and liabilities are domestic or foreign. You choose whether to apply
leasing arrangements and delayed payments over selected periods to
each asset and liability. You also choose whether to have entities
owning other entities and whether they report their taxation obligations
separately or on a consolidated basis.
The Kyscope is easy to operate from its front end which allows you
ready specification of investment circumstances, such as:
 the characteristics of each asset and liability (eg investment amount
and year, year of sale, year of first net receipts, pre-tax rate of return
etc); and
 the nature of each entity (eg the assets they own, when they own
other entities and distribute income, when their owners sell out, etc)....
........and also allows easy selection of tax options, such as:
 the tax treatment of each asset and liability (eg tax write-off rate,
tax rate, CGT treatment, etc);
 the tax treatment of entities and the entity’s owners (eg CGT
treatment, entity and owner tax rates, mix of foreign and domestic
owners, treatment of domestic dividends and foreign tax credits, etc).
A comprehensive User’s Guide in help file format is incorporated in
the Kyscope.
yscope
K
®
A tool for creating and assessing a
kaleidoscope of business income
tax options
The Kyscope is a tool for creating and investigating options for taxing
income from different business investments. It is built on a linked set
of Microsoft® Excel spreadsheets and has an easy-to-use front end.
The Kyscope integrates relevant components of business investment
activity, enabling users to see the implications of options under
consideration. It measures the income and pre-tax returns produced
by the assets and liabilities of taxpayers’ investments. It then tracks
the taxing of that income, and associated post-tax returns, as it flows
to the taxpayers, perhaps via entities and perhaps from offshore.
Copyright
The model is owned (but not endorsed) by the Commonwealth of
Australia. The developer, Wayne Mayo, has a licence over the model.
While with the Australian Treasury over the 1980s and 1990s, the
developer spent many years grappling with business taxation issues,
including during the 1985/86 and 1998/99 tax reforms. He has a
number of publications on business taxation.
Investment
flows
Developer Contact Details
1 Brough Place Chapman ACT 2611 Australia
Telephone:
02 6288 6338
International: + 61 2 6288 6338
E-mail:
Click on ‘Contact the developer’ at www. kyscope.com.au
Users can investigate a wide range of tax options; eg entities may be
taxed under full imputation, full integration or classical taxation
systems or as fixed or discretionary trusts. Users may also compare
results against a ‘pure’ income tax system which taxes all income
from assets/liabilities in the year it is earned at the marginal tax rate
of individual owners.
Key Benefits
The Kyscope measures the annual income earned from assets and
liabilities to give a complete picture of the investment circumstances
you have chosen. This gives you the luxury of being able to focus on
tax policy intent and associated tax design options.
The Kyscope ensures policy advice is comprehensive and soundly
based on an integrated view of tax arrangements. Policy decisions
about whether to tax income and, if so, when, may be implemented with
minimal unforseen side-effects.
More Benefits
Gerard sets up a company to own the vineyard and floats some of it to
the public. If the company is sold from time to time, how will any
resulting capital gains tax (CGT) interact with the taxation of income
from the vineyard? Will there be double tax? What tax treatment of a
buy-back by the company of the public’s shares would be consistent
with entity and CGT tax arrangements?
If Gerard’s local company decides to take over an offshore grapegrowing company, what policy and compliance/administration
interrelationships will arise from providing Gerard foreign tax credits on
the offshore income?
The Kyscope enables you to:
Structure and Use
 better understand how a business income tax system fits together;
Each asset and liability you select for analysis by the Kyscope has its
own ‘Asset’ spreadsheet. A set of ‘Asset’ spreadsheets linked to an
‘Entity’ spreadsheet may be activated to represent a sole trader’s
business or the operations of an entity such as a company. The annual
income produced by the selected assets and liabilities is measured
comprehensively (annual receipts - annual expenses + annual change
in value of assets and liabilities).
 establish a
arrangements;
framework
against
which
to
set
business
tax
 draw together business income tax policy and implementation
decisions.
Use the Kyscope to:
THE KYSCOPE - A KALEIDOSCOPE THAT
INTEGRATES BUSINESS INVESTMENT ACTIVITY
 assess alternative policy options;
Assets, liabilities or
entities may be either
domestic or foreign
 confirm the precise structure of changes to the law (from the
formulae behind the Kyscope’s cells);
 appreciate the size of compliance and administrative burdens
associated with policy options (from the number of accounts or ledgers
required by the Kyscope to run the options);
 obtain year-by-year tax revenue figures, aggregate economy-wide or
sector-wide tax revenue effects and tax expenditure comparisons;
 obtain insights into possible behavioural responses to policy
proposals - eg product prices and investment costs – and implications
of change across business income tax systems.
Real-life Simulations
Use the Kyscope to address practical questions by simulating real-life
situations. Set up a ‘situation’, for example, one in which Gerard buys
land and plants grape vines. What are the tax implications if he
negatively gears his plantation business or leases the plantation to
someone else for a time?
HEAD ENTITY
Lease/right, and/or
delayed payment, over
any asset or liability for
selected period
Depreciating asset
Appreciating asset
Financial asset
Financial liability
Trading stock
ENTITY OWNERS
Foreign or domestic
ENTITY
Remaining after buy-back
Depreciating asset
Appreciating asset
Financial asset
ENTITY OWNERS
Foreign or domestic
Financial liability
Participating in buy-back
Trading stock
Owned entity's assets and liabilities
taxed through the entity to the head
entity or, under consolidation, taxed
directly in the head entity
Lease/right
Delayed paymt
Price adjustments for
tax distortions
Discounts/premiums
on financial securities
Exchange rate effects
Value/tax value charts
Cash flows
Pre-tax returns
Post-tax returns
Tax revenue
You may use the Kyscope to model business investment activities
undertaken by either individuals, small enterprises, larger companies
with a number of subsidiaries or multi-national operations.
You decide whether selected entities, owners and underlying assets