Appendix C: Statement of risks
Overview
Full details of fiscal risks and contingent liabilities are provided in Budget Paper No. 1, Budget Strategy and Outlook 2011‑12. The following statement updates (where necessary) those fiscal risks and contingent liabilities that have changed since the 2011‑12 Budget.
The forward estimates of revenue and expenses in the Mid‑Year Economic and Fiscal Outlook 2011‑12 (MYEFO) incorporate assumptions and judgements based on the best information available at the time of publication and are based on a range of economic assumptions and other forecasts and projections.
Major taxes such as company and personal tax fluctuate significantly with economic activity. Capital gains tax is particularly volatile and is affected by both the quantum of gains in asset prices and the timing of when those gains are realised. Resource rent taxes may vary quite significantly, particularly with commodity prices, and the level of the Australian dollar. Revenue from carbon permit sales for the flexible price period may also vary owing to changes in the world price of carbon permits.
In addition, revenue forecasting relies heavily on the observed historical relationships between the economy, tax bases and tax revenues. Such relationships may shift as economic conditions change, presenting a further risk to the estimates.
The estimates and projections of revenue are subject to a number of general risks that can affect taxation collections. These general pressures include tax avoidance, court decisions and Australian Taxation Office rulings. These pressures may result in a shift in the composition of taxation collected from the various tax bases and/or a change in the size of the tax base.
If www.budget.gov.au responds slowly or you are having trouble downloading a document, try one of the Budget Website Mirrors
Note: Where possible, Budget documents are available in HTML and for downloading in Portable Document Format(PDF). If you require further information on any of the tables or charts on this website, please contact The Treasury.
