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About the financial statements

The ATO’s financial statements are general purpose financial statements and are required by section 42 of the Public Governance, Performance and Accountability Act 2013 (PGPA Act).

The financial statements have been prepared in accordance with:

  • the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 for reporting periods ending on or after 1 July 2015
  • Australian Accounting Standards and Interpretations Reduced Disclosure Requirements – issued by the Australian Accounting Standards Board (AASB) – that apply for the reporting period.

The ATO’s financial statements have been prepared on an accrual basis and in accordance with the historical cost convention, except for certain assets and liabilities at fair value. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position.

These financial statements incorporate the financial transactions of the Tax Practitioners Board (TPB), the Australian Business Register (ABR), and the Australian Charities and Not-for-profits Commission (ACNC).

Independent Auditor's report

Statement by the Commissioner of Taxation and Chief Finance Officer

Statement of Comprehensive Income

for the period ended 30 June 2018

2018

2017

Original Budget

Note

$'000

$'000

$'000

NET COST OF SERVICES

Expenses

Employee benefits

1A

1,977,679

1,858,411

1,879,652

Suppliers

1B

1,384,067

1,466,854

1,445,744

Depreciation and amortisation

4A

197,626

192,011

174,355

Finance costs

1C

1,303

1,226

-

Write-down and impairment of assets1

1D

20,242

12,639

-

Other expenses

1E

563

7,418

-

Total expenses

3,581,480

3,538,559

3,499,751

Own-Source Income

Own-source revenue

Rendering of services1

2A

107,924

119,200

97,980

Rental income

2B

29,871

21,820

24,020

Other revenue

2C

9,471

3,532

3,693

Total own-source revenue

147,266

144,552

125,693

Gains

Other gains

2D

10

21,501

-

Total gains

10

21,501

-

Total own-source income

147,276

166,053

125,693

Net cost of services

(3,434,204)

(3,372,506)

(3,374,058)

Revenue from Government

2E

3,199,160

3,197,797

3,199,703

Deficit on continuing operations

(235,044)

(174,709)

(174,355)

Deficit

(235,044)

(174,709)

(174,355)

OTHER COMPREHENSIVE INCOME

Items not subject to subsequent reclassification to net cost of services

Revaluation of restoration obligations provision

(118)

(23)

-

Other changes in asset revaluation reserves

-

-

-

Total other comprehensive income

(118)

(23)

-

Total comprehensive loss

(235,162)

(174,732)

(174,355)

1Prior year adjustments have been made to these numbers. Refer to Overview.

Budget Variances Commentary: Statement of Comprehensive Income

Affected line items

Explanation of major variances

Employee benefits

The timing of the adoption of the ATO Enterprise Agreement 2017 and associated payrise and higher than expected separation and redundancies costs towards the end of 2017-18 have resulted in a higher than expected actual.

Suppliers

The lower than expected actual is driven by reduced expenditure on contractors and consultants combined with a lower than expected Workers’ compensation premium expense.

Depreciation and amortisation

Higher computer software asset additions has resulted in a higher than expected depreciation charge.

Rendering of services

Higher than anticipated recovery of legal costs have resulted in increased revenue for rendering of services.

Rental income

Higher than budgeted rental income is a result of new rental agreements with other Government agencies that were not known at the time the budget was prepared.

Other revenue

The variance is driven by a refund of prior year Workers’ compensation premium that was not factored in the budget.

Statement of financial position

as at 30 June 2018

2018

2017

Original Budget

Note

$'000

$'000

$'000

ASSETS

Financial Assets

Cash

3A

28,944

23,115

63,566

Trade and other receivables1

3B

463,812

442,292

390,230

Total financial assets

492,756

465,407

453,796

Non-Financial Assets

Buildings - leasehold improvements

4A

195,175

211,310

258,496

Plant and equipment

4A

73,017

85,389

58,972

Intangibles - computer software

4A

520,746

497,714

479,939

Other non-financial assets

4B

89,544

89,367

102,515

Total non-financial assets

878,482

883,780

899,922

Total assets

1,371,238

1,349,187

1,353,718

LIABILITIES

Payables

Employees

6A

44,529

17,948

21,902

Suppliers

6B

384,402

280,755

328,378

Other payables

6C

84,619

91,863

104,823

Total payables

513,550

390,566

455,103

Interest Bearing Liabilities

Leases

7A

10,859

15,892

-

Total interest bearing liabilities

10,859

15,892

-

Provisions

Employee provisions

8A

672,872

629,701

632,175

Other provisions

8B

29,881

30,550

24,683

Total provisions

702,753

660,251

656,858

Total liabilities

1,227,162

1,066,709

1,111,961

Net assets

144,076

282,478

241,757

EQUITY

Contributed equity

1,550,110

1,453,370

1,593,456

Reserves

115,401

115,519

115,542

Accumulated deficit1

(1,521,435)

(1,286,411)

(1,467,241)

Total equity

144,076

282,478

241,757

1 Prior year adjustments have been made to these numbers. Refer to Overview.

Budget Variances Commentary : Statement of Financial Position

Affected line items

Explanation of major variances

Cash

The actual was lower than budget primarily due to fluctuations associated with the timing of payments to employees and suppliers.

Trade and other receivables

The higher than budgeted actual is primarily driven by a higher than expected appropriation receivable aligned with pending payments to suppliers.

Buildings - leasehold improvements

Lower than budgeted Building - leasehold improvements is due to a change in asset purchase priorities after budget approval, resulting in lower than expected asset additions.

Plant and equipment

Higher than budgeted Plant and equipment is driven by a change in asset purchase priorities after budget approval, resulting in additional asset purchases.

Intangibles - computer software

Higher than budgeted Intangibles - computer software is driven by considerably higher than expected asset additions, consistent with the change in asset purchase priorities after budget approval. This increase is partially offset by a higher than budgeted depreciation charge for the year.

Other non-financial assets

The actual was lower than budget due to less than expected lease incentives provided to sublease tenants.

Employees

The higher than budgeted employee payables is driven by higher than expected separation and redundancies towards the end of the year.

Suppliers

The higher than budgeted actuals is primarily driven by pending payments for services provided on behalf of the ATO.

Other payables

The actual was lower than budget primarily due to reduced operating lease incentives.

Employee provisions

The higher than budgeted actual is predominantly due to the higher than expected provision for employee benefits following the adoption of the ATO Enterprise Agreement 2017.

Other provisions

The higher than budgeted actual is largely driven by additional legal costs and indemnities for unforeseen cases not factored into the budget.

Accumulated deficit

The budgeted equity balances did not account for an operating deficit nor subsequent appropriation reductions associated with the repeal of a number of Appropriation Acts related to prior years.

Statement of Changes in Equity

for the period ended 30 June 2018

Contributed Equity

Asset Revaluation Surplus

Retained Earnings

Total Equity

2018

2017

Original Budget

2018

2017

Original Budget

2018

2017

Original Budget

2018

2017

Original Budget

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

1,453,370

1,286,961

1,593,456

115,519

115,542

115,542

(1,286,411)

(1,120,593)

(1,467,241)

282,478

281,910

241,757

-

-

-

-

-

-

20

8,890

-

20

8,890

-

1,453,370

1,286,961

1,593,456

115,519

115,542

115,542

(1,286,391)

(1,111,703)

(1,467,241)

282,498

290,800

241,757

-

-

(118)

(23)

-

-

-

-

(118)

(23)

-

-

-

-

-

-

(235,044)

(174,709)

-

(235,044)

(174,709)

-

-

-

-

(118)

(23)

-

(235,044)

(174,709)

-

(235,162)

(174,732)

-

(43,739)

-

-

-

-

-

(43,739)

-

-

27,890

54,790

-

-

-

-

-

-

27,890

54,790

-

112,589

111,619

-

-

-

-

-

-

112,589

111,619

-

96,740

166,409

-

-

-

-

-

-

-

96,740

166,409

-

-

-

-

-

-

-

-

-

-

-

-

-

1,550,110

1,453,370

1,593,456

115,401

115,519

115,542

(1,521,435)

(1,286,412)

(1,467,241)

144,076

282,477

241,757

1 Prior year adjustment relates to the recovery of legal costs adjustments and minor adjustment to finance lease cost.

2 Prior year returns of contributed equity relate to repeal of the 2012-13, 2013-14 and 2015-16 annual appropriation Acts. 2015-16 annual appropriations which will automatically lapse from 1 July 2018, are not legal reductions, and are therefore still included in Note 18B Unspent Annual Appropriations.

Accounting Policy

Amounts appropriated which are designated as ‘equity injections’ for a year (less any formal reductions) and Departmental Capital Budgets (DCBs) are recognised directly in contributed equity in that year.

Budget Variances Commentary : Statement of Changes in Equity

Explanation of major variances

The variances are supported by the explanations provided above in the Statement of Comprehensive Income and Statement of Financial Position.

Cash Flow Statement

for the period ended 30 June 2018

2018

2017

Original Budget

Note

$'000

$'000

$'000

OPERATING ACTIVITIES

Cash received

Appropriations

3,125,100

3,217,314

3,180,213

Rendering of services

125,228

115,560

128,294

Receipts transferred from the Official Public Account

257,660

293,392

284,441

Interest

-

-

-

GST received

136,635

151,187

127,757

Other

-

20

-

Total cash received

3,644,623

3,777,473

3,720,705

Cash used

Employees

1,908,100

1,845,849

1,860,669

Suppliers

1,412,867

1,630,409

1,575,595

Borrowing costs (finance leases)

706

943

-

Receipts transferred to the Official Public Account

281,806

304,578

284,441

Total cash used

3,603,479

3,781,779

3,720,705

Net cash from/(used by) operating activities

41,144

(4,306)

-

INVESTING ACTIVITIES

Cash received

Proceeds from sales of property, plant and equipment

1

1

-

Total cash received

1

1

-

Cash used

Purchase of property, plant and equipment

22,203

41,364

174,429

Purchase of intangibles

155,770

136,539

-

Total cash used

177,973

177,903

174,429

Net cash from/(used by) investing activities

(177,972)

(177,902)

(174,429)

FINANCING ACTIVITIES

Cash received

Appropriations - contributed equity

153,288

153,298

174,429

Total cash received

153,288

153,298

174,429

Cash used

Return of capital

-

-

-

Payment of finance lease - principal amount

10,631

15,365

-

Total cash used

10,631

15,365

-

Net cash from/(used by) financing activities

142,657

137,933

174,429

Net increase/(decrease) in cash held

5,829

(44,275)

-

Cash at the beginning of the reporting period

23,115

67,390

63,566

Cash at the end of the reporting period

3A

28,944

23,115

63,566

Budget Variances Commentary: Statement of Cash Flows

Explanation of major variances

The variances are supported by the explanations provided above in the Statement of Comprehensive Income and Statement of Financial Position.

Administered Schedule of Comprehensive Income

for the period ended 30 June 2018

2018

2017

Original Budget

Note

$'m

$'m

$'m

NET COST OF SERVICES

Expenses

Subsidies

13A

9,550

9,452

9,964

Personal benefits

13B

1,147

1,099

1,191

Impairment on taxation receivables1

5,508

5,665

5,863

Penalty and interest charge remission expenses

1,976

1,124

1,410

Interest on overpayments

105

163

165

Superannuation guarantee charge

628

282

317

Other expenses

21

32

13

Total expenses

18,935

17,817

18,923

Revenue

Taxation revenue

Income tax2

14A

312,937

281,417

302,727

Indirect tax2

14B

89,683

86,140

89,450

Other taxes

14C

3,028

1,009

2,521

Total taxation revenue

405,648

368,566

394,698

Non-taxation revenue

Unclaimed superannuation monies

158

534

300

Other revenue

13

3

-

Total non-taxation revenue

171

537

300

Total revenue

405,819

369,103

394,998

Net contribution by services

386,884

351,286

376,075

Surplus on continuing operations

386,884

351,286

376,075

Total comprehensive income

386,884

351,286

376,075

1 Includes write-offs of $6,003 million (2017: $4,804) less re-raises of $1,266 million (2017: $917) and the movement in the impairment provision of $771 million (2017: $1,778). Prior year adjustments have also been made. Refer to Overview.

2 Prior year adjustments have been made to these numbers. Refer to Overview.

Budget Variances Commentary : Schedule of Comprehensive Income

Affected line items

Explanation of major variances

Subsidies

The actuals are lower than budget primarily due to lower than expected Research and development tax incentive (R&D), partially offset by strong Fuel tax credits (FTC) claims:

  • R&D claims grew slower than expected and there was increased ATO compliance activity denying more R&D claims,
  • The growth in FTC is consistent with higher fuel excise revenue primarily driven by higher diesel excise consistent with higher than expected business investment.

Penalty and interest charge remission expenses

The actuals are higher than budget primarily due to significant compliance related activities in 2017-18.

Interest on overpayments

The actuals are lower than budget primarily due to improved work practices reducing unnecessary delays and consequently, reduced Interest on overpayments.

Superannuation guarantee charge

The actuals are higher than budget primarily due to compliance activities and community awareness of Superannuation guarantee non-compliance resulting in high employee notifications.

Income tax

The actuals are higher than budget due to higher taxes from companies, individuals and superannuation funds, consistent with higher than expected growth in key commodity prices, salary and wages and capital gains, respectively.

Indirect tax

The actuals are higher than budget primarily due to Superannuation guarantee charge revenue which was driven by compliance activities and community awareness of Superannuation guarantee non-compliance resulting in high employee notifications.

Unclaimed superannuation monies

The actuals are lower than budget primarily due to higher than anticipated reunification of Unclaimed superannuation monies (USM). This reflects the greater than anticipated impact of a number of ATO initiatives aimed at reuniting USM with individual funds.

Administered Schedule of Assets and Liabilities

as at 30 June 2018

2018

2017

Original Budget

Note

$'m

$'m

$'m

ASSETS

Financial Assets

Cash

300

341

300

Cash held in OPA for special Accounts1

106

94

-

Total financial assets

406

435

300

Non-Financial Assets

Taxation receivables1

15A

22,569

20,511

22,791

Non-taxation receivables2

15B

3

14

30

Accrued revenues

15C

14,276

13,974

14,726

Total non-financial assets

36,848

34,499

37,547

Total assets administered on behalf of Government

37,254

34,934

37,847

LIABILITIES

Payables

Subsidies

21

35

22

Personal benefits1

15

23

30

Superannuation guarantee charge1

33

7

20

Taxation refunds due

1,008

1,222

692

Superannuation holding account1

106

95

116

Other payables

1

-

-

Total payables

1,184

1,382

880

Provisions

Subsidies

16A

3,901

4,175

4,537

Personal benefits

16A

1,222

1,216

1,314

Other accrued expenses

16A

78

73

60

Income taxation refunds provided for

16A

2,190

1,345

2,044

Indirect taxation refunds provided for

16A

306

241

236

Superannuation guarantee payments

16A

854

624

647

Unclaimed superannuation payments

16A

746

840

609

Other provisions for refund

16A

5

6

-

Interest on overpayment of taxes

16A

-

-

8

Total provisions

9,302

8,520

9,455

Total liabilities administered on behalf of Government

10,486

9,902

10,335

Net assets

26,768

25,032

27,512

1 Prior year adjustments have been made to these numbers. Refer to Overview.

2 Non-taxation receivables was previously included as part of taxation receivables. Prior year adjustments have also been made. Refer to Overview.

Accounting Policy

Administered Liabilities

Administered liabilities include payables and provisions. Payables are recognised for claims on hand and provisions are raised for accrued expenses in accordance with the accounting policy in the Administered Expenses in Note 13. The majority of the ATO’s administered liabilities are not categorised as financial liabilities as they are statutory in nature.

Budget Variances Commentary : Schedule of Assets and Liabilities

Affected line items

Explanation of major variances

Cash held in OPA accounts

The actuals are higher than budget due to a change in accounting policy in 2016-17 that was required through the Financial Reporting Rules to include the credit balance of special accounts in the entity’s cash balance. This was adopted in June 2017 after the budget had already been developed.

Taxation receivables

The actuals are lower than budget primarily due to higher provisions for credit amendments resulting from compliance related activities and the classification of the accrued revenue for the Major bank levy in the budget as taxation receivables. This has been partially offset by higher than budgeted actuals for company receivables consistent with the increase in Company revenue.

Accrued revenue

The actuals are lower than budget primarily due to lower accrued revenue for Fringe benefits tax and Goods and services tax consistent with lower actual revenue recognised compared to budget for these items. This has been partially offset by the accrual for the Major bank levy which was budgeted for as a taxation receivable.

Taxation refunds due

Taxation refunds due can be volatile due to the timing of lodgements, payments and audit outcomes from year to year. It is noted the budget was based on the latest actual balance of the payable account available (2015-16), which was lower at that time.

Subsidies provision

The actuals are lower than budget primarily due to the provision for Research and development tax incentive (R&D). R&D claims grew slower than expected and ATO compliance activity resulted in denying more R&D claims.

Income taxation refunds provided for

The actuals are higher than budget primarily due to a higher provision for refunds for company income tax. Provisions for refunds can be volatile due to the timing of lodgements, payments and audit outcomes from year to year.

Indirect taxation refunds provided for

The higher than budgeted actuals is primarily due to Goods and Services Tax (GST). Provisions for refunds can be volatile due to the timing of lodgements, payments and audit outcomes from year to year.

Superannuation guarantee payments

The actuals are higher than budget primarily due to compliance activities and community awareness of Superannuation guarantee non-compliance resulting in high employee notifications.

Unclaimed superannuation payments

The actuals are lower than budget primarily due to higher than anticipated reunification of Unclaimed superannuation monies (USM). This reflects the greater than anticipated impact of a number of ATO initiatives aimed at reuniting USM with individual funds.

Administered Reconciliation Schedule

for the period ended 30 June 2018

2018

2017

$'m

$'m

Opening assets less liabilities as at 1 July1

25,032

22,549

Adjustments to equity

FTB equity transfer

117

70

HELP equity transfer

359

173

SFSS equity transfer

(6)

-

Net (cost of)/contribution by services

Income1

405,819

369,103

Expenses

(18,935)

(17,817)

Transfers (to)/from Australian Government

Appropriation transfers from Official Public Account

Annual appropriations

-

-

Special appropriations (unlimited)

107,534

102,537

Appropriation transfers to OPA

Transfers to OPA

(493,152)

(451,583)

Closing assets less liabilities as at 30 June

26,768

25,032

1 Prior year adjustments have been made to these numbers. Refer to Overview.

Accounting Policy

Administered Cash Transfers to and from the Official Public Account

Revenue collected by the ATO for use by the Government rather than the ATO is administered revenue. Collections are transferred to the Official Public Account (OPA) maintained by the Department of Finance. Cash, on the other hand, is drawn from the OPA to make payments under Parliamentary appropriation on behalf of the Government. These transfers to and from the OPA are adjustments to the administered cash held by the ATO on behalf of the Government and are reported in the schedule of administered cash flows and in the administered reconciliation schedule.

Administered Cash Flow Statement

for the period ended 30 June 2018

2018

2017

$'m

$'m

OPERATING ACTIVITIES

Income tax

307,352

275,573

Indirect tax

87,578

83,301

Other revenue

2,159

1,205

Superannuation holding account

11

3

Subsidies paid

(9,834)

(9,334)

Personal benefits

(1,154)

(1,192)

Interest

(105)

(171)

Other

(418)

(295)

Net cash from operating activities

385,589

349,090

Cash at the beginning of the reporting period1

435

391

Cash from Official Public Account

Appropriations

107,483

102,490

Special accounts

51

47

Total cash used from official public account

107,534

102,537

Cash to official public account

Administered receipts

(493,101)

(451,536)

Special accounts

(51)

(47)

Total cash to official public account

(493,152)

(451,583)

Cash at the end of the reporting period

406

435

1 Prior year adjustments have been made to these numbers. Refer to Overview.

Accounting Policy

The administered cash flow statement represents the total cash received or paid by the primary operating activities of the ATO. Therefore, the categories disclosed above are treated on a net basis. For example, a refund relating to Income tax is defined as an overpayment of tax and treated as a reduction to the Income tax category. Positive amounts represent an inflow and negative amounts represent an outflow for the relevant category. More detailed information in relation to refunds can be found in the Special Appropriations Note 18C.