Australian Taxation Office
Section 1: Entity overview and resources
1.1	Strategic direction statement
1.2	Entity resource statement
1.3	Entity measures
1.4	Additional estimates and variations
1.5	Breakdown of additional estimates by Appropriation Bill
Section 2: Revisions to outcomes and planned performance
2.1	Outcome and performance information
Section 3: Explanatory tables and budgeted financial statements
3.1	Explanatory tables
3.2	Budgeted financial statements

Australian Taxation Office
Section 1: Entity overview and resources
1.1	Strategic direction statement
There has been no significant change to the strategic direction of the Australian Taxation Office (ATO) from that outlined in the Portfolio Budget Statements 2015-16 (page 191).
The ATO is seeking an additional $46.2 million in departmental funding through Appropriation Bill (No. 3) 2015-16. This relates to an additional $36.0 million for the following measures as outlined in the Mid-Year Economic and Fiscal Outlook 2015-16:
•	Enhanced Welfare Payment Integrity — non-employment income data matching ($0.7 million);
•	Reducing red tape — improvements to data and analytics infrastructure of the Australian Taxation Office ($9.5 million); and
•	Tax administration — Single Touch Payroll Reporting ($25.8 million).
This funding also includes the Growing Jobs and Small Business - streamlining business registration measure ($5.9 million) outlined in Budget Paper No. 2, Budget Measures 2015-16 and an adjustment to reflect movement of funds ($5.5 million), offset by a reduction of $1.2 million relating to the Public Sector Superannuation Accumulation Plan administration fees outlined in the Mid-Year Economic and Fiscal Outlook 2014-15.
The ATO is also seeking an additional $74.0 million as an equity injection through Appropriation Bill (No. 4) 2015-16. This relates to an additional $72.5 million for the following measures as outlined in the Mid-Year Economic and Fiscal Outlook 2015-16:
•	Higher Education Loan Programme — strengthened compliance ($1.6 million);
•	Reducing red tape — improvements to data and analytics infrastructure of the Australian Taxation Office ($11.4 million); and
•	Tax administration — Single Touch Payroll Reporting ($59.5 million).
This funding also includes the Growing Jobs and Small Business - streamlining business registration measure ($2.4 million) outlined in Budget Paper No. 2, Budget Measures 2015-16 and an adjustment to reflect the re-appropriation of $0.9 million from prior year’s appropriation before it is repealed. The funding is offset by a reduction of $1.8 million of prior year’s appropriation.
1.2	Entity resource statement
The Entity Resource Statement details the resourcing for the Australian Taxation Office at Additional Estimates. Table 1.1 outlines the total resourcing available from all sources for the 2015-16 Budget year, including variations through Appropriation Bill Nos. 3 and 4, Special Appropriations and Special Accounts. 
Table 1.1: Australian Taxation Office Resource Statement — Additional Estimates for 2015-16 as at Additional Estimates February 2016

Table 1.1: Australian Taxation Office Resource Statement — Additional Estimates for 2015-16 as at Additional Estimates February 2016 (continued)

(a)	Appropriation Act (No. 1) 2015-16 and Appropriation Bill (No. 3) 2015-16.
(b)	Estimated adjusted balance carried from previous year for annual appropriations.
(c)	Includes an amount of $115.1m in 2015-16 for the Departmental Capital Budget (refer to table 3.2.5 for further details).
(d)	Estimated retained revenue receipts under s.74 of the Public Governance, Performance and Accountability (PGPA) Act 2013. 
(e)	Appropriation Act (No. 2) 2015-16 and Appropriation Bill (No. 4) 2015-16.
(f)	Section 77 of the Public Governance, Performance and Accountability Act 2013 is used for repayments not provided for in any other appropriation. Amounts received on or before 30 June 2014 were repaid under s.28 of the Financial Management and Accountability Act 1997.
(g)	These figures relate to administered expenses such as fuel tax credits, research and development tax incentives, and Australian Screen Production Incentive. Tax refunds for 2014-15 were $89.2 billion including $165.7 million made on behalf of the ATO by the Department of Immigration and Border Protection (DIBP). Estimated tax refund items for 2015-16 are $98.9 billion including $190 million made on behalf of the ATO by the DIBP.
Reader note: All figures are GST exclusive.
Table 1.1: Australian Taxation Office resource statement — Additional Estimates for 2015-16 as at Additional Estimates February 2016 (continued)
Third party payments from and on behalf of other entities

Table 1.1: Australian Taxation Office resource statement — Additional Estimates for 2015-16 as at Additional Estimates February 2016 (continued)

1.3	Entity measures
Table 1.2 summarises new Government measures taken since the 2015-16 Budget. The table is split into expense and capital measures, with the affected programme identified.
Table 1.2: Entity 2015-16 measures since Budget

Table 1.2: Entity 2015-16 measures since Budget (continued)

(a)	This measure was announced in the Mid-Year Economic and Fiscal Outlook 2014-15 as a cross portfolio measure and has not previously appeared in a portfolio statement.
(b)	This measure was announced in the Budget 2015-16 as a cross-portfolio measure and has not previously appeared in a portfolio statement.
Prepared on a Government Financial Statistics (fiscal) basis.

1.4	Additional estimates and variations
The following tables detail the changes to the resourcing for the Australian Taxation Office at Additional Estimates, by outcome. Table 1.3 details the Additional Estimates and variations resulting from new measures since the 2015-16 Budget in Appropriation Bills Nos. 3 and 4. Table 1.4 details Additional Estimates or variations through other factors, such as parameter adjustments.
Table 1.3: Additional estimates and variations to outcomes from measures since 2015-16 Budget

(a)	This measure was announced in the Mid-Year Economic and Fiscal Outlook 2014-15 as a cross portfolio measure and has not previously appeared in a portfolio statement.
(b)	This measure was announced in the Budget 2015-16 as a cross-portfolio measure and has not previously appeared in a portfolio statement.

Table 1.4: Additional estimates and variations to outcomes from other variations

1.5	Breakdown of additional estimates by Appropriation Bill
The following tables detail the Additional Estimates sought for the Australian Taxation Office through Appropriation Bills Nos. 3 and 4.
Table 1.5: Appropriation Bill (No. 3) 2015-16

2014–15 available appropriation is included to allow a comparison of this year's appropriation with what was made available for use in the previous year. Available appropriation is the amount available to be drawn down, and is equal to: Budget Appropriation + Additional Estimates Appropriation - Movement of Funds to 2015-16.

Table 1.6: Appropriation Bill (No. 4) 2015-16

2014–15 available appropriation is included to allow a comparison of this year's appropriation with what was made available for use in the previous year. Available appropriation is the amount available to be drawn down, and is equal to: Budget Appropriation + Additional Estimates Appropriation.

Section 2: Revisions to outcomes and planned performance
2.1	Outcome and performance information
There has been no change to the ATO’s outcome or outcome strategy from that included in the Portfolio Budget Statements 2015-16 (page 197).
There has been no change to the programme objective, expenses, deliverables or key performance indicators for programmes 1.2 to 1.24 that affect Appropriation Bills
Nos. 3 and 4.
Table 2.1: Budgeted expenses and resources for Outcome 1

(a)	Departmental Appropriation combines ‘Ordinary annual services (Appropriation Act No. 1 and
Bill No. 3)’ and ‘Retained Revenue Receipts under s.74 of the PGPA Act 2013’.
(b)	Expenses not requiring appropriation in the Budget year is made up of depreciation expense, amortisation expense, makegood expense and audit fees.

Programme objective 1.1 Australian Taxation Office
There has been no change to the programme objective, deliverables or key performance indicators included in the Portfolio Budget Statements 2015-16.
Table 2.2: Programme expenses 1.1 Australian Taxation Office

Section 3: Explanatory tables and budgeted financial statements
3.1	Explanatory tables
3.1.1	Estimates of special account flows
Special accounts provide a means to set aside and record amounts used for specific purposes. Table 3.1.1 shows the expected additions (receipts) and reductions (payments) for each account used by the ATO. The corresponding table in the Portfolio Budget Statements 2015‑16 is Table 3.1.1.
Table 3.1.1: Estimates of special account flows and balances

(A) Administered
(D) Departmental
3.2	Budgeted financial statements
3.2.1	Analysis of budgeted financial statements
Budgeted departmental comprehensive income statement
The ATO is budgeting for a balanced budget in 2015-16.
The budgeted departmental comprehensive income statement also reflects changes arising from measures since Budget as outlined in Table 1.2.
Budgeted departmental balance sheet
The ATO’s assets are predominantly non‑financial assets.
The ATO’s liabilities continue to be predominantly employee entitlements.

3.2.2	Budgeted financial statements
Departmental financial statements
Table 3.2.1: Comprehensive income statement (showing net cost of services) for the period ended 30 June

Table 3.2.1: Comprehensive income statement (showing net cost of services) for the period ended 30 June (continued)

(a)	From 2010-11, the Government introduced net cash appropriation arrangements where Appropriation Act No. 1 or Bill No. 3 revenue appropriations for the depreciation/amortisation expenses of
non-corporate Commonwealth entities were replaced with a separate capital budget (the Departmental Capital Budget, or DCB) provided through Appropriation Act No. 1 or Bill No. 3 equity appropriations. For information regarding DCBs, please refer to Table 3.2.5 Departmental Capital Budget Statement.
Prepared on Australian Accounting Standards basis.

Table 3.2.2: Budgeted departmental balance sheet (as at 30 June)

Table 3.2.2: Budgeted departmental balance sheet (as at 30 June) (continued)
 *Equity is the residual interest in assets after the deduction of liabilities.
Prepared on Australian Accounting Standards basis.

Table 3.2.3: Departmental statement of changes in equity — summary of movement (budget year 2015-16)

Prepared on Australian Accounting Standards basis.

Table 3.2.4: Budgeted departmental statement of cash flows
(for the period ended 30 June)

Prepared on Australian Accounting Standards basis.

Table 3.2.5: Departmental capital budget statement
(for the period ended 30 June)

(a) 	Includes both current and prior Act 2 and Bills 4/6 appropriations. 
(b) 	Does not include annual finance lease costs. Includes purchases from current and previous years’ Departmental Capital Budgets (DCBs).
(c) 	Includes the following sources of funding:
	- current and prior year Act (No. 1) and Bills 3/5 appropriations (excluding amounts from the DCB);
	- donations and contributions;
	- gifts;
	- internally developed assets;
	- s74 Retained revenue receipts; and
	- proceeds from the sale of assets.
Prepared on Australian Accounting Standards basis.
Table 3.2.6: Statement of asset movements (2015-16 Budget year) — Departmental

(a)	‘Appropriation equity’ refers to equity injections provided through Appropriation Act (No.2) 2015-16 and Bill (No.4) 2015-16.
(b)	‘Appropriation ordinary annual services’ refers to funding provided through Appropriation Act (No.1) 2015-16 and Bill (No.3) 2015-16 for depreciation/amortisation expenses, DCBs or other operational expenses. 
Prepared on Australian Accounting Standards basis.

Schedule of administered activity
Table 3.2.7: Schedule of budgeted income and expenses administered on behalf of Government (for the period ended 30 June)

Prepared on Australian Accounting Standards basis.

Table 3.2.8: Schedule of budgeted assets and liabilities administered on behalf of Government (as at 30 June)

Prepared on Australian Accounting Standards basis.

Table 3.2.9: Schedule of budgeted administered cash flows
(for the period ended 30 June)

Table 3.2.9: Schedule of budgeted administered cash flows
(for the period ended 30 June) (continued)

Prepared on Australian Accounting Standards basis.

Notes to the financial statements
Basis of accounting
The ATO’s budgeted financial statements have been prepared on an accrual basis.
Notes to the departmental statements
The departmental financial statements, included in Tables 3.2.1 to 3.2.6 have been prepared on the basis of Australian Accounting Standards and Department of Finance guidance for the preparation of financial statements.
The budget statements and estimated forward years have been prepared to reflect the following matters.
Cost of administering goods and services tax
Departmental statements include the estimated costs of administering the goods and services tax (GST) pursuant to the ‘intergovernmental agreement on the reform of Commonwealth‑State Financial Relations’. The GST revenue is collected on behalf of the States and Territories which agree to compensate the Australian Government for the agreed GST administration costs.  
The GST administration costs are reported in the annual GST Administration Performance Report.
Notes to the administered statements
The administered financial statements at Tables 3.2.7 to 3.2.9 have been prepared on the basis of Australian Accounting Standards and Department of Finance guidance for the preparation of financial statements.
The standards require that taxation revenues are recognised on an accrual basis when the following conditions apply:
•	the taxpayer or the taxpayer group can be identified in a reliable manner;
•	the amount of tax or other statutory charge is payable by the taxpayer or taxpayer group under legislative provisions; and
•	the amount of the tax or statutory charge payable by the taxpayer or taxpayer group can be reliably measured, and it is probable that the amount will be collected.
The amount of taxation revenue recognised takes account of legislative steps, discretion to be exercised and any refunds and/or credit amendments to which the taxpayers may become entitled.
Recognition of taxation revenue
Taxation revenue is recognised when the Government, through the application of legislation by the ATO and other relevant activities, gains control over the future economic benefits that flow from taxes and other statutory charges. This methodology, known as the Economic Transaction Method (ETM), relies on the estimation of probable flows of taxes from transactions which have occurred in the economy, but have not yet been reported, and are likely to be reported to the ATO through an assessment or disclosure.
However, in circumstances when there is an ‘inability to reliably measure tax revenues when the underlying transactions or events occur’, the accounting standards permit an alternative approach known as the Taxation Liability Method (TLM). Under this basis, taxation revenue is recognised at the earlier of when an assessment of a tax liability is made or payment is received by the ATO. This recognition policy means that taxation revenue is generally measured at a later time than would be the case if it were measured under the ETM method.
In accordance with the above revenue recognition approach, the ATO uses ETM as the basis for revenue recognition, except for income tax for individuals, companies, superannuation funds,  superannuation surcharge and the minerals resource rent tax (repealed September 2014) which are recognised on a TLM basis.
Items recognised as reductions to taxation revenue
The following items are recognised as reductions (increases) to taxation revenue and not as an expense:
•	refunds of revenue; and
•	increase (decrease) in movement of provision for credit amendments.