Part 3: Fiscal strategy and outlook (Continued)
General revenue assistance is a broad category of payments that are provided to the States without conditions to spend according to their own budget priorities.
In 2012‑13, the States will receive $49.4 billion in general revenue assistance from the Commonwealth, comprising $48.3 billion in GST entitlements and $1.2 billion in other general revenue assistance. This is a 4.8 per cent increase in general revenue assistance, compared with the $47.1 billion the States received in 2011‑12. Total general revenue assistance to the States is estimated to represent 13.2 per cent of total Commonwealth expenditure in 2012‑13.
GST entitlement in 2012‑13 has been revised up by $50.0 million since Budget and by $675.0 million over the four years to 2015‑16.
Table 3.27 summarises GST and general revenue assistance payments to the States. Detailed tables of GST and general revenue assistance, including state shares of each payment, are provided in Annex A.
|ACT municipal services||36.8||37.5||38.2||38.9|
|Snowy Hydro Ltd tax compensation||74.4||74.4||74.4||74.4|
|Total GST and other payments||49,431.3||52,139.1||54,832.0||57,539.2|
GST revenue variations since the 2012‑13 Budget
Table 3.28 provides a reconciliation of the GST revenue estimates since the 2012‑13 Budget. The reconciliation accounts for policy decisions and parameter and other variations.
|GST revenue at 2012-13 Budget||50,486||53,234||56,056||58,730|
|Changes between 2012-13 Budget and|
|Effect of policy decisions||8||39||74||74|
|Effect of parameter and other variations||296||457||460||626|
|GST revenue at 2012-13 MYEFO||50,790||53,730||56,590||59,430|
Specific policy decisions taken since Budget that affect GST revenue are shown in Table 3.29. These decisions increase the amount of GST revenue by $194.4 million over four years.
Detailed information on policy decisions since the 2012‑13 Budget are included in Appendix A.
|Commonwealth penalty unit – increase in value to reflect inflation||2.0||10.0||13.0||13.0|
|Customs' compliance assurance system – expansion||-||7.6||7.6||7.6|
|Fringe benefits tax – reform of living-away-from-home allowances and benefits||0.7||-||-||-|
|Fringe benefits tax – removal of concessional treatment of ‘in-house’ fringe benefits if accessed through a salary sacrifice arrangement||5.0||10.0||35.0||35.0|
|GST – restrictions on GST refunds – revisions and changed start date||-||..||6.0||6.0|
|Indirect Tax Concession Scheme – diplomatic and consular concessions||..||..||..||..|
|Tax compliance – maintaining the integrity of the tax and superannuation system||-||11.7||12.0||12.2|
|Tax laws – miscellaneous amendments||..||..||..||..|
|Total GST revenue policy decisions||7.7||39.3||73.6||73.8|
Reconciling GST revenue and GST entitlements to the States
In accordance with the Intergovernmental Agreement, the Commonwealth administers the GST on behalf of the States and all GST revenue is paid to the States.
GST advances are paid during the relevant financial year and the Commonwealth Treasurer determines the level of GST receipts based on the final budget outcome. A balancing adjustment is made following the conclusion of the financial year to ensure that the States receive their full entitlement of GST payments.
In addition to this balancing adjustment, GST revenue for a financial year also varies from the amount of GST paid to the States for that year because of:
- accrual GST revenues where the cash amounts have not yet been remitted to the ATO;
- penalties, other than general interest charge penalties, which are not included in the definition in the Intergovernmental Agreement of GST to be paid to the States; and
- the net GST component of sales (and associated input tax credits) by Commonwealth agencies which has been collected by those agencies but which, as at 30 June in each year, will not have been remitted to (or refunded by) the ATO, because it is not due to be paid (or refunded) until the next Business Activity Statement is lodged.
The reconciliation of GST revenue and GST entitlements to the States is provided in Table 3.30.
|less change in GST receivables||2,987||2,358||2,541||2,690||2,819|
|less non-GIC penalties collected||165||180||190||200||210|
|less net GST collected by Commonwealth agencies but not yet remitted to the ATO||-343||2||-1||..||1|
|GST entitlements to the States||46,040||48,250||51,000||53,700||56,400|
Table 3.31 below provides information on the balancing adjustment relating to 2011‑12 which will be paid in 2012‑13.
|GST entitlements to the States in 2011-12||46,040.1|
|less advances of GST revenues made throughout 2011-12||45,600.0|
|equals following year balancing adjustment||440.1|
Distribution of GST entitlement pool among the States
As agreed by all parties in the Intergovernmental Agreement, GST payments are distributed among the States in accordance with the principle of horizontal fiscal equalisation and having regard to the recommendations of the Commonwealth Grants Commission. The calculations for the distribution of the GST pool in 2012‑13 are shown in Table 3.32.
(1) x (2)
The calculations for the distribution of the 2011‑12 balancing adjustment are shown in Table 3.33. This adjustment will be paid to each State in 2012‑13 following the upwards revision to the States' 2011‑12 GST entitlement of $440.1 million.
(1) x (2)
(5) - (6)
(a) Total may not equal sum of State totals.
GST administration costs
Given that all GST revenue is provided to the States, the States compensate the Commonwealth for the agreed costs incurred by the ATO in administering the GST, as shown in Table 3.34.
|Australian Taxation Office budget||683.2||680.9||681.9||688.3||695.3|
|less prior year adjustment||5.9||-13.7|
|equals State government payments||677.4||694.7||681.9||688.3||695.3|
|less Australian Taxation Office outcome(a)||697.0|
|equals Commonwealth budget impact||-19.6|
|plus prior year adjustment||5.9|
|equals following year adjustment||-13.7|
(a) Estimated outcome for 2011‑12 pending confirmation by the Australian National Audit Office.
The preliminary outcome for the 2011‑12 GST administration expenses of $697.0 million differs from the amount paid by the States and the prior year adjustment by $13.7 million. Once the outcome for GST administration in 2011‑12 is audited, the final adjustment will be incorporated into the States' administration costs for 2012‑13.
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