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Australian Taxation Office

Section 1: Overview, appropriations and budget measures summary

Overview

The role of the Australian Taxation Office (ATO) is to manage and shape taxation, excise and superannuation systems that fund services for Australians, giving effect to social and economic policy. Through these systems the ATO is the Government's principal revenue management agency. In 2001-02, the ATO will collect 92 per cent of the Commonwealth Government's revenue on behalf of the Australian community (this excludes GST collections).

• ATO also supports the delivery of community benefits, having roles in other services, including:
• Private Health Insurance;
• Family Assistance;
• the Australian Valuation Office;
• the Development Allowance Authority; and
• cross-agency support, such as working with Centrelink to reduce benefit fraud, with the Child Support Agency (CSA) to ensure income transfer for the care of children, and with the Australian Bureau of Statistics to reduce the cost to the community of collecting statistical data.

Appropriations

The total appropriation for the ATO in the 2001-02 Budget is $4,908.1 million. Table 1.1, on the following page, shows the total appropriations by administered expenses, price of output appropriation and agency capital (equity injections and loans).

Australian Taxation Office - appropriations 2001-02

Table 1.1: Appropriations and other revenue

(1) C1, E1 and I1 refer to information provided in Table 2.1. K1 refers to information provided in Table 3.1. K2 refers to information provided in Table 3.6. K3 refers to information provided in Table 3.4.

(2) Refer to Table 3.1 for application of agency revenue.

(3) Revenue from other sources includes other revenue from government (for example, resources free of charge) and revenue from sources other than government (for example, sales of goods and services) and excludes GST credits. Non-appropriated agency and administered revenues are detailed in Appendix 1.

* Percentage figures indicate the percentage contribution of revenue from government (agency appropriations) to the total price of outputs, by outcome.

Budget Measures - Australian Taxation Office summary

Table 1.2: Summary of measures in the 2001-02 Budget

Table 1.2b: Summary of post MYEFO measures

Administered capital and agency equity injections and loans

The ATO does not have an appropriation for an equity injection or loan, or an appropriation for administered capital in 2001-02. ATO's agency capital appropriation including equity injections and loans are detailed in Table 3.4.

Section 2: Outcomes and outputs information

Outcomes and output groups

Chart 6 on the following page shows the relationship between Government outcomes and the contributing outputs for the Australian Taxation Office (ATO). Financial detail for Outcome 1 by output appears in Table 2.1 while non-financial information for Outcome 1 appears in Table 2.2.

Chart 6: Outcomes and output groups

Changes to outcomes and outputs

There are no proposed changes in outcomes or outputs since the previous year.

The ATO has, however, commenced a review of its outcome and outputs framework for the ATO's next Pricing Agreement. The new framework will reflect changes in our business deliverables due to tax reform, and new approaches to the way we plan and manage internally. Some of these changes will be reflected in our internal planning documents for 2001-02.

Outcome 1 - Description

Effectively managed and shaped systems that support and fund services for Australians and give effect to social and economic policy through the tax system

There is a single government outcome relating to the ATO which is `effectively managed and shaped systems that support and fund services for Australians and give effect to social and economic policy through the tax system'.

In this context, `effectively managed and shaped' means how well the ATO:

• implements tax reform structure whilst delivering our principal business outcomes;
• maintains compliance behaviour through providing comprehensive education and support services to the community and developing compliance strategies to address compliance risks, such as aggressive tax planning and the cash economy;
• minimises the costs of compliance through integrated taxation system design, and supporting the community to meet their tax obligations; and
• maintains community confidence through working in partnership with the community to foster community ownership of the tax system and providing timely and professional service.

This will be achieved through ensuring that the ATO is an efficient and adaptive organisation.

Measures affecting Outcome 1

Education campaign and other information initiatives for choice of superannuation fund and related measures

The Government will allocate $14 million over two years to the Australian Taxation Office to implement an education and communication campaign and other information initiatives for the Government's choice of superannuation fund and related measures. The choice of superannuation and related measures will make it easier for employees/members to select their own superannuation fund and to pursue their own needs within the superannuation system.

The Australian Taxation Office will absorb the cost of implementing the education and communication campaign and other information initiatives.

Simplification of Business Activity Statements

The Government will provide the Australian Taxation Office with funding of $52 million over two years to fund development and implementation of simplified Business Activity Statements and Instalment Activity Statements. It is expected that $14 million will be spent in 2000-01. The funding will also cover an information and communciations campaign to inform taxpayers about the simplified reporting arrangements.

Outcome 1 - resourcing

Table 2.1 shows how the 2001-02 appropriations translate to total resourcing for Outcome 1.

Table 2.1: Total resources for Outcome 1

(1) C1, E1 and I1 - see Table 1.1.

Outcome 1 - Contribution of outputs

Table 2.2 details the performance indicators used to assess our achievement of Outcome 1, and shows the link between the outputs and the outcome.

There are four distinct outputs that contribute to Outcome 1:

• contribution to policy advice and legislation supports the formulation of effective taxation, excise and superannuation policy and the reflection of that policy in legislation and includes provision of Ministerial and Parliamentary Services;
• revenue contributes to effective taxation and excise arrangements through managing and shaping taxation systems that collect revenue effectively and efficiently which, in turn, maintains community confidence in the taxation and excise systems;
• transfers effect the movement of money to support government redistribution and savings initiatives such as Retirement Income and Family Initiatives; and
• cross agency support provides services, such as data matching and the provision of statistical information to other agencies (not involving monies).

Performance information for Outcome 1

Table 2.2: Performance information for Outcome 1

Evaluations

The Australian National Audit Office and ATO Internal Audit have a rolling programme of issues that are audited during the financial year. Other issues are evaluated within the ATO during the financial year as required.

Competitive tendering and contracting

The ATO has continued with its competitive tendering and contracting (CTC) process across a wide range of its activities. As part of the ATO's performance improvement and CTC strategy, functions continue to be benchmarked and expenditure reduced to benchmark levels. These other functions include data capture and management, property services, regional copying and forms storage and distribution.

Section 3: Budgeted financial statements

The budgeted financial statements will form the basis of the financial statements that will appear in the Australian Taxation Office (ATO) 2000-01 Annual Report, and for the input into the Whole of Government Accounts. The financial statements should be read in conjunction with the accompanying notes.

These budgeted financial statements and administered notes are consistent with the forms of financial statements specified under the draft 2001-02 `Requirements for the Preparation of Financial Statements of Commonwealth Agencies and Authorities'.

Agency statements

Budgeted agency statement of financial performance

This statement provides a picture of the expected financial results for the ATO by identifying full accrual expenses and revenues, which highlights whether the ATO is operating at a sustainable level.

Budgeted agency statement of financial position

This statement shows the financial position of the ATO. It enables decision makers to track the management of the ATO's assets and liabilities.

Budgeted agency statement of cash flows

This statement identifies expected cash flows from operating activities, investing activities and financing activities.

Agency capital budget statement

This statement shows all proposed capital expenditure funded either through the Budget as appropriations or from internal sources.

Agency non-financial assets - summary of movement

This statement shows the movement in the ATO's non-financial assets over the Budget year 2001-02.

Administered notes

Details of transactions administered by the ATO on behalf of the Commonwealth are shown in the following notes to the financial statements.

Note of budgeted administered financial performance

This note identifies the main revenues and expenses administered on behalf of the Government. It also discloses administered revenues from government and transfers to the Public Account.

Note of budgeted administered financial position

This note shows the assets and liabilities administered on behalf of the Government.

Note of budgeted administered cash flows

This note shows cash flows administered on behalf of the Government.

Table 3.1: Budgeted agency statement of financial performance
for the period ended 30 June

(1) K1 - see Table 1.1.

Table 3.2: Budgeted agency statement of financial position
as at 30 June

Table 3.3: Budgeted agency statement of cash flows
for the period ended 30 June

Table 3.4: Agency capital budget statement

(1) K3 - see Table 1.1.

Table 3.5: Agency non-financial assets - summary of movement (Budget year 2001-02)

Table 3.6: Note of budgeted administered financial performance
for the period ended 30 June

(1) K2 - see Table 1.1

Table 3.7: Note of budgeted administered financial position
as at 30 June

Table 3.8: Note of budgeted administered cash flows
for the period ended 30 June

Notes to the Financial Statements

Basis of accounting

The financial statements have been prepared on an accrual basis and are in accordance with the historical cost convention.

The budgeted financial statements have been prepared in accordance with the Goods and Services Tax (GST) accounting guidelines of the Urgent Issues Group (UIG) of the Australian Accounting Standards Board. The UIG consensus requires that expenses and assets be accounted for net of recoverable GST, revenues be accounted for net of GST payable and that cash flows and accounts payable and receivable be reported gross. Appropriations are thus net of recoverable GST amounts.

Notes to the agency statements

Details of agency items in the financial statements included in Table 3.1 to 3.5 have been prepared in accordance with Schedule 2 of the Finance Minister's Orders for 1997-98.

The budget statements and estimated forward years have been prepared to reflect the following matters.

Cost of administering Goods and Services Tax (GST)

Agency statements for 2000-01 and forward years include the estimated costs of administering the proposed GST pursuant to the `intergovernmental agreement on the reform of Commonwealth - state financial relations', the GST revenue is collected on behalf of the states and territories which agree to compensate the Commonwealth for the agreed GST administration costs.

The recovery of GST administration costs are reported under the Department of the Treasury.

Costs of administering other tax reform proposals

Agency statements for 2000-01 and forward years include a cost estimated for taxation reform proposals announced by the Government as part of A New Tax System or the result from the Government's response to the recommendations made by the Review of Business Taxation.

Operating loss

In implementing tax reform, whilst maintaining the requirement of ongoing administration, the ATO is absorbing greater workloads than anticipated. The financial consequence has been an increase of $33.1 million in the budgeted operating loss for 2000-01 with the loss increasing from $36.3 million to $69.4 million, while for 2001-02 the expected operating loss has increased from $2.2 million to $43.7 million.

Resourcing

The ATO is currently undergoing a Pricing Review. Through evaluation of the ATO's outputs, which will include the costing and benchmarking of those outputs, the Review aims to establish appropriate prices for the ATO's outputs. The results of the Review will take effect from 2002-03.

Notes to the administered statements

Details of administered items in the financial statements included in Table 3.6 to 3.8 have been prepared in accordance with Schedule 2 of the Finance Ministers Orders for 1997-98. These statements incorporate a change in revenue recognition policy from prior years.

The budget statements and forward years have been prepared on the basis noted below and to reflect the following matters.

Recognition of taxation revenue

For 1999-2000, 2000-01 and forward years administered taxation revenue has been brought to account on a year by year basis where:

• the identity of the taxpayer is certain;
• the amount of the liability or refund is certain;
• the liability or entitlement to a refund has been notified to the Commissioner or advised by the taxpayer;
• there is an intention on the part of the Commissioner to collect the liability; and
• there is a legislative intent by the Commonwealth to change the basis or application of taxation law.

This recognition policy does not include the following item as revenue of the period:

• estimates of future collections or refunds from individuals in respect of income tax returns to be lodged for the current financial year ended at 30 June;
• estimates of instalments of tax and final payments for companies due after 30 June;
• estimates of final amounts for Petroleum Rent Resource Tax due after 30 June; and
• actual payments for Pay As You Go, GST, excise and withholding taxes for amounts collected or withheld in June but not remitted to the Commissioner until July.

Items recognised as reductions to taxation revenue

The following items are recognised as reductions (increases) to taxation revenue and not as expense:

• refunds of revenue;
• increase (decrease) in movement of provision for credit amendments;
• diesel fuel rebates and diesel fuel credits; and
• increases (decreases) in movement of provision for diesel fuel rebates.

Section 4: Purchaser/provider

Cross agency support overview

In 2000-01 the ATO entered into purchaser/provider arrangements with both the Department of Family and Community Services (FaCS) and the Department of Health and Aged Care which will see the ATO continuing to provide services to each of these departments to enable them to achieve their stated Outcomes in 2001-02.

The ATO will be providing services to FaCS for the Family Assistance Office and the Child Support Agency.

The ATO will also be providing services to the Department of Health and Aged Care for the implementation of the Private Health Insurance rebate.

Appendix 1

Non-appropriation agency and administered revenue

Appendix 2

Estimates of expenses from special appropriations