1.1 Objectives of Tourism Australia

Tourism Australia’s vision is for Australia to be the most desirable and memorable destination on earth.

Tourism Australia is a not-for-profit Australian Government corporate commonwealth entity. Its objective is to promote tourism to and within Australia. Its revenues are sourced primarily via government funding and industry contributions. Tourism Australia focuses its activities on positioning Australia within overseas markets as an international tourist destination through its network of international offices. During the period of Australian bushfires and COVID-19, Tourism Australia increased its focus on marketing to the Australian interstate tourism markets to stimulate additional visitor demand during a time of international border restrictions.

Tourism Australia’s statutory objectives are to:

• Influence people to travel to Australia for leisure and events;
• Influence people travelling to Australia to travel throughout Australia;
• Influence Australians to travel throughout Australia for leisure and events;
• Help foster a sustainable tourism industry in Australia; and
• Help increase the economic benefits to Australia from tourism.

Tourism Australia's Government Outcome is to grow demand and foster a competitive and sustainable Australian tourism industry through partnership marketing to targeted global consumers in key markets.

1.2 The basis of preparation

The financial statements are general purpose financial statements and are required by section 42 of the Public Governance, Performance and Accountability Act 2013.

The financial statements and notes have been prepared in accordance with:

1. Public Governance Performance and Accountability [Financial Reporting] Rule 2015 [FRR]; and
2. Australian Accounting Standards and Interpretations – Reduced Disclosure Requirements issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period.

The financial statements have been prepared on an accrual basis and in accordance with historical cost convention, except for certain assets and liabilities at fair value. Except where stated, no allowance has been made for the effect of changing prices on the results or the financial position. The financial statements are presented in Australian dollars. Values are rounded to the nearest thousand dollars unless otherwise specified.

Comparative figures

Comparative figures have been adjusted, where required, to conform to changes in presentation of the financial statements.

1.3 New accounting standards

All new, revised, amending standards and/or interpretations that were issued prior to the sign-off date and are applicable to the current reporting period did not have a material effect on Tourism Australia's financial statements, with the exception of AASB 16 Leases.

Application of AASB 15 Revenue from contracts with customers / AASB 1058 Income of not-for-profit entities

Tourism Australia adopted AASB 15 and AASB 1058 using the modified retrospective approach, under which the cumulative effect of initial application is recognised in retained earnings at 1 July 2019. Accordingly, the comparative information presented for 2019 is not restated, that is, it is presented as previously reported under the various applicable AASBs and related interpretations.

Under the new income recognition model Tourism Australia shall first determine whether an enforceable agreement exists and whether the promises to transfer goods or services to the customer are ‘sufficiently specific’. If an enforceable agreement exists and the promises are ‘sufficiently specific’ (to a transaction or part of a transaction), Tourism Australia applies the general AASB 15 principles to determine the appropriate revenue recognition. If these criteria are not met, Tourism Australia shall consider whether AASB 1058 applies.

In relation to AASB 15, Tourism Australia elected to apply the new standard to all new and uncompleted contracts from the date of initial application. Tourism Australia is required to aggregate the effect of all of the contract modifications that occur before the date of initial application.

The transition to and implementation of AASB 15 and AASB 1058 did not have a material impact on Tourism Australia. No transition adjustments were required on 1 July 2019.

Application of AASB 16 Leases

Tourism Australia adopted AASB 16 using the modified retrospective approach, under which the cumulative effect of initial application is recognised in retained earnings at 1 July 2019. Accordingly, the comparative information presented for 2019 is not restated, that is, it is presented as previously reported under AASB 117 and related interpretations.

Tourism Australia elected to apply the practical expedient to not reassess whether a contract is, or contains a lease at the date of initial application. Contracts entered into before the transition date that were not identified as leases under AASB 117 were not reassessed. The definition of a lease under AASB 16 was applied only to contracts entered into or changed on or after 1 July 2019.

AASB 16 provides for certain optional practical expedients, including those related to the initial adoption of the standard. Tourism Australia applied the following practical expedients when applying AASB 16 to leases previously classified as operating leases under AASB 117:

• Apply a single discount rate to a portfolio of leases with reasonably similar characteristics;
• Exclude initial direct costs from the measurement of right-of-use assets at the date of initial application for leases where the right-of-use asset was determined as if AASB 16 had been applied since the commencement date;
• Reliance on previous assessments on whether leases are onerous as opposed to preparing an impairment review under AASB 136 Impairment of assets as at the date of initial application; and
• Applied the exemption not to recognise right-of-use assets and liabilities for leases with less than 12 months of lease term remaining as of the date of initial application.

As a lessee, Tourism Australia previously classified leases as operating or finance leases based on its assessment of whether the lease transferred substantially all of the risks and rewards of ownership. Under AASB 16, Tourism Australia recognises right-of-use assets and lease liabilities for most leases. However, Tourism Australia has elected not to recognise right-of-use assets and lease liabilities for some leases of low value assets based on the value of the underlying asset when new or for short-term leases with a lease term of 12 months or less.

On adoption of AASB 16, Tourism Australia recognised right-of-use assets and lease liabilities in relation to leases of office space, which had previously been classified as operating leases.

The lease liabilities were measured at the present value of the remaining lease payments, discounted using Tourism Australia's incremental borrowing rate as at 1 July 2019. Tourism Australia's incremental borrowing rate is the rate at which a similar borrowing could be obtained from an independent creditor under comparable terms and conditions. The weighted-average rate applied was 0.71%.

The right-of-use assets were measured as follows:

a) Office space: measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments.

Impact on transition

On transition to AASB 16, Tourism Australia recognised additional right-of-use assets and additional lease liabilities, recognising the difference in retained earnings. Such difference includes lease incentives attached to the leases.

The impact on transition is summarised below:

The following table reconciles the minimum lease commitments disclosed in Tourism Australia's 30 June 2019 annual financial statements to the amount of lease liabilities recognised on 1 July 2019:

All other new, revised, and amending standards or interpretations that have been issued by the AASB prior to sign-off date that are applicable to the future reporting period(s) are not expected to have a future material financial impact on Tourism Australia's financial statements.

1.4 Significant accounting estimates and judgments

Except where specifically identified and disclosed, Tourism Australia has determined that no accounting assumptions and estimates have a significant risk of causing a material adjustment to carrying amounts of assets and liabilities within the next accounting period.

The uncertainties and consequences of two significant events in 2019-20, COVID-19 and the Australian bushfires, have impacted Tourism Australia's operations. The impacts that COVID-19 and the Australian bushfires have had on Tourism Australia's financial statements are disclosed in Note 3C, Note 8 and Note 12B.

1.5 Taxation

Tourism Australia is exempt from all forms of taxation except Fringe Benefits Tax (FBT) and the Goods and Services Tax (GST).

Revenues, expenses, assets and liabilities are recognised net of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office.

1.6 Events after the reporting period

There was no subsequent event that had the potential to significantly affect the ongoing structure and financial activities of Tourism Australia.