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. 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. 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. 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. Developer Contact Details 1 Brough Place Chapman ACT 2611 Australia Telephone: International: Click on ‘Contact the developer’ at www. kyscope.com.au Investment flows A tool for creating and assessing a kaleidoscope of business income tax options

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 The Kyscope enables you to:  better understand how a business income tax system fits together;  establish a framework against which to set business tax arrangements;  draw together business income tax policy and implementation decisions. Use the Kyscope to:  assess alternative policy options;  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? 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 grape- growing company, what policy and compliance/administration interrelationships will arise from providing Gerard foreign tax credits on the offshore income? Structure and Use 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). 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