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Expenses

2018

2017

$'000

$'000

Note 1A: Employee Benefits

Wages and salaries

1,341,861

1,299,792

Superannuation:

Defined contribution plans

113,365

98,813

Defined benefit plans

188,498

190,197

Leave and other entitlements

286,988

242,549

Separation and redundancies

42,155

22,980

Other employee expenses

4,812

4,080

Total employee benefits

1,977,679

1,858,411

Accounting Policy

Accounting policies for employee related expenses is contained in Note 8: Employee Provisions.

2018

2017

$'000

$'000

Note 1B: Suppliers

Contractors and consultants

297,205

351,457

IT and communications

443,649

440,011

Legal

64,919

67,116

Office operations

143,677

146,875

Property

65,879

59,059

Tax administration services provided by the Department of Home Affairs

51,154

53,647

Travel

25,218

34,706

Other

77,125

79,187

Total goods and services supplied or rendered

1,168,826

1,232,058

Other suppliers

Operating lease rentals

203,194

214,363

Workers compensation expenses

12,047

20,433

Total other suppliers

215,241

234,796

Total suppliers

1,384,067

1,466,854

Leasing commitments

The ATO in its capacity as lessee has a range of long and short term leases with fixed dates for expiry.


In 2017-18 ATO entered a new 10 year lease in Gosford. Minimum lease payments have been included for four additional leases as market reviews have been finalised.

Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows:

2018

2017

$'000

$'000

Within 1 year

205,859

152,269

Between 1 to 5 years

664,903

560,540

More than 5 years

365,248

351,406

Total operating lease commitments

1,236,010

1,064,215

Accounting Policy

Leased Assets

The ATO leases property for office accommodation under operating lease agreements. Operating lease payments are expensed on a straight-line basis over the life of the lease.

Some of the ATO’s IT equipment is leased under embedded finance lease arrangements.

Where an asset is acquired by means of a finance lease, the asset is capitalised at the present value of minimum lease payments at the inception of the contract and a liability is recognised at the same time, for the same amount.

The discount rate used is the interest rate implicit in the lease. Leased assets are depreciated over the period of the lease and lease payments are allocated between the principal component and the interest expense.

Lease Incentives

The threshold for the recognition of new lease incentives received is $250,000 per lease (excluding GST).

Where an incentive has been received by the ATO (such as a free fit out, rent-free period, reimbursement of lessee expenses or cash) the value of the lease incentive received is recognised as a liability. The liability is reduced over the period of the lease. Lease incentives that represent a rent reduction throughout the lease term are treated as an offset of the rent expense immediately rather than a liability.

Where an incentive has been provided by the ATO the value of the lease incentive received is recognised as an asset. The asset is reduced over the period of the lease. Lease incentives that represent a rent reduction throughout the lease term, are treated as an offset of the rent revenue immediately rather than an asset.

2018

2017

$'000

$'000

Note 1C: Finance Costs

Finance leases

706

943

Unwinding of discount

597

283

Total finance costs

1,303

1,226

Accounting Policy

All finance charges are expensed as incurred.

Finance expenses disclosed in the Statement of Comprehensive Income relate to changes in:

  • the discounted amount of onerous lease liabilities and provision for restoration obligation due to the passage of time, and
  • the interest expense for IT equipment held under a finance lease.

2018

2017

$'000

$'000

Note 1D: Write-Down and Impairment of Assets

Impairment and write-offs of non-financial assets

Buildings

211

1,596

Plant and equipment

1,234

472

Intangibles

7,417

140

Revaluation decrement (plant and equipment)

-

-

Impairment on financial instruments

931

53

Other financial assets1

10,449

10,378

Total write-down and impairment of assets

20,242

12,639

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

2018

2017

$'000

$'000

Note 1E: Other Expenses

Compensation

554

1,048

Act of grace payments

-

6,369

Losses from asset sales

9

1

Total other expenses

563

7,418