Australian Government, 2012‑13 Budget
Budget

Part 3: Fiscal strategy and outlook (Continued)

Attachment D

Australia's Federal Relations (Continued)

GST and general revenue assistance

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.

Table 3.27: GST and general revenue assistance, 2012-13 to 2015-16
$million 2012-13 2013-14 2014-15 2015-16
GST entitlement 48,250.0 51,000.0 53,700.0 56,400.0
Other payments        
ACT municipal services 36.8 37.5 38.2 38.9
Reduced royalties 75.4 64.1 64.0 69.7
Royalties 994.7 963.1 955.5 956.2
Snowy Hydro Ltd tax compensation 74.4 74.4 74.4 74.4
Total other 1,181.3 1,139.1 1,132.0 1,139.2
Total GST and other payments 49,431.3 52,139.1 54,832.0 57,539.2

GST

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.

Table 3.28: Reconciliation of GST revenue estimates since 2012-13 Budget
$million 2012-13 2013-14 2014-15 2015-16
GST revenue at 2012-13 Budget 50,486 53,234 56,056 58,730
Changes between 2012-13 Budget and        
MYEFO        
Effect of policy decisions 8 39 74 74
Effect of parameter and other variations 296 457 460 626
Total variations 304 496 534 700
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.

Table 3.29: Policy decisions since Budget that affect GST revenue
$million 2012-13 2013-14 2014-15 2015-16
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.

Table 3.30: Reconciling GST revenue and GST entitlements to the States
  Outcome   Estimates
$million 2011-12   2012-13 2013-14 2014-15 2015-16
GST revenue 48,849   50,790 53,730 56,590 59,430
less change in GST receivables 2,987   2,358 2,541 2,690 2,819
GST receipts 45,861   48,432 51,189 53,900 56,611
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.

Table 3.31: Balancing adjustment relating to 2011‑12
$million Total
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.

Table 3.32: Distribution of the GST entitlement pool, 2012‑13
  Estimated
31 December
2012
population
(1)


GST
relativities
(2)

 Adjusted
population
(1) x (2)
(3)
Share of
adjusted
population
%
(4)
2012-13
GST
entitlement
$million
(5)
NSW 7,316,776 0.95312 6,973,766 30.6 14,774.5
VIC 5,669,647 0.92106 5,222,085 22.9 11,063.4
QLD 4,605,716 0.98477 4,535,571 19.9 9,609.0
WA 2,458,567 0.55105 1,354,793 5.9 2,870.2
SA 1,658,218 1.28472 2,130,346 9.4 4,513.3
TAS 513,830 1.58088 812,304 3.6 1,720.9
ACT 377,726 1.19757 452,353 2.0 958.3
NT 233,964 5.52818 1,293,395 5.7 2,740.2
Total 22,834,444 na 22,774,613 100.0 48,250.0

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.

Table 3.33: Distribution of the GST balancing adjustment, 2011‑12(a)
 
31 December
2011
population
(1)


GST
relativities
(2)

Adjusted
population
(1) x (2)
(3)
Share of
adjusted
population
%
(4)
2011-12
GST
entitlement
$million
(5)
2011-12
GST
advances
$million
(6)
Balancing
adjustment
$million
(5) - (6)
(7)
NSW 7,247,669 0.95776 6,941,527 30.9 14,231.9 14,104.9 127.0
VIC 5,574,455 0.90476 5,043,544 22.5 10,340.6 10,273.6 66.9
QLD 4,513,009 0.92861 4,190,825 18.7 8,592.3 8,600.7 -8.4
WA 2,387,232 0.71729 1,712,338 7.6 3,510.7 3,419.6 91.1
SA 1,645,040 1.27070 2,090,352 9.3 4,285.8 4,239.2 46.6
TAS 511,718 1.59942 818,452 3.6 1,678.0 1,643.4 34.7
ACT 370,729 1.11647 413,908 1.8 848.6 825.1 23.5
NT 232,365 5.35708 1,244,798 5.5 2,552.2 2,493.6 58.6
Total 22,482,217 na 22,455,744 100.0 46,040.1 45,600.0 440.1

(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.

Table 3.34: GST administration budget, 2011‑12 to 2015‑16
  Actual   Estimates
$million 2011-12   2012-13 2013-14 2014-15 2015-16
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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