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Agency Additional Estimates Statements

Australian Taxation Office

Section 1: Agency overview and resources

1.1 Strategic direction

There has been no significant change to the strategic direction of the Australian Taxation Office (ATO) from that outlined in the Portfolio Budget Statements 2009-10 (pages 193-194).

The ATO is seeking an additional $13.4 million in administered expenses in Appropriation Bill (No. 3) 2009-10 to move unspent 2008-09 funding of $11.3 million into 2009-10 for the public awareness campaign associated with the Nation Building and Jobs Plan — Small Business and General Business Tax Break measure, and bring forward funding of $2.1 million from 2011-12 into 2009-10 for the public awareness campaign associated with the Private Health Insurance — fair and sustainable support for the future measure.

1.2 Agency resource statement

Table 1.1 shows the total resources from all origins. The table summarises how resources will be applied by outcome and by administered and departmental classification.

Table 1.1: Australian Taxation Office resource statement — additional
estimates for 2009-10 as at Additional Estimates November 2009

Table 1.1: Australian Taxation Office resource statement — additionalestimates for 2009-10 as at Additional Estimates November 2009

Table 1.1: Australian Taxation Office resource statement — Additional
estimates for 2009-10 as at Additional Estimates November 2009 (continued)

Table 1.1: Australian Taxation Office resource statement — Additionalestimates for 2009-10 as at Additional Estimates November 2009 (continued)

1. Appropriation Bill (No. 3) 2009-10.

2. These figures relate to administered expenses including fuel tax credits, superannuation co-contributions, education tax refunds and research and development subsidies. Tax refund items for 2008-09 are $83,388 million (including $72 million paid via the Australian Customs Service (ACS) on the ATO's behalf) and are estimated at $86,870 million for 2009-10 (including $90 million paid via the ACS on the ATO's behalf).

1.3 Agency measures table

Table 1.2: Agency measures since Budget

Note: Further details of these measures can be found in Mid-Year Economic Fiscal Outlook 2009-10.

1.4 Additional estimates and variations

The following tables detail the changes to the resourcing for the ATO at additional estimates, by outcome.

Table 1.3: Additional estimates and variations to outcomes from measures since 2009-10 Budget

Table 1.4: Additional estimates and variation to outcomes from other variations

1.5 Breakdown of additional estimates by Appropriation Bill

Table 1.5: Appropriation Bill (No. 3) 2009-10

Section 2: Revisions to agency outcomes and planned performance

2.1 Resources and performance information

Outcome 1 Budgeted expenses and resources

There has been no change to outcomes, the outcome strategy or performance information for the ATO from that included in the Portfolio Budget Statements 2009-10 (pages 201-229).

There have been no changes to program objectives, expenses, deliverables or key performance indicators from that published in the Portfolio Budget Statements 2009-10 for programs 1.1 to 1.2 and 1.4 to 1.21 that affect additional estimates.

Table 2.1 reflects changes to program expenses from that published in the Portfolio Budget Statements 2009-10.

Table 2.1: Budgeted expenses and resources for Outcome 1

Program 1.3: Compliance assurance and support for revenue collections

There have been no changes to program objectives, deliverables or key performance indicators from that published in the Portfolio Budget Statements 2009-10.

Table 2.2: Program 1.3 expenses

Section 3: Explanatory tables and budgeted financial statements

3.1 Explanatory tables

3.1.1 Estimates of special account flows

Special accounts provide a means to set aside and record amounts used for specified purposes. Table 3.1.1 shows the expected additions (receipts) and reductions (payments) for each account used by the ATO.

Table 3.1.1: Estimates of special account flows

(A) = Administered.

(D) = Departmental.

3.2 Budgeted financial statements

3.2.1 Analysis of budgeted financial statements

Budgeted departmental income statements

Operating revenues

In 2009-10, total agency revenue is estimated to be $3,067.0 million. This consists of government appropriation revenue of $3,006.6 million, revenue from other sources of $56.4 million and resources received free of charge of $4.0 million. Total agency revenue is estimated to decrease by $8.3 million in 2009-10 from that in the Portfolio Budget Statements 2009-10, representing a decrease in government appropriation of $21.2 million due to measures, offset by an increase in revenue from other sources of $12.9 million.

Operating expenses

In 2009-10, total expenses are estimated to be $3,067.0 million. This consists of $1,953.8 million in employees, $1,003.3 million in suppliers and other expenses, and $109.9 million in depreciation and amortisation.

Budgeted departmental balance sheet

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

Assets

The ATO's assets are predominantly non-financial assets. In 2009-10 the ATO will continue to maintain its commitment to long term improvement, investing $146.0 million in capital expenditure. Total assets have decreased by $46.2 million from the Portfolio Budget Statements 2009-10.

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 have decreased by $56.7 million from the Portfolio Budget Statements 2009-10. This represents decreases in the following categories — employee entitlements ($4.5 million), other provisions ($19.8 million), finance lease liabilities ($2.2 million) and total payables ($30.2 million).

3.2.2 Budgeted financial statements

Table 3.2.1: Budgeted departmental income statement
(for the period ended 30 June)

Table 3.2.1: Budgeted departmental income statement(for the period ended 30 June)

Prepared on Australian Accounting Standards basis.

Table 3.2.2: Budgeted departmental balance sheet
(as at 30 June)

Table 3.2.2: Budgeted departmental balance sheet(as at 30 June)

Prepared on Australian Accounting Standards basis.

Table 3.2.3: Budgeted departmental statement of cash flows
(for the period ended 30 June)

Table 3.2.3: Budgeted departmental statement of cash flows(for the period ended 30 June)

Prepared on Australian Accounting Standards basis.

Table 3.2.4: Departmental statement of changes in equity — summary of movement
(budget year 2009-10)

Table 3.2.4: Departmental statement of changes in equity — summary of movement (budget year 2009-10)

Prepared on Australian Accounting Standards basis.

Table 3.2.5: Departmental capital budget statement

Prepared on Australian Accounting Standards basis.

Table 3.2.6: Statement of asset movements — Departmental (2009-10)

Prepared on Australian Accounting Standards basis.

Table 3.2.7: Schedule of budgeted income and expenses administered on behalf of Government
(for the period ended 30 June)

Table 3.2.7: Schedule of budgeted income and expenses administered on behalf of Government (for the period ended 30 June)

Prepared on Australian Accounting Standards basis. Also refer note in Section 3.2.3 on recognition of taxation revenue and items recognised as reductions to taxation revenue.

Table 3.2.8: Schedule of budgeted assets and liabilities administered on behalf of Government
(as at 30 June)

Table 3.2.8: Schedule of budgeted assets and liabilities administered on behalf of Government (as at 30 June)

Prepared on Australian Accounting Standards basis. Also refer note in Section 3.2.3 on recognition of taxation revenue and items recognised as reductions to taxation revenue.

Table 3.2.9: Schedule of budgeted administered cash flows
(for the period ended 30 June)

Table 3.2.9: Schedule of budgeted administered cash flows(for the period ended 30 June)

Prepared on Australian Accounting Standards basis.

3.2.3 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 3.2.6 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 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 3.2.7 to 3.2.9 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 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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