Australian Government, 2005–06 Budget

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Section 3: Budgeted financial statements

The budgeted financial statements will form the basis of the financial statements that will appear in the Australian Taxation Office (Tax Office) 2005-06 Annual Report, and for the input into the Whole of Government accounts. The financial statements should be read in conjunction with the accompanying notes.

These budgeted financial statements and administered schedules are consistent with the forms of financial statements specified under the 2004-05 Finance Minister’s Orders Requirements for the Preparation of Financial Statements of Australian Government Entities.

Analysis of budgeted financial statements

Departmental financial statements

Budgeted departmental income statement

There has been no change in the Tax Office’s 2005-06 budgeted operating loss of $15.1 million outlined in the 2005-06 Treasury Portfolio Budget Statements (page 236).

Operating Revenues

Total departmenatl revenue is estimated to be $2,503.0 million and consists of $2,459.0 million appropriation and revenue from other sources of $44.0 million. This is an increase of $68.0 million from the 2004-05 actual revenue.

This rise in revenue is driven by additional operational activity as a result of Budget measures shown in Table 1.4 and those published in the 2005-06 Treasury Portfolio Budget Statements, the 2004-05 Treasury Portfolio Additional Estimates Statements and the 2004-05 Treasury Portfolio Budget Statements.

Operating Expenses

Total expenses are estimated to be $2,517.9 million. This is an increase of $58.7 million from the 2004-05 actual expenditure.

Operating expenses consist of $1,576.6 million in labour expenditure, $823.7 million in supplier expenditure and $117.6 million in depreciation and amortisation.

This rise in expenses is driven by additional operational activity as a result of Budget Measures shown in Table 1.4 and those published in the 2005-06 Treasury Portfolio Budget Statements, the 2004-05 Treasury Portfolio Additional Estimates Statements and the 2004-05 Treasury Portfolio Budget Statements.

Budgeted departmental balance sheet

In 2005-06 the Tax Office’s equity position will be negative $56.7 million. This is a decline of $15.3 million predominantly from 2004-05 as a result of the approved operating loss.

Assets

In 2005-06 the Tax Office will be maintaining its commitment to long-term improvement, investing $154.5 million in capital.

Liabilities

The Tax Office’s liabilities are predominantly employee entitlements. There is no significant movement in total liabilities from 2004-05.

Budgeted financial statements

Departmental financial statements

Budgeted departmental income statement

This statement provides a picture of the expected financial results for the Tax Office by identifying full accrual expenses and revenues, which highlights whether the Tax Office is operating at a sustainable level.

Budgeted departmental balance sheet

This statement shows the financial position of the Tax Office. It enables decision-makers to track the management of the Tax Office’s assets and liabilities.

Budgeted departmental statement of cash flows

This statement identifies expected cash flows from operating activities, investing activities and financing activities.

Departmental statement of changes in equity — summary of movement

This statement shows the movement in the Tax Office’s equity over the Budget year.

Departmental capital budget statement

This statement shows all proposed capital expenditure funded either through the Budget as appropriations or from internal sources.

Departmental property, plant, equipment and intangibles — summary of movement

This statement shows the movement in the Tax Office’s non-financial assets over the Budget year.

Schedule of administered activity

Details of transactions administered by the Tax Office on behalf of the Australian Government are shown in the following notes to the financial statements.

Schedule of budgeted income and expenses administered on behalf of government

This schedule identifies the main revenues and expenses administered on behalf of the Australian Government. It also discloses administered revenues from government and transfers to the Official Public Account.

Schedule of budgeted assets and liabilities administered on behalf of government

This schedule shows the assets and liabilities administered on behalf of the Australian Government.

Schedule of budgeted administered cash flows

This schedule shows cash flows administered on behalf of the Australian Government.

Table 3.1: Budgeted departmental income statement (for the period ended 30 June)

Table 3.1: Budgeted departmental income statement(for the period ended 30 June)

Table 3.2: Budgeted departmental balance sheet (as at 30 June)

Table 3.2: Budgeted departmental balance sheet(as at 30 June)

* 'Equity' is the residual interest in assets after deduction of liabilities.

Table 3.3: Budgeted departmental statement of cash flows (for the period ended 30 June)

Table 3.3: Budgeted departmental statement of cash flows(for the period ended 30 June)

Table 3.4: Departmental statement of changes in equity — summary of movement (Budget year 2005-06)

Table 3.4: Departmental statement of changes in equity — summary of movement (Budget year 2005-06)

Table 3.5: Departmental capital budget statement

Table 3.5: Departmental capital budget statement

Table 3.6: Departmental property, plant, equipment and intangibles — summary of movement
(Budget year 2005-06)

Table 3.6: Departmental property, plant, equipment and intangibles — summary of movement (Budget year 2005-06)

Table 3.7: Schedule of budgeted income and expenses administered on behalf of government (for the period ended 30 June)

Table 3.7: Schedule of budgeted income and expenses administered on behalf of government (for the period ended 30 June)

Table 3.8: Schedule of budgeted assets and liabilities administered on behalf of government (as at 30 June)

Table 3.8: Schedule of budgeted assets and liabilities administered on behalf of government (as at 30 June)

Table 3.9: Schedule of budgeted administered cash flows
(for the period ended 30 June)

Table 3.9: Schedule of budgeted administered cash flows(for the period ended 30 June)

Table 3.10: Schedule of administered capital budget

This table is not applicable to the Tax Office.

Table 3.11: Schedule of administered property, plant, equipment and intangibles — summary of movement (Budget year 2005-06)

This table is not applicable to the Tax Office.

Notes to the financial statements

Basis of accounting

The budgeted financial statements have been prepared on an accrual basis.

Notes to the departmental statements

Details of departmental items in the financial statements included in Table 3.1 to 3.6 have been prepared in accordance with the requirements and guidance for the preparation of financial statements.

The budget statements and estimated forward years have been prepared to reflect the following matters.

Australian Valuation Office

The Tax Office’s departmental budget statements are consolidated to include the financial operations of the Australian Valuation Office.

Cost of administering goods and services tax

Departmental statements include the estimated costs of administering the goods and services tax 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 recovery of GST administration costs are reported under Treasury.

Notes to the administered schedules

Details of administered items in the financial statements included in Tables 3.6 to 3.8 have been prepared under the Tax Liability Method (TLM) of revenue recognition, consistent with the Australian Government’s recognition of taxation revenue. Under TLM, taxation revenue is recognised at the time a taxpayer makes a self-assessment or when an assessment of a tax liability is raised by the Australian Taxation Office or the Australian Customs Service. This method retains some elements of cash revenue recognition, for example, when a cash payment occurs prior to an assessment being raised.

The budgeted statements and forward years have been prepared on the basis noted below and to reflect the following matters.

Recognition of taxation revenue

Since 1999-2000 administered taxation revenue has been brought to account on a year by year basis where:

  • the client or the client group can be identified in a reliable manner;
  • an amount of tax or other statutory charge is payable by the client or client group under legislative provisions; and
  • the amount of the tax or statutory charge payable by the client or client group can be reliably measured, and it is probable that the amount will be collected.

This recognition policy does not include the following items as revenue of the period:

  • estimates of future collections or refunds from individuals in respect of income tax returns to be lodged for the current financial year ended at 30 June;
  • estimates of instalments of tax and final payments for companies due after 30 June;
  • estimates of final amounts for petroleum resource rent tax due after 30 June; and
  • actual payments for Pay As You Go, GST, excise and withholding taxes for amounts collected or withheld in June but not remitted to the Commissioner until July.

Items recognised as reductions to taxation revenue

The following items are recognised as reductions (increases) to taxation revenue and not as expense:

  • refunds of revenue; and
  • increase (decrease) in movement of provision for credit amendments.

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