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14: Administered - income

2021

2020

$'m

$'m

Note 14A: Income tax

Individuals and others withholding tax

235,747

229,731

Companies

98,998

87,036

Superannuation funds

13,037

6,621

Fringe benefits tax

3,501

3,939

Resources rent tax

897

921

Total income tax

352,180

328,248

Note 14B: Indirect tax

Goods and services tax

74,480

65,288

Excise duty

24,503

23,116

Wine equalisation tax

1,101

1,040

Luxury car tax

900

632

Total indirect tax

100,984

90,076

Note 14C: Other taxes

Major bank levy

1,572

1,639

Superannuation guarantee charge

1,683

1,034

Self managed superannuation fund levy

139

141

Other

107

123

Total other taxes

3,501

2,937

Note 14D: Non-taxation revenue

Unclaimed superannuation monies

802

1,120

Voluntary repayment of JobKeeper

193

-

Fines

53

48

Other

87

14

Total non-taxation revenue

1,135

1,182

Accounting policy

The ATO recognises revenue when, and only when, the following three conditions have been satisfied:

1. there is a basis establishing the ATO’s right to receive the revenue;

2. it is probable that future economic benefits will be received by the ATO; and

3. the amount of revenue to be received can be reliably measured.

Estimating some revenues can be difficult due to impacts of economic conditions and timing of final taxable income, hence the ATO uses two bases of recognition:

1. Economic transaction method (ETM)

Revenue is recognised when the ATO, through the application of legislation to taxation and other relevant activities, gains control over the future economic benefits that arise from taxes and other statutory charges.

Where a taxation revenue type is able to be measured reliably, including transactions that are yet to occur but are likely to be reported, the ETM is applied.

Estimation techniques have inherent risks of error and rely on assumptions such as wage growth, gross domestic product (GDP) and recent historical information. Based on the information and evidence available at the date of these financial statements, the amounts disclosed represent a reliable estimate of revenue.

2. Taxation liability method (TLM)

Revenue is recognised at the earlier of when an assessment of a tax or superannuation liability is made, or payment is received by the ATO. Further, revenue is recognised when there is sufficient information to raise an assessment but an event has occurred which delays the issue of the assessment. This method is permitted under AASB 1058 Income of Not-for-Profit Entities in circumstances when there is an inability to reliably measure taxes when the underlying transactions or events occur. Revenue recognised under the TLM basis is generally measured at a later time than would be the case if it were measured under ETM.

In accordance with the revenue recognition approach adopted by the Australian Government, the ATO applies the ETM and TLM approaches as set out in the following tables.

Revenue types recognised on an ETM basis

Type of taxation and superannuation revenue

Nature of revenue type

Fringe benefits tax

Fringe benefits tax (FBT) is recognised on fringe benefits provided by employers to employees during the reporting period and includes an estimate of outstanding instalments and balancing payments for the annual FBT return.

Petroleum resource rent tax

Petroleum resource rent tax is recognised based on actual taxable profits for the year in respect of offshore petroleum projects excluding some of the North-West Shelf production and associated exploration areas, which are subject to excise and royalties.

Goods and services tax

The goods and services tax (GST) is a broad-based tax of 10 per cent on most goods and services supplied or sold during the reporting period. GST revenue includes actual liabilities raised during the year and an estimate of amounts outstanding that relate to transactions occurring in the reporting period.

Excise duty

Excise duty is recognised based on the actual and estimated duty payable to the Government. Excise duty becomes payable when certain goods are distributed for home consumption during the reporting period.

Wine equalisation tax

The wine equalisation tax revenue is recognised when an assessable dealing occurs within the reporting period giving rise to a tax liability and an estimate of amounts outstanding that related to transactions occurring in the reporting period.

Luxury car tax

The luxury car tax revenue is recognised at the time the sale (or private import) of a luxury vehicle occurs within the reporting period and an estimate of amounts outstanding that relate to transactions occurring in the reporting period.

Major bank levy

Major bank levy is a levy calculated within the reporting period on authorised deposit-taking institutions with a total liability threshold of greater than $100 billion.

Unclaimed superannuation monies

Revenue is recognised based on the annual amount of unclaimed superannuation received by the ATO less an estimate of future outflows relating to the annual amount received when account owners initiate a claim or the account owner is identified. Revenue in relation to inactive low balance accounts, closure of eligible rollover fund accounts and trustee voluntary payments will be recognised on a TLM basis as the amount of the payments cannot be reliably measured.

Self managed superannuation fund levy

A self-managed superannuation fund (SMSF) is obligated to pay the SMSF levy when the SMSF (registered and active) exists at any time through the income year.

Revenue types recognised on a TLM basis

Type of taxation and superannuation revenue

Nature of revenue type

Income tax - individuals

Individuals income tax includes income tax withholding, other individuals, Medicare levy, and income tax refunds.

Income tax withholding represents amounts withheld from remuneration paid during the year. Other individuals includes income tax instalments for the year and prior year final tax returns received by the ATO during the year. Income tax refunds are made where tax credits exceed the final liability on assessment. Refunds include prior year refunds made or assessed during the year.

Individuals income tax does not include estimates of revenue or refunds related to the current taxation year that will be recognised in tax returns lodged after the end of the current financial year.

Income tax - companies

Company income tax includes company tax payable that relates to income tax instalments and final payments received/raised for the current and prior reporting periods.

It does not include estimates of revenue related to the current taxation year that will be recognised in tax returns lodged after the end of the current financial year.

Income tax - superannuation funds

Superannuation income tax includes amounts payable by superannuation funds that relate to income tax instalments and final payments for the current and prior reporting periods. Superannuation funds income tax is levied on earnings and taxable contributions.

It does not include estimates of revenue related to the current taxation year that will be recognised in tax returns lodged after the end of the current financial year.

Superannuation guarantee charge

Superannuation guarantee charge is a charge on employers that have not paid the compulsory superannuation guarantee for their employees. The ATO assesses and collects the guarantee, interest owing and an administrative fee.

Voluntary repayment of JobKeeper

Voluntary repayment of Jobkeeper payments satisfy the recognition criteria of revenue upon receipt into the consolidated revenue fund. The payments are recognised in the financial statements as non-taxation revenue.

Accounting policy

Allowance for credit amendments and provisions for refunds

Taxpayers are entitled to dispute taxation amounts assessed by the ATO. Where the ATO considers that the probable outcome will be a reduction in the amount of tax owed by a taxpayer, an allowance for credit amendment (if the disputed debt is unpaid) or a provision for refund (if the disputed debt has been paid) will be recognised.

The allowance for credit amendments and provisions for refunds are recognised as a reduction in revenue.

For disputes less than $10 million, these estimates are calculated using an automated model. The model uses historical trends to calculate probable reductions.

Disputes greater than $10 million are manually assessed. Where there is insufficient certainty to make a manual assessment a statistical model is used to estimate the value.

Penalties and interest charges

Penalties and interest arising under taxation legislation are recognised as revenue at the time the penalty or interest is imposed on the taxpayer. Generally, subsequent remissions and write-offs of such penalties and interest are treated as an expense of the period. Penalties and interest that are imposed by law and immediately remitted by the Commissioner are not recognised as revenue or as an expense. Additional interest is raised for the period between the last imposition and the end of the financial year to recognise amounts not yet recorded on taxpayer accounts.

Settlements

A settlement involves an agreement between the ATO and the taxpayer to resolve matters in dispute where one or more parties make concessions on what they consider is the legally correct position. Where this results in a reduction of the amounts payable by the taxpayer, the reductions for the assessment and any associated penalties and interest charges, excluding failure to lodge penalties, are recognised as a reduction in revenue.

Pay as you go (PAYG) system

The ATO collects compulsory repayment amounts of accumulated HELP and other income contingent loan (ICL) debts through the PAYG tax system. The repayment of ICL debts reduces the loan that a person owes to the Commonwealth.

An adjustment is made to Individuals income tax revenue for the compulsory repayment of ICL debts as the collection of these amounts through the PAYG tax system does not represent revenue for the ATO and the compulsory repayments figure can be reliably estimated.