Accounting Policy

Accounting policies for employee related expenses is contained in Note 7A Employee provisions.

Leasing commitments

The ATO in its capacity as lessee has a range of long and short-term leases with fixed dates for expiry. A number of leases are due to end over the next five years.

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

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.

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 $150,000 per lease.

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.

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 over time; and
• the interest expense for IT equipment held under a finance lease.