Section 3: Explanatory tables and budgeted financial statements
Section 3 presents budgeted financial statements which provide a comprehensive snapshot of agency finances for the budget year 2008‑09. It explains how budget plans are incorporated into the financial statements and provides further details of movements in administered funds, special accounts and government Indigenous expenditure.
3.1 Explanatory tables
3.1.1 Reconciliation of total available appropriation and outcomes
The Agency Resource Statement (Table 1.1) details the total available appropriation to the ATO agency from all sources. For departmental operating appropriations (outputs) this includes carry-forward amounts as well as amounts appropriated at budget. As the ATO incurs and is funded for future liabilities, generally depreciation and employee entitlements, the total amount of departmental operating appropriation available to the ATO is unlikely to be fully utilised in the budget year. The difference between the agency resource statements and the sum of all payments made at the departmental outputs level is the expected carry-forward amount of resources for the 2009‑10 budget year, including amounts related to meeting future obligations to maintain the ATO's asset base and to meet employee entitlement liabilities.
Table 3.1.1: Reconciliation of total available appropriation and outcomes
3.1.2 Movement of administered funds between years
Table 3.1.2: Movement of administered funds between years
The ATO has not moved any administered funds between years.
3.1.3 Special accounts
Special accounts provide a means to set aside and record amounts used for specified purposes. Special accounts can be created by a Finance Minister's Determination under the Financial Management and Accountability Act 1997 or under separate enabling legislation. Table 3.1.3 shows the expected additions (receipts) and reductions (payments) for each account used by the ATO.
Table 3.1.3: Estimates of special account cash flows and balances
3.1.4 Australian Government Indigenous Expenditure
Table 3.1.4: Australian Government Indigenous Expenditure
3.2 Budgeted financial statements
3.2.1 Differences in agency resourcing and financial statements
The ATO does not have any differences between the resource information presented in the Budget Papers and Portfolio Budget Statements.
3.2.2 Analysis of budgeted financial statements
Budgeted departmental income statement
The ATO is planning a balanced budget in 2008‑09 after income tax equivalent expense from the Australian Valuation Office (AVO).
Operating revenues
In 2008‑09, total agency revenue is estimated to be $2,925.0 million. This consists of revenues from Government of $2,861.1 million, revenue from other sources of $60.1 million and resources received free of charge of $3.8 million. Total revenue is estimated to increase by $51.7 million in 2008‑09 from 2007‑08, representing an increase in revenues from Government of $59.7 million due to measures, offset by a smaller decrease in revenue from other sources of $8.0 million.
Operating expenses
In 2008‑09, total expenses are estimated to be $2,924.1 million. This consists of $1,744.4 million in employees, $1,056.4 million in suppliers and $123.3 million in depreciation and amortisation.
Budgeted departmental balance sheet
The estimated equity position of the ATO at the end of 2008‑09 is $115.3 million. This represents an increase in equity of $78.7 million from the 2007‑08 estimated actual results, due to equity injections of $79.7 million in 2008‑09, offset by dividends payable by AVO of $1.0 million.
Assets
The ATO's assets are predominantly non-financial assets. In 2008‑09 the ATO will continue to maintain its commitment to long term improvement, investing $206.6 million in capital expenditure. This represents an increase of $26.5 million from the 2007‑08 estimated actual results, due to asset purchases associated with measures shown in Table 1.2.
A significant proportion of the ATO's capital investment is directed toward the development or improvement of internally developed systems and software in support of the ATO's intention of making people's experience with the revenue systems easier, cheaper and more personalised, and improving the integrity and flexibility of the superannuation business systems.
Liabilities
The ATO's liabilities are predominantly employee entitlements. Total liabilities are estimated to decrease by $3.8 million from 2007‑08 estimated actual results. This is due to decreases of $1.9 million in finance lease liabilities and $9.2 million in suppliers and other liabilities, offset by an increase of $7.3 million in employee entitlements.
3.2.3 Budgeted financial statements tables
Table 3.2.1: Budgeted departmental income statement
(for the period ended 30 June)
Prepared on an Australian Accounting Standards basis.
Table 3.2.2: Budgeted departmental balance sheet
(as at 30 June)
Prepared on an Australian Accounting Standards basis.
Table 3.2.3: Budgeted departmental statement of cash flows
(for the period ended 30 June)
Prepared on an Australian Accounting Standards basis.
Table 3.2.4: Departmental statement of changes in equity — summary of
movement (Budget year 2008‑09)
Prepared on an Australian Accounting Standards basis.
Table 3.2.5: Schedule of budgeted income and expenses administered on
behalf of Government (for the period ended 30 June)
Prepared on an Australian Accounting Standards basis.
Table 3.2.6: Schedule of budgeted assets and liabilities administered on
behalf of Government (as at 30 June)
Prepared on an Australian Accounting Standards basis.
Table 3.2.7: Schedule of budgeted administered cash flows
(for the period ended 30 June)
Prepared on an Australian Accounting Standards basis.
3.2.4 Notes to the financial statements
Basis of accounting
The budgeted financial statements have been prepared on an accrual basis.
Notes to the departmental statements
The departmental financial statements, included in Tables 3.2.1 to 3.2.4 have been prepared on the basis of Australian Accounting Standards and Department of Finance and Deregulation guidance for the preparation of financial statements.
The budget statements and estimated forward years have been prepared to reflect the following matters.
Australian Valuation Office
The ATO's agency budget statements are consolidated to include the financial operations of the Australian Valuation Office.
Cost of administering goods and services tax
Departmental statements include the estimated costs of administering the goods and services tax (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 Australian Government for the agreed GST administration costs.
The recovery of GST administration costs are reported under the Treasury.
Notes to the administered statements
The administered financial statements included in Tables 3.2.5 to 3.2.7 have been prepared on the basis of Australian Accounting Standards.
The standards require that taxation revenues are recognised on an accrual basis when the following conditions apply:
- the taxpayer or the taxpayer group can be identified in a reliable manner;
- the amount of tax or other statutory charge is payable by the taxpayer or taxpayer group under legislative provisions; and
- the amount of the tax or statutory charge payable by the taxpayer or taxpayer group can be reliably measured, and it is probable that the amount will be collected.
The amount of taxation revenue recognised takes account of legislative steps, discretion to be exercised and any refunds and/or credit amendments to which the taxpayers may become entitled.
Recognition of taxation revenue
Taxation revenue is recognised when the government, through the application of legislation by the ATO and other relevant activities, gains control over the future economic benefits that flow from taxes and other statutory charges — the Economic Transaction Method (ETM). This methodology relies on the estimation of the probable flows of taxes from transactions which have occurred in the economy, but not yet reported, and are likely to be reported, to the ATO through an assessment or disclosure.
However in circumstances when there is an `inability to reliably measure tax revenues when the underlying transactions or events occur', the standards permit an alternative approach — the Taxation Liability Method (TLM). Under this basis, taxation revenue is recognised at the earlier of either when an assessment of a tax liability is made or payment is received by the ATO. This recognition policy means that taxation revenue is generally measured at a later time than would be the case if it were measured under the ETM method.
In accordance with the above revenue recognition approach, the ATO uses ETM as the basis for revenue recognition, except for income tax for individuals, companies and superannuation funds and superannuation surcharge which are recognised on a TLM basis.
Items recognised as reductions to taxation revenue
The following items are recognised as reductions (increases) to taxation revenue and not as an expense:
- refunds of revenue; and
- increase (decrease) in movement of provision for credit amendments.
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