The ATO is responsible for the management of substantial Commonwealth funds and must demonstrate effective and efficient management of resources in accordance with the Australian Government’s policies and the requirements of other agencies, such as the Australian National Audit Office (ANAO).

For our financial statements (as required by subsection 43(4) of the PGPA Act), see Part 5 - Financial statements.

For details on how we have performed against our financial performance measures in our corporate plan, see Strategic objective: F1 Financial in the annual performance statement.

In this section

• Information on our budget, including our:
  • Operating expense budget
  • Capital budget
  • Agency resource statement
• Administering GST
• Efficient administrative practices

Operating expense budget

The ATO actively manages its budget through governance and assurance processes, including oversight by senior management committees. These committees provide an integrated approach to effective resource management and prioritisation of significant investment decisions.

The ATO’s operating expense budget for 2020–21 (excluding depreciation) was $3.9 billion.

The ATO’s 2020–21 financial result was an operating surplus of $49 million or 1.2% under budget. This result includes lease principal repayments under Australian Accounting Standards Board 16 leasing standards and excludes non-cash financial accounting adjustments, such as write-off expenses, depreciation, amortisation, finance lease and revaluation adjustments made for our financial statements.

Operating expenditure, 2020–21

Capital budget

The ATO’s approach to capital management includes a capital management plan that contains information about our proposed capital expenditure from all funding sources.

The ATO commenced 2020–21 with a capital budget of $156.3 million, which comprised:

• departmental capital budget of $133.7 million
• equity funding of $22.6 million.

During the year, the capital budget increased by $113.6 million as a result of both government and ATO decisions.

The ATO’s 2020–21 capital expenditure was $140.3 million. The ATO is seeking approval to carry forward 2020–21 capital underspends to support government priorities and legislative projects in future years.

Administering GST

The ATO administers the goods and services tax (GST) on behalf of the Australian states and territories. The states and territories reimburse the Commonwealth for the ATO’s cost of administering GST. Our obligations to the states and territories are set out in the GST Administration Performance Agreement between the ATO and the Council on Federal Financial Relations (as per the Intergovernmental Agreement on Federal Financial Relations).

The agreed estimate for administering GST in 2020–21 was $621.5 million. The final cost of GST administration is subject to a special purpose audit by the ANAO. The final audited cost is reported against the agreed estimate and presented to the states and territories at the conclusion of the audit.

GST administration outcomes and performance are published annually in the GST administration annual performance report, which is available at ato.gov.au/GSTadministration.

Agency resource statement

Budgeted expenses and resources

Efficient administrative practices

Along with agency budgets that provide funding to deliver specific programs, government expenditure is guided by legislation that provides direction and sets minimum requirements, including reporting obligations. The ATO complies with the PGPA Act, PGPA Rule, ANAO requirements, and the Environment Protection and Biodiversity Conservation Act 1999.

Asset management

The ATO has an asset management framework in place which outlines how we plan and maintain the optimal asset mix for effective delivery of our programs.

The ATO’s approach to asset management includes:

• detailed procedures and guidance on asset management
• an asset register, which is subject to a regular stocktake.

Procurement

Procurement refers to the whole process of acquiring goods or services – from identifying a need, through to obtaining and paying for the goods or services. If relevant, it also includes the ongoing contract management and disposal of goods.

The ATO’s approach to procuring goods and services – including consultancies – is consistent with, and reflects the principles of, the Commonwealth procurement rules and various procurement‑related legislation and government policies. To ensure this, the ATO has a range of system-based and other controls in place and conducts regular assurance processes.

Standard ATO contracts include a clause requiring suppliers to comply with all legislative and government policy obligations, including those relating to taxation and workplace health and safety. In addition, we have worked closely with our suppliers throughout the COVID-19 pandemic to ensure there are adequate COVID-19 safety measures in place for their employees and we have made working from home available to labour hire personnel wherever possible throughout the pandemic.

This section includes procurement information for the ATO, ACNC and TPB, unless noted otherwise.

Contracting

All ATO contracts of $100,000 or more provide for the Auditor-General to have access to the contractor’s premises.

The ATO had no contracts in excess of $10,000 that were exempted by the Accountable Authority from being published on AusTender because it would disclose exempt matters under the FOI Act.

Consultancy contracts

The ATO uses consultancy services to obtain independent advice, often of a specialised nature, to assist with decision-making at the agency level.

Consultants are engaged through a procurement process, using open tender, limited tender or an established panel arrangement. All consultants who require unsupervised access to ATO premises or ATO information are required to complete mandatory training on security, as well as work, health and safety.

During 2020–21, the ATO entered into 113 new reportable consultancy contracts, involving total actual expenditure of $8.4 million. In addition, 52 ongoing reportable consultancy contracts were active during 2020–21, involving total actual expenditure of $4.8 million. Prior-year contracts accounted for 36% of total consultancy expenditure.

Annual reports contain information about actual expenditure on reportable consultancy contracts. Information on the value of reportable consultancy contracts is available on the AusTender website at tenders.gov.au.

Non-consultancy contracts

Non-consultancy services are engaged through a procurement process, using open tender, limited tender or an established panel arrangement. Suppliers’ employees and contractors who require unsupervised access to ATO premises or ATO information are required to complete mandatory training on security, as well as work, health and safety.

During 2020–21, the ATO entered into 1,485 new reportable non-consultancy contracts, involving total actual expenditure of $304.7 million. In addition, 1,512 ongoing reportable non-consultancy contracts were active during 2020–21, involving total actual expenditure of $1,656.0 million.

Annual reports contain information about actual expenditure on reportable non-consultancy contracts. Information on the reportable non-consultancy contracts’ value is available on the AusTender website at tenders.gov.au.

Small and medium enterprises

The ATO supports small and medium business participation in the Commonwealth Government procurement market. Our support focuses on removing barriers to their participation and includes:

• streamlined tender requirements for lower value and less complex contracts
• adhering to the principles of the Commonwealth Government’s Digital Sourcing Framework, which includes structuring procurements in a way that enables small and medium enterprises to compete fairly to provide components of large ICT projects
• actively seeking opportunities to engage Aboriginal and Torres Strait Islander businesses.

Small-to-medium enterprises and small enterprise participation statistics are available on the Department of Finance website at finance.gov.au/procurement. The Australian Government has set two targets for contracts awarded to businesses with less than 200 employees:

• 10% of all contracts (by value)
• at least 35% of contracts valued up to $20 million (by value).

The ATO exceeded both targets in 2020–21.

The ATO recognises the importance of ensuring small businesses are paid on time. The ATO achieved 96% compliance in 2020–21. The results of the Survey of Australian Government Payments to Small Business are available on the Treasury’s website at treasury.gov.au.

Indigenous procurement policy

In 2020–21, we spent over $22.9 million with Aboriginal and Torres Strait Islander businesses. This expenditure relates to both new contracts entered into during 2020–21 (82 with a total value of $15.2 million) and contracts entered into during previous years.

Grants

The ATO provides a small number of discretionary grants, including funding for legal institutes, and to encourage community participation in the tax and superannuation systems through sponsorship and mentoring arrangements.

The ATO’s grant activities meet the requirements and principles of grants administration contained in the Commonwealth grants rules and guidelines 2017, including reporting and publishing of all grants provided throughout the year.

During 2020–21, the ATO awarded 13 grants of which 10 were to support the National Tax Clinic program.

Information about the National Tax Clinic program is available on our website at ato.gov.au/nationaltaxclinic. All grants awarded are published on grants.gov.au.

Compliance with finance law

The PGPA Act requires that agencies provide a statement of significant issues reported to the minister under paragraph 19(1)(e) of the Act, which relates to non-compliance with finance law and action taken to remedy non-compliance.

The ATO reported one such issue to the responsible Minister for 2020–21 concerning the implications of the decision of the High Court in Commissioner of Taxation v Travelex Limited [2021] HCA 8, which was handed down on 10 March 2021.

The High Court’s decision means that the ATO’s historical practice of revising a taxpayer’s business activity statement (BAS) to amend net amounts (including GST, wine equalisation tax and luxury car tax) and net fuel amounts without issuing an assessment had no legal effect. The decision impacts all revisions of net amounts and net fuel amounts for tax periods between 1 July 2000 and 30 June 2012 where no assessment was issued.

As a result of the High Court’s decision, such refunds paid between 1 July 2000 and 29 June 2012 were paid out of the consolidated revenue fund without an appropriation made by law‍⁵. The underlying correctness of the amounts refunded is not in question. The issue is a technical one that, due to the ATO’s BAS revision practice, such amounts were refunded without the support of an assessment.

The ATO has reviewed its BAS revision practice to ensure that taxpayers are only paid refunds following the revision of a net amount or net fuel amount where an assessment has been issued.

The ATO has reported this issue in its financial statements for the year ending 30 June 2021.

___________________________

Footnote

⁵ Section 15C of the Taxation Administration Act 1953 commenced on 28 June 2012 and provides appropriation for such refunds paid on or after that date.

Ecologically sustainable development and environmental performance

Section 516A of the Environment Protection and Biodiversity Conservation Act 1999 requires all Commonwealth agencies to report on certain aspects of ecologically sustainable development and environmental performance.

Appropriations - Departmental funding for ecologically sustainable development

The ATO does not receive departmental funding for work that specifically contributes to ecologically sustainable development. However, in making decisions on expenditure, we apply the Commonwealth procurement rules and guidance from the Department of Finance on informed decision-making processes.

The Commonwealth procurement rules include the need to consider the environmental aspects of the purchase and, where the procurement is via tender, a tenderer’s practices regarding environmental impacts.

In April 2021, we established the 2024 ATO environmental sustainability strategy. The ATO’s 2024 targets are to reduce:

• our greenhouse gas emissions by at least 10% from 2019–20 levels
• the amount of waste from ATO offices going to landfill by at least 5% from 2019–20 levels.

In 2020–21, the ATO minimised our environmental impact by meeting the requirements of the Energy Efficiency in Government Operations (EEGO) policy for ‘Tenant light and power’ and ‘Central services’ performance ratings.

Additionally, 90% of the ATO’s eligible tenancies that qualify for a rating have achieved or exceeded the minimum National Australian Built Environment Rating System (NABERS) rating of 4.5 stars.

Appropriations - Administered funding

In 2020–21, the ATO administered appropriations for two energy and fuel schemes that provide credits and grants to reduce the costs of some fuels, or to provide a benefit to encourage recycling of waste oils. These were:

• Program 1.7 Fuel Tax Credits Scheme (see Performance results – programs 1.5 to 1.13 and 1.15 to 1.19 )
• Program 1.9 Product Stewardship for Oil (see Performance results – programs 1.5 to 1.13 and 1.15 to 1.19 ).

More information about fuel schemes is available at ato.gov.au/business/fuel-schemes.