GST and general revenue assistance
General revenue assistance is a broad category of payments that are provided to the States without conditions to spend according to their own budget priorities.
In 2011‑12, the States will receive $48.7 billion in general revenue assistance from the Commonwealth, comprising $47.5 billion in GST entitlements and $1.2 billion in other general revenue assistance. This is a 3.8 per cent increase in general revenue assistance, compared with the $47.0 billion the States received in 2010‑11. Total general revenue assistance to the States is estimated to represent 13.1 per cent of total Commonwealth expenditure in 2011‑12.
Table 3.26 summarises GST and general revenue assistance payments to the States. Detailed tables of GST and general revenue assistance, including state shares of each payment, are provided in Annex A.
Table 3.26: GST and general revenue assistance, 2011-12 to 2014-15
GST
GST revenue variations since the 2011‑12 Budget
Table 3.27 is a reconciliation of the GST revenue estimates since the 2011‑12 Budget. The reconciliation accounts for policy decisions, parameter and other variations.
GST revenue in 2011‑12 has been revised down by $880 million since Budget, reflecting lower forecast growth for taxable consumption.
Table 3.27: Reconciliation of GST revenue estimates since 2011-12 Budget
- Refer to the measure Fringe benefits tax — reform of living-away-from-home benefits.
Reconciling GST revenue and GST entitlements to the States
In accordance with the Intergovernmental Agreement, the Commonwealth administers the GST on behalf of the States and all GST revenue is paid to the States.
Since 2009‑10, GST advances are paid during the relevant financial year and the Commonwealth Treasurer determines the level of GST receipts based on the final budget outcome. A balancing adjustment is made following the conclusion of the financial year to ensure that the States receive their full entitlement of GST payments.
In addition to this balancing adjustment, GST revenue for a financial year also varies from the amount of GST payments to the States for that year because of:
- GST revenues that are recognised on a Commonwealth whole‑of‑government basis, but are not remitted to the Australian Taxation Office until the following financial year;
- penalties, other than general interest charge penalties, which are not included in the definition in the Intergovernmental Agreement of GST to be paid to the States; and
- the GST component of sales by Commonwealth agencies which has been collected by those agencies but which, as at 30 June in each year, has not been remitted to the Australian Taxation Office, because it is not due to be paid until the next Business Activity Statement is lodged.
The reconciliation of GST revenue and GST entitlements to the States is provided in Table 3.28.
Table 3.28: GST revenue and GST entitlements to the States
Table 3.29 below provides information on the balancing adjustment relating to 2010‑11 which will be paid in 2011‑12.
Table 3.29: Balancing adjustment relating to 2010-11
Distribution of GST payments among the States
As agreed by all parties in the Intergovernmental Agreement, GST payments are distributed among the States in accordance with the principle of horizontal fiscal equalisation and having regard to the recommendations of the Commonwealth Grants Commission. The calculations for the distribution of the GST pool in 2011‑12 are shown in Table 3.30.
Table 3.30: Distribution of the GST pool, 2011-12
- These figures reflect the relativities applied for the purposes of distributing GST to the States. When all Commonwealth payments to the States are taken into account, the distribution is far closer to an equal per capita basis.
The calculations for the distribution of the 2010‑11 balancing adjustment are shown in Table 3.31. This adjustment will be made to each State's 2011‑12 GST entitlement following the underpayment of $437.2 million in 2010‑11.
Table 3.31: Distribution of the GST balancing adjustment, 2010-11(a)
- Total may not equal sum of State totals.
GST administration costs
As the GST has a national tax base, the Intergovernmental Agreement provides for the Australian Taxation Office to administer the GST on behalf of the States. Given that all GST revenue is provided to the States, the States compensate the Commonwealth for the agreed costs incurred by the Australian Taxation Office in administering the GST, as shown in Table 3.32.
Table 3.32: GST administration budget, 2010-11 to 2014-15
- Estimated outcome for 2010‑11 pending confirmation by the Australian National Audit Office.
The preliminary outcome for the 2010‑11 GST administration expenses of $660.7 million differs from the amount paid by the States and the prior year adjustment by $5.9 million. Once the outcome for GST administration in 2010‑11 is audited, the final adjustment will be incorporated into the States' administration costs for 2011‑12.
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