latter part of the financial year, the productive output is dependent on seasonal factors throughout the income year, and the amount of that income is dependent on market factors at the time of sale. For these reasons, averaging entities are often not able to estimate their production, and therefore their GST liability, in advance.

Correcting mistakes

9.25 The Commissioner will be provided with clear authority to permit taxpayers to correct an error in a BAS by making a compensating change in the next BAS.

9.26 Currently, the legislation does not provide a mechanism for correcting errors in GST returns, and it was arguable that errors, even where small, could only be made by lodging an amended return. Correcting an error in one return by making a compensating change in the next return was a practice which was commonly adopted in correcting errors in sales tax returns.

Assessment of impacts

9.27 The intention of the indirect tax measures in this Bill is to lessen the compliance costs to small business while still collecting information which is sufficient to maintain the integrity of the new tax system. In broad terms, while the changes in this Bill may require some short term adjustment by business to the changed reporting arrangements, they will provide immediate reductions in the costs of remitting and reporting GST for small businesses.

Impact group identification

9.28 The RIS for the GST Act identifies businesses, charities and government organisations as the key groups impacted by the GST. The impacts of these measures will be broadly similar for each of these taxpayer groups. The measures are intended to benefit small businesses and other entities who lodge their BAS on a quarterly basis. While monthly remitters of GST may gain a minor compliance cost benefit from some reduction in the detail required in GST reporting, the measures in the package do not impact significantly on monthly remitters of GST.

9.29 The main benefits from the GST and due date reforms in this Bill lie in:

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the additional time for collecting and reporting information and the additional cash flow benefit provided by the extension in due dates;

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the option for all quarterly remitters of GST to report limited information in their quarterly return with the balance being provided annually; and

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the additional option for taxpayers with an annual turnover of $2 million or less to pay quarterly instalments of GST and lodge annual returns.

All GST registrants

9.30 All 2.1 million GST registrants will be able to use the simplified activity statement. They may also be covered by a Commissioners determination that would permit them to correct GST mistakes that were made in an activity statement in the next activity statement.

Quarterly remitters of GST

9.31 Currently, approximately 90% of entities who remit GST do not lodge monthly GST returns. Some entities lodge monthly returns despite not meeting the threshold for compulsory monthly lodgement, predominantly those who are in a net refund position and choose to lodge monthly to improve their cash flow position.

9.32 In addition to the existing arrangements, these entities will have the new option of lodging partial GST returns, with a further annual return containing the balance of the data.

Quarterly remitters who may choose instalments

9.33 Entities with a turnover which does not exceed $2 million, whose GST net amount is not a refund, who have a good lodgement history and have provided at least 4 months return form data will have the option of choosing GST instalments. This means that all entities under that threshold which have been registered for GST since 1 July 2000, have chosen to lodge quarterly, and have complied with their GST obligations will be able to choose the instalment option immediately. The vast majority of quarterly remitters are not in a GST refund position, and 95% of these net GST payers will be able to choose to adopt GST instalments because their turnover does not exceed the relevant threshold, subject to their lodgement history being satisfactory and sufficient GST return data being available.

9.34 The instalment option is not available to entities who are in a net refund position because such entities do not have a net GST liability. Consequently, there is no instalment to calculate for these entities.

Entities with substituted accounting periods

9.35 There are currently 14,500 GST registrants who have substituted accounting periods. Of these, 82% will be relieved of their current obligation to remit GST monthly and may revert to quarterly payment of GST from the commencement of the 2001-2002 income year.

Analysis of costs/benefits

9.36 This section of the RIS considers the compliance, revenue and economic costs and benefits of the GST measures in the package.

Compliance costs and benefits

9.37 Overall, the measures in this Bill are expected to considerably reduce compliance costs for business, charities and government organisations by providing additional options to ease their reporting burden.

9.38 Overall, there is expected to be a significant, but unquantifiable reduction in compliance costs from these measures. Whilst all GST registrants will benefit from these changes, the degree to which individual taxpayers will benefit will depend on their circumstances.

9.39 Taxpayers will not have to report certain information, resulting in a reduction in the compliance burden of extracting, collating and supplying that information.

9.40 Where information needs to be reported annually rather than quarterly there is a reduction in the duplication of effort Taxpayers will also have considerable time to provide the information that is required with annual returns.

9.41 Linking the timing of the lodgement of additional GST information with the timing of lodgement of annual income tax returns is also designed to reduce professional costs. Taxpayers would commonly only need to visit their accountant once to deal with their GST and income tax reporting requirements.

Simplified BAS forms

9.42 There will be a reduction in the amount of information collected on the BAS, and some taxes, such as luxury car tax and wine equalisation tax, will not be shown for taxpayers who do not have a liability for such taxes.

9.43 Quarterly lodgers that choose to report some information annually need report only GST collected and paid and quarterly sales/turnover in the GST return section of each quarterly BAS. They will need to provide a further return on a short information statement.

9.44 While the form of the further return is something that is approved by the Commissioner from time to time, it is currently proposed that the further annual return of GST show exports, other GST-free sales, capital purchases and non-capital purchases. This annual statement can be lodged at the same time as their annual income tax return but no later than 28 February in 2002.

9.45 The majority of small business GST registrants also lodge income tax returns annually. While this is dependent in part on the nature of the lodgment requirements for income tax set by the Commissioner, the intention is that normally the further GST return and the income tax return will have the same due date and can be lodged at the same time. This alignment of due dates is intended to permit small businesses to visit their accountant once a year to deal with their income tax and GST workloads. This is expected to result in a reduction in the overall reporting workload for both businesses and tax professionals.

Extended due dates

9.46 The extension in the due dates for the quarterly BAS will allow affected entities more time to put together the information required for their BAS. These taxpayers include business taxpayers of all sizes and across all industry groups, but in particular small business taxpayers. This will also provide increased opportunity to fit their compliance workload in with other workloads.

9.47 In many cases, the reduction in the compliance workload from these measures can be expected to result in a further collateral benefit of reduced overtime costs.

Due dates falling on a Saturday, Sunday or public holiday

9.48 The further extension in the due dates for lodgement that would otherwise fall on a weekend or public holiday will provide the flexibility for entities to meet their reporting obligations either before, during or the day after, the weekend or holiday.

Quarterly returns for substituted accounting periods

9.49 Currently, entities that account for income tax using a substituted accounting period in place of a 30 June year end must lodge monthly GST returns, even if their turnover does not exceed the $20 million threshold for lodging quarterly returns.

9.50 From the first quarter of the 2001-2002 year, substituted accounting period entities will be able to lodge GST returns quarterly provided their turnover does not exceed the monthly turnover threshold. This will mean they will not need to lodge a BAS more than quarterly in most cases. This change will provide a significant reduction in compliance costs for the majority of substituted accounting period entities, who will be able to access the choices available to quarterly lodgers.

9.51 As the threshold for monthly remittance of PAYG withholding depends on a different measure of turnover (amounts withheld during the previous financial year) to the threshold for lodging GST returns monthly, a small minority will still be required to remit PAYG withholdings monthly.

GST instalments

9.52 Many small businesses who must currently report actual GST data on a quarterly basis will now be able to lodge their GST returns annually and pay quarterly instalments worked out for them by the ATO.

9.53 The new alternative annual return option available to quarterly lodgers with an annual turnover of $2 million or less was designed to be as simple as possible and give people the choice of only visiting their accountant once to meet their income tax and GST responsibilities.

9.54 Under this system, taxpayers will no longer have to review their records or visit their accountant to calculate their quarterly payment amount. They will have the certainty of knowing exactly how much they need to set aside for their quarterly payment as the Commissioner will advise the amount of the quarterly instalment.

Varying instalments

9.55 The design of the variation mechanism, and the penalty for underestimation, is at the heart of any flexible and robust system for payment of a tax by instalment in advance of its quantification. An effective variation mechanism will provide reasonable latitude for taxpayers to estimate their liability, while also providing a disincentive to defer tax by underestimating liability. Because ultimate liabilities cannot be precisely quantified until the end of the tax period, too small a margin for error will make it difficult for taxpayers to avoid the possibility of penalty. However, because of the potential for deferral of revenue from one year to the next, or from early to late in the financial year, too generous a margin for error will result in a significant cost to the public purse because of the PDI cost where revenue is deferred for any period and the effect on the budget where revenue is deferred from one year to the next.

9.56 The GST instalment system will provide this flexibility for taxpayers whose circumstances change during the financial year and for whom the instalment determined by the Commissioner is inappropriate. The variation mechanism operates on the same principles as the GDP-adjusted instalment option under the PAYG system of which many businesses are already familiar.

9.57 The underestimation penalty is modelled on the PAYG underestimation penalty, where instalments are less than 85% of the appropriate amount. The 15% margin for error is more generous than underestimation penalties under some other systems; for example, under the company instalment system which existed before PAYG was introduced, the margin for error was only 10%. To remove the incentive to defer tax by varying down then later varying up, a penalty may also be payable where a particular instalment is too low when compared with annual GST liability, or where the instalment is not calculated by reference to the estimate of annual tax. A greater margin for error of 25% is provided for the September 2001 quarter instalment only, and taxpayers may minimise any liability to penalty by making a top-up payment in a later quarter to cover an earlier underestimate. This is to recognise the difficulties in varying that instalment as the ATO notified amount will be based only on the December 2000 GST payment.

Averaging entities

9.58 Entities which average their income tax, such as farmers, authors and sportspersons, will be able to defer payment of the first and second instalment that would otherwise be payable. This would result in a small reduction in compliance costs through only having to pay 2 instalments rather than 4, and not having to work out early in the financial year whether the instalment determined by the Commissioner is inappropriate.

9.59 These entities may derive a cash flow benefit from the deferral of 2 instalments of GST. This benefit exists because of the seasonal and often unpredictable nature of the income of many of these entities. If these taxpayers were required to pay the first 2 instalments and the instalment notified by the Commissioner was excessive, it would often be impracticable for them to determine an appropriate varied instalment because the seasonal and fluctuating nature of trade in these industries makes it particularly difficult for them to forecast production volumes and values early in the financial year.

Correcting mistakes

9.60 As this amendment is aimed at facilitating an existing practice under GST and previously under sales tax, it is expected to have no impact on compliance costs.

9.61 The measures which ensure that entities will be able to correct minor mistakes in their next GST return would considerably reduce the compliance burden that would be faced by taxpayers if they were required to correct every error, no matter how small, by lodging an amended BAS. It also removes the disincentive to comply with the law that results from the greater compliance cost that would otherwise occur.

9.62 As errors can be corrected which resulted in a calculated liability that was either too high or too low, individual businesses may derive a very small cash flow cost or benefit depending on the nature of the error corrected.

Implementation costs

9.63 There will be minor costs to businesses and charities in implementing the recommendations, but these are likely to be negligible when compared with the overall reduction in compliance costs from the new measures.

9.64 Affected taxpayers may incur upfront costs in familiarising themselves with, and evaluating, the additional options provided by the new law. This upfront compliance cost is expected to be smaller than that which occurs for other tax changes of a similar magnitude. As part of the communication and education campaign, the Commissioner will advise affected taxpayers of the availability of the new options by letter, and flyers will accompany the first simplified forms. Entities who adopt the streamlined quarterly reporting option will simply use new reporting stationery which shows information similar to that currently collected, with the exception that less information will be reported, while some information will be reported less often. Most businesses affected by the GST instalment system will already be familiar with instalment payment systems, which have existed for income tax and FBT for many years. The GST instalment system has been largely modelled on the PAYG instalment system.

9.65 Adoption of the new arrangements is also optional for business, as those businesses that are satisfied with the existing system may continue to use the existing arrangements. The BAS forms will become less complex.

9.66 In some cases, businesses will seek professional advice. This decision is a matter for the individual business to take, having regard to the upfront cost of such advice, which may be outweighed by the benefits, such as improved cash flow and better business management which may result from professional advice.

9.67 To the extent practicable, the GST instalment system operates on the same principles as the GDP-adjusted instalment option under the PAYG system, with which many businesses will be familiar. Instalment systems have been a feature of income tax and FBT for many years, and many businesses and most tax professionals will have some familiarity with concepts such as variations and underestimation penalties.

9.68 The costs of familiarisation will be considerably ameliorated by an appropriately targeted education and information campaign which the ATO has already commenced to familiarise businesses and tax professionals. In addition, taxpayers can take advantage of a wide range of other free services such as call centres, advisory visits by ATO staff and web site information provided by the ATO and other organisations.

9.69 Businesses deciding to take advantage of the options provided by the new arrangements may need to update computer software. The cost will depend on the nature of the licence in the software and the agreement with the software provider. There may be no additional costs where businesses have an existing, ongoing maintenance agreement with the software provider that covers these changes.

9.70 In addition, the ATO has been working with software providers to help them update BAS reporting software, which forms a part of many standard small business accounting packages.

Administration costs and benefits

9.71 The ATO has commenced an education and information campaign, which will include television, press and radio advertisements to ensure immediate community awareness of the changes.

9.72 There will be an upfront cost to the ATO in making appropriate changes to its systems and processes, together with other administrative costs and corporate flow ons. With the exception of the education campaign referred to in paragraph 9.68, the implementation costs will be met from existing budgets. The administrative systems and instructional material will change to provide forms that are more customised to user requirements over the next 6 to 9 months. These changes will be coupled with further marketing and publicity, mainly directly targeted rather than mass media.

9.73 These administration costs of implementation cannot be fully quantified at this stage. However, additional allocations of $12 million in 2000-2001 and $40 million in 2001-2002 have been made to defray these costs.

Revenue impact

9.74 The revenue impacts for the measures are set out in the general outline and for convenience those measures which are dealt with by this RIS and which have a revenue cost are repeated in Table 9.1. The table does not deal with administrative and economic costs, which are detailed elsewhere.

9.75 There is some reduction in gross GST revenue, mainly in the 2001-2002 financial year, as the measures permitting GST instalments and quarterly lodgement by substituted accounting periods will result in some deferral of tax payable. However, as deferral benefits in outyears are balanced by revenue deferred from the previous year, the long term cost is minimal and limited to growth in the deferred amount from year to year. In addition, the 25% tolerance for the September 2001 quarter will result in a revenue cost in 2001-2002 of $10 million to be recouped in the 2002-2003 year.

Simplified BAS

9.76 The simplified BAS forms will have no impact on revenue, as these changes do not change taxpayers liability to tax but merely the extent to which that liability is explained in each return.

Extended due dates

9.77 The extension in lodgement and payment dates for quarterly substituted accounting period remitters will defer the receipt of GST remittances. However, as the change does not shift GST revenue from one income year to another, there is no impact on overall revenue in any particular year.

Quarterly returns for substituted accounting periods

9.78 Permitting entities with substituted accounting periods to defer some revenue from a monthly to quarterly payment profile will have a revenue impact in the first year of its introduction. Payments that would have been due for April and May 2002 (in May and June respectively) will be deferred until July 2002. The total revenue estimated to be deferred from 2000-2001 to the 2001-2002 year is $80 million. There is a small effect on revenue in later years due to growth, which has been estimated at $5 million per annum.

GST instalments

9.79 The introduction of the measure relating to GST instalments is expected to result in some deferral of revenue from one year to the next as taxpayers may vary their liability down but are not required to vary their liability up where the GST component of transactions increases. The deferral is greater in the 2001-2002 year because revenue from more instalments is deferred in that year.

9.80 The concession to averaging entities which permits them to pay the amount that would be due for the first, second and third quarters as a single payment in the third quarter is expected to slightly increase the deferral of revenue in the 2001-2002 year, as this is the first year in which this option becomes available.

Correcting mistakes

9.81 Permitting taxpayers to correct GST mistakes in their immediately succeeding return would have a small but unquantifiable cost to revenue where underpayment errors in one financial year are deferred to the next financial year. The precise revenue impact of the measure is dependent on the manner in which the Commissioner administers the concession, and errors which result in deferral from underpayment can be expected to be cancelled out, in part, by revenue brought forward from overpayment errors.

9.82 In the case where the Commissioner considers that the error correction concession is being abused, an assessment of tax may be issued.

Economic impact

9.83 As some of the GST measures in the package will allow entities to defer payment of GST for short periods, there is a financing cost to the Commonwealth by way of PDI. This cost to the Commonwealth will provide a commensurate benefit to businesses, who will be able to defer payments.

Simplified BAS and correcting mistakes

9.84 There is no impact expected from the simplified BAS measure and negligible impact expected from the correcting errors measure.

Extended due dates

9.85 There is a PDI cost from the later receipt of revenue through the due date concession. This cost is estimated as being $140 million in the 2001-2002 financial year, of which $26 million relates to GST.

Quarterly returns for substituted accounting periods

9.86 The PDI cost of allowing eligible substituted accounting periods to pay their GST liability on a quarterly basis rather than on a monthly basis is expected to be less than $5 million per annum.

GST instalments

9.87 As there is expected to be negligible effect on revenue from the introduction of the GST instalment regime, the PDI cost is also expected to be negligible.

9.88 The PDI cost of allowing averaging taxpayers to defer paying what would have been their first and second instalments until the due date for their third instalment is estimated at $8 million.

Consultation

9.89 Since the implementation of the GST, the government and the ATO have consulted extensively with business, charities and tax professionals on the impact of the system. The GST measures in this package are based on the results of that consultation, which focussed particularly on the needs of small business in the light of experience gained from the first 2 quarterly returns under the new tax system.