Australian Taxation Office
Section 1: Entity overview and resources	63
1.1	Strategic direction	63
1.2	Entity resource statement	63
1.3	Entity measures table	66
1.4	Additional estimates and variations	68
1.5	Breakdown of additional estimates by appropriation bill	69
Section 2: Revisions to entity resources and planned performance	71
2.1	Resources and performance information	71
Section 3: Explanatory tables and budgeted financial statements	74
3.1	Explanatory tables	74
3.2	Budgeted financial statements	75

Australian Taxation Office
Section 1: Entity overview and resources
1.1	Strategic direction
There has been no significant change to the strategic direction of the Australian Taxation Office (ATO) from that outlined in the Portfolio Budget Statements 2014‑15 (page 179).
The ATO is seeking an additional $14.8 million in departmental funding through Appropriation Bill (No. 3) 2014‑15. This relates to an additional $15.8 million for the following measures as outlined in the Mid‑Year Economic and Fiscal Outlook 2014‑15:
•	Higher Education Reforms — amendments ($0.4 million);
•	Industry Innovation and Competitiveness Agenda — Employee Share Schemes ($0.2 million); and
•	Repeal of the Minerals Resource Rent Tax and related measures (the related measure is Low Income Superannuation Contribution extended for contributions made until 2016‑17) ($15.2 million).
This funding is offset by a reduction of $1.0 million relating to the Communications and Public Affairs Functions — targeted savings measure outlined in Budget Paper No. 2, Budget Measures 2014‑15.
The ATO is also seeking an additional $0.6 million as an equity injection through Appropriation Bill (No. 4) 2014‑15 for the Higher Education Reforms — amendments outlined in the Mid‑Year Economic and Fiscal Outlook 2014‑15.
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 2014‑15 Budget year, including variations through Appropriation Bill Nos. 3 and No. 4, Special Appropriations and Special Accounts. 

Table 1.1: Australian Taxation Office resource statement — additional estimates for 2014‑15 as at Additional Estimates February 2015

Table 1.1: Australian Taxation Office resource statement — additional estimates for 2014‑15 as at Additional Estimates February 2015 (continued) 

1.	Appropriation Act (No. 1) 2014‑15 and Appropriation Bill (No. 3) 2014‑15.
2.	Estimated adjusted balance carried from previous year for annual appropriations.
3.	Includes an amount of $133.8m in 2014‑15 for the Departmental Capital Budget (refer to table 3.2.5 for further details).
4.	Estimated retained revenue receipts under section 74 of the Public Governance, Performance and Accountability (PGPA) Act 2013. 
5.	Appropriation Act (No. 2) 2014‑15 and Appropriation Bill (No. 4) 2014‑15.
6.	These figures relate to administered expenses such as fuel tax credits, research and development tax incentives, and interest on overpayment and early payment of tax. Tax refunds for 2013‑14 were $97.5 billion including (including $123.2 million paid via the Australian Customs Service (ACS) on the ATO’s behalf) and $99.3 billion for 2014‑15 (including $160 million paid via the ACS on the ATO’s behalf).

Reader note: All figures are GST exclusive 
1.3	Entity measures table
Table 1.2 summarises new Government measures taken since the 2014‑15 Budget. The table is split into expense and capital measures, with the affected programme identified.
Table 1.2: Entity 2014‑15 measures since Budget

Table 1.2: Entity measures since Budget (continued)

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 2014‑15 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 the 2014‑15 Budget

Note. Details of these measures are in the Mid‑Year Economic and Fiscal Outlook 2014‑15.
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) 2014‑15

Table 1.6: Appropriation Bill (No. 4) 2014‑15

Section 2: Revisions to entity resources and planned performance
2.1	Resources and performance information
There has been no change to the ATO’s outcome or outcome strategy from that included in the Portfolio Budget Statements 2014‑15 (page 187).
There has been no change to the programme objective, expenses, deliverables or key performance indicators for programmes 1.6 to 1.24 that affect Appropriation Bills No. 3 and No. 4.
Table 2.1: Budgeted expenses and resources for Outcome 1

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 2014‑15.
Programme Expenses 1.1
Table 2.2: Programme 1.1 expenses

Programme Objective 1.2 Tax Practitioners Board
There has been no change to the programme objective, deliverables or key performance indicators included in the Portfolio Budget Statements 2014‑15.
Programme Expenses 1.2
Table 2.3: Programme 1.2 expenses

Programme Objective 1.3 Australian Business Register
There has been no change to the programme objective, deliverables or key performance indicators included in the Portfolio Budget Statements 2014‑15.
Programme Expenses 1.3
Table 2.4: Programme 1.3 expenses

Programme Objective 1.5 Australian Charities and Not‑for‑Profits Commission
There has been no change to the programme objective, deliverables or key performance indicators included in the Portfolio Budget Statements 2014‑15.
Programme Expenses 1.5
Table 2.5: Programme 1.5 expenses

Section 3: Explanatory tables and budgeted financial statements
3.1	Explanatory tables
Estimates of special account flows
Special accounts provide a means to set aside and record amounts used for specified 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 2104-15 portfolio budget statements is Table 3.1.2. 
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 2014‑15. This excludes the impact of Operation Sunlight changes to funding whereby depreciation and amortisation expenses are not funded by appropriation from 2010‑11 onward.
The budgeted departmental comprehensive income statement also reflects changes arising from Budget measures 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: Budgeted departmental comprehensive income statement (showing net cost of services)

Prepared on Australian Accounting Standards basis.
Table 3.2.2: Budgeted Departmental balance sheet (as at 30 June)

Prepared on Australian Accounting Standards basis.
Table 3.2.3: Departmental statement of changes in equity — summary of movement (Budget Year 2014‑15)

Prepared on Australian Accounting Standards basis.
Table 3.2.4: Budgeted Departmental statement of cash flows (as at 30 June)

Prepared on Australian Accounting Standards basis.

Table 3.2.5: Capital Budget Statement — Departmental

Consistent with information contained in the Statement of Asset Movements and the Budgeted Statement of Cash Flows.
Table 3.2.6: Statement of asset movements (2014‑15)

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)

Prepared on Australian Accounting Standards basis.

Table 3.2.10: Schedule of Administered Capital Budget
The ATO does not have any administered capital.
Table 3.2.11: Schedule of Administered Asset Movements (2014-15)
The ATO does not have any administered non‑financial assets.

Notes to the Financial Statements
Basis of accounting
The budgeted financial statements have been prepared on an accrual basis.
Departmental
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) under the Intergovernmental Agreement on Federal 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 recoveries of GST administration costs are reported under the Treasury.
Administered
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.