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GST ADMINISTRATION PERFORMANCE AGREEMENT

An agreement between

the Commissioner of Taxation and

the Council on Federal Financial Relations, comprising the Treasurers of:

The Commonwealth of Australia

The State of New South Wales

The State of Victoria

The State of Queensland

The State of Western Australia

The State of South Australia

The State of Tasmania

The Australian Capital Territory

The Northern Territory of Australia

GST Administration Performance Agreement

PREAMBLE

1. The Intergovernmental Agreement on Federal Financial Relations (the Intergovernmental Agreement) requires accountability and performance arrangements to be established between the Australian Taxation Office and the Council on Federal Financial Relations (Council). These accountability arrangements require a GST Administration Performance Agreement to be established between the Australian Taxation Office and the Council.

PART 1 — FORMALITIES

Parties to the Agreement

2. The Agreement is between the:

(a) The Commissioner of Taxation and

(b) the Council on Federal Financial Relations, comprising the Treasurers of:

The Commonwealth of Australia;

The State of New South Wales;

The State of Victoria;

The State of Queensland;

The State of Western Australia;

The State of South Australia;

The State of Tasmania;

The Australian Capital Territory; and

The Northern Territory of Australia.

3. The Parties to the Agreement are the Commissioner of Taxation and the Council listed above (the Parties).

4. The Agreement will be implemented in accordance with the terms of the Intergovernmental Agreement, including that the GST Administration Sub-Committee (GSTAS) will monitor all aspects of the operation and administration of the GST and this Agreement. GSTAS has delegated aspects of that role to the GST Policy and Administration Sub-group (GPAS).


Term of the Agreement

5. The Agreement will commence operation once all Parties have signed it and continue until the Parties agree to its termination. It supersedes all previous GST administration agreements.

6. GSTAS (through GPAS) will conduct triennial reviews of the body of the Agreement. The Council will be provided with a report from GSTAS on the outcome of each review, with the fifth review to be completed by 30 June 2017.

PART 2 — OBJECTIVES AND CONTEXT OF THE AGREEMENT

Purpose of the Agreement

7. The purpose of the Agreement is:

(a) to provide accountability between the Australian Taxation Office and the Council on GST administration; and

(b) to provide an agreed basis for GSTAS (through GPAS) to monitor the administration of the GST by the Australian Taxation Office and its agents in return for the agreed GST administration costs being paid by the States and Territories.

Context of the Agreement

8. The Parties to the Agreement are committed to:

(a) achieving world’s best practice for GST administration in Australia;

(b) a cost—effective and transparent GST administration; and

(c) a cooperative relationship between the Parties.

9. The Parties to the Agreement recognise that:

(a) the achievement of world’s best practice GST administration, including in respect of cost effectiveness, is dependent on the GST policy and economic framework and integrated administrative design;

(b) the GST is administered as part of Australia’s integrated tax system and its administrative framework;

(c) the Commissioner of Taxation has the general administration of the GST law; and

(d) the Agreement does not impede the Australian Taxation Office from:

(i) its accountability to the Commonwealth Government and Parliament for its revenue collection and taxation administration responsibilities;

(ii) reporting on GST matters to the Commonwealth Government; and

(iii) complying with statutory and other obligations imposed on the Australian Taxation Office by the Commonwealth Government and/or Parliament.


PART 3 — PERFORMANCE OUTCOME

10. The Parties agree that the outcome to be achieved by the Australian Taxation Office in GST administration is to collect GST revenue effectively, including through optimising voluntary compliance by effectively and efficiently managing the administrative and compliance risks to the GST system.

11. The Australian Taxation Office is accountable to the Council for achieving the above stated performance outcome, the achievement of which will be measured by the agreed measures outlined in Schedule A (Performance Outcome Measures).

Interpreting performance

12. In evaluating the performance of the Australian Taxation Office against the agreed measures stipulated in Schedule A, the Parties will take into consideration such factors as economic conditions and the context of GST administration as outlined in Part 2 — Objectives and Context of the Agreement.

PART 4 – COST OF ADMINISTRATION

GST administration activities

13. The administration activities which are GST related for the purpose of agreeing the GST administration budget and costs are outlined in Schedule B (GST Budget and Administration Activities).

14. In the context of Australia’s integrated taxation system and its administrative framework, the Parties agree that Schedule B will include the activities which are solely GST related or partly GST related.

15. The Parties recognise the requirement on the States and Territories to fully compensate the Commonwealth for the agreed costs of administering the GST.

16. The agreed GST administration costs will be on an accruals basis, and will include the costs to the Commonwealth of the equity invested in GST administration as reflected in a capital usage charge when such a charge is applied to the Australian Taxation Office.

PART 5 — PROCESS FOR DEVELOPING AND MODIFYING BUDGETS AND BUSINESS PLANS

17. The Parties agree to the planning and budget processes specified in Schedule B. These processes are designed to broadly accord with Commonwealth arrangements for funding agency operations.

18. Schedules A and B will be adjusted as necessary to ensure they are consistent with the level of funding provided to the Australian Taxation Office to administer the GST.

19. Schedule B outlines the Australian Taxation Office GST related activities that form the GST administration budget. The Parties agree the Australian Taxation Office will have flexibility to reallocate resourcing within the agreed budget as required to achieve agreed outcomes.


20. The Australian Taxation Office undertakes to advise GSTAS (through GPAS) of any material resource reallocations and the associated reasons.

PART 6 – MONITORING AND REVIEW

Reporting arrangements

21. The Parties agree to the monitoring and review arrangements outlined in Schedule C (Monitoring and Review Arrangements). These arrangements have been designed to ensure appropriate alignment of Australian Taxation Office Parliamentary reporting responsibilities and reporting responsibilities under the Agreement.

Audit arrangements

22. The Australian Taxation Office will arrange, subject to the agreement of the Commonwealth Auditor-General, for the Australian National Audit Office (ANAO) to conduct an annual special purpose audit of GST costs and the systems for control of GST costs. This audit, where practical, will align with the ANAO’s annual audit program of Australian Taxation Office financial statements.

23. The Parties agree to the special purpose audit arrangements outlined in Schedule C.

24. GSTAS (through GPAS) will be consulted on the audit engagement terms of reference, which will be consistent with the relevant clauses contained in Schedule C.

25. The arrangements for the special purpose audit will take into account the broader financial management and accountability framework within which GST administration operates in order to avoid duplication or inconsistency with other annual ANAO audits or other financial management arrangements of the Australian Taxation Office.

PART 7 – MANAGEMENT OF THE AGREEMENT

Relationship management

26. The Parties agree that a cooperative relationship between them will be achieved through commitment to the following:

(a) communicating on matters relevant to this Agreement outside of the formal reporting arrangements; and

(b) consultation processes, which promote openness and provide opportunities for input into strategic planning and informal avenues for problem resolution.


Amendment Processes

27. Schedules to the Agreement will be reviewed annually by GSTAS (through GPAS). GSTAS may agree to revise the Schedules at any time, subject to endorsement by the Council, without terminating the existing Agreement or signing a new Agreement.

28. Amendments to the performance measures (including targets/benchmarks) outlined in Schedule A to this Agreement, will take account of (but not be limited to) the following:

(a) alignment with the stated outcomes to be achieved by the Australian Taxation Office and its agents outlined in Part 3;

(b) alignment with Australian Taxation Office’s performance measures as reported to Parliament;

(c) the level of agreed investment and funding in GST administration;

(d) consideration of results of relevant benchmarking activities;

(e) consideration of economic conditions and the context of GST administration as outlined in Part 2 – Objectives and Context of the Agreement; and

(f) a manageable set of performance indicators focusing on key outcomes.

29. Changes to the body of the Agreement will require the agreement of the Council. Any proposals for a new Agreement will initially be prepared by the Parties for review by GSTAS (through GPAS). Consistent with the provisions of the Intergovernmental Agreement any new Performance Agreement is to be endorsed by the Council prior to being signed by the Parties.

Dispute resolution

30. Disputes over the operation of the Agreement which cannot be resolved by GPAS or GSTAS in accordance with this Agreement’s relationship management arrangements may be referred by any Party to the Council.

31. The Parties agree that the Australian Taxation Office will have the opportunity to provide direct advice to the Council on any matter related to this Agreement submitted for consideration by the Council.

The Parties have confirmed their commitment to this agreement as follows:

Signed for and on behalf of the Commonwealth of Australia by

____________________________

The Honourable Joe Hockey MP Treasurer of the Commonwealth of Australia

March 2014

Signed for and on behalf of the Australian Taxation Office by

____________________________

Mr Chris Jordan Commissioner of Taxation

April 2014

Signed for and on behalf of the State of New South Wales by

____________________________

The Honourable Michael Baird MP Treasurer of the State of New South Wales

March 2014

Signed for and on behalf of the State of Victoria by

____________________________

The Honourable Michael O’Brien MP Treasurer of the State of Victoria

March 2014

Signed for and on behalf of the State of Queensland by

____________________________

The Honourable Tim Nicholls MP Treasurer of the State of Queensland

March 2014

Signed for and on behalf of the State of Western Australia by

____________________________

The Honourable Mike Nahan MLA Treasurer of the State of Western Australia

March 2014

Signed for and on behalf of the State of South Australia by

____________________________

The Honourable Jay Weatherill MP Treasurer of the State of South Australia

March 2014

Signed for and on behalf of the State of Tasmania by

____________________________

The Honourable Lara Giddings MHA Treasurer of the State of Tasmania

March 2014

Signed for and on behalf of the Australian Capital Territory by

____________________________

Mr Andrew Barr MLA Treasurer of the Australian Capital Territory

March 2014

Signed for and on behalf of the Northern Territory by

____________________________

The Honourable David Tollner MLA Treasurer of the Northern Territory of Australia

March 2014

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Schedule A

PERFORMANCE OUTCOME MEASURES G S T A D M I N I S T R A T I O N P E R F O R M A N C E A G R E E M E N T

A1 This Schedule provides a range of agreed measures for the Council on Federal Financial Relations to determine whether the Australian Taxation Office has achieved the stated outcomes in clauses 10 and 11 of this Agreement.

A2 Achievements against these measures may be found in the annual GST administration performance reports provided by the Australian Taxation Office.

A3 Notes for Schedule A: Where international benchmarking figures are shown, these are based on the latest information available. Definitions of each measure are described in the Schedule A explanatory notes.


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Maintain compliance

Performance category Measure

1. Revenue Outcome

(a) GST revenue (cash)

Total cash

Customs cash

2. GST debt (a) GST debt outstanding

Total

Collectable

(b) GST debt collection rate

(c) Interest paid on delayed refunds

(d) GST debt non-pursuit

Dollar

Percentage

(e) Ageing of GST debt — number of cases

<30 days

<60 days

<90 days

>90 days

Total

(f) Ageing of GST debt — value

<30 days

<60 days

<90 days

>90 days

Total

3. Trend over time in GST

gap

(a) Estimated GST gap – value ($m)

(b) Estimated GST gap excluding debt as a percentage of accrual revenue

(c) Estimated GST gap including debt as a percentage of accrual revenue


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Compliance outcomes


1. Compliance outcomes (a) Strike rate

(b) Compliance liabilities raised

(c) Voluntary disclosure large market

Number

Value $

(d) Compulsory GST registrations compared to potential GST registrations

based on

income tax returns data

(e) BAS lodgment

% lodged - monthly quarterly

% lodged on time - monthly

quarterly

(f) Audit coverage

International benchmark (2005)

Average 5.85%, range 0.6% to 27.7%

(g) Objection rate

Cost effective administration


1. Cost effectiveness (a) Cost as a % of revenue

International benchmark (2007) Average 1.22, range 0.82 to 1.53

(b) Cost per registrant

International benchmark (2007) Average $410, range $157 to $527

2. Operational and cost

management (a) Variation of GST administration costs from agreed budget

(total admin budget )

(b) Compliance costs as a % of total admin costs

(c) Electronic activity statements are finalised in 12 business days

(d) Objections are finalised in 56 calendar days of receiving all necessary information

(e) Written technical advice: Taxpayer requests are actioned in 28 calendar days

Private rulings are finalised in 28 calendar days of receiving all necessary information

(f) Telephone general enquiry service – general calls answered within 5 mins


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Cost effective administration (Cont.)


2. Operational and cost

management (cont’d) (g) BAS lodgment method – % of BAS lodged electronically

overall

monthly remitters

quarterly remitters

annual remitters

(h) Quality of technical advice*

Percentage of cases that passed

(i) Australian resident ABR registrations are finalised in 20 business days.

*Previously reported measure A-grade pass (tax office standard)

Australian Customs and Border Protection Service (ACBPS)

ACBPS Productivity

Outcome1

Measure

1. Management of GST

revenue collection

(a) GST liability assessed

(b) GST collected

2. Maintain compliance (a) Costs of import and export compliance

(b) Compliance coverage – imports

(c) Compliance coverage – exports

(d) Audit coverage – Tourist Refund Scheme (TRS)

(e) TRS claims rejected

(f) GST adjustments – underpaid GST revenue

(g) GST adjustments – rejected Tourist Refund Scheme claims

(h) Total GST adjustments

(i) Compliance yield


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3. Cost Effective

Administration

(a) Costs of import processing

(b) Costs of export processing

c) Costs of import and export compliance

d) Costs of administering the Tourist Refund Scheme

(e) Total costs

(f) Import declarations processed

(g) Export declarations processed

(h) Total TRS claims processed

(i) Total costs as a % of total GST liability assessed

(j) Total costs as % of total GST collected


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EXPLANATORY NOTES

International benchmarks

A4 Average and range are based on a mix of 2005 and 2007 reviews with benchmarking partners and represents the latest figures available. These figures will be updated as new information becomes available.

Key features under the framework

A5 The indicators have been structured to distinguish between those which are considered to be “core” (or key) and those which are “supplementary” (or complementary). The distinction has been made to enable the Australian Taxation Office’s effort to be driven towards achieving those performance indicators and targets of greatest importance to the parties to the Performance Agreement. The two indicators are:

Core performance indicators

A6 Defined as those indicators which are key accountability measures. Collectively, core performance indicators enable the Australian Taxation Office to demonstrate it has achieved the desired outcomes for the Council. These indicators are base measures and in general would not require change from year to year.

Supplementary indicators

A7 Defined as those indicators which provide additional context or information about an area of performance. They are complementary to the core performance indicators by providing additional information on Australian Taxation Office workloads and or output performance. They can also include qualitative or narrative information about an aspect of GST administration. Supplementary indicators may include information on matters such as identified risks, strategies, and treatment outcomes.

Maintain Compliance

1(a) GST revenue (Cash)

A8 Both the total amount and the ACBPS amount are used. The total includes the ACBPS amount. All projections are based on the most recently available MYEFO estimates.

2(a) GST debt outstanding

A9 The Australian Taxation Office’s client accounting system for activity statement tax obligations features a running account balance. Liabilities for various revenue products including GST are posted to the accounts while credits (payments) are applied to the balance of the account, rather than being matched to individual liabilities. This necessitates the estimation of GST debt. To enable this estimation, a measurement process is undertaken. The process requires the disaggregation of liabilities by head of revenue for each taxpayer, after exclusion of certain categories and subsequent apportioning of total debits having regard to the sum of each head of revenue. These debit balances by head of revenue are then summed to allow an attribution percentage to be derived.


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A10 This percentage is then applied to activity statement collectable debt, as adjusted to reflect the exclusion of any amounts subject to dispute or insolvency, to derive an estimated collectable GST debt amount.

A11 The ratio of estimated collectable GST debt to net GST revenue, expressed as a percentage, is a measure used by a number of revenue agencies to gauge their relative effectiveness in managing their debt holdings. The net GST revenue amount is provided by Revenue Analysis Branch. (Note - from the financial year 2003 onwards this measure is reported based on collectable debt. Prior to that date, the measure was based on total debt, which included amounts subject to dispute.)

2(b) GST debt collection rate

A12 This measure was reported for the first time in 2003-04. The outcome reported was that of estimated collectable GST debt as a percentage of GST revenue (as agreed). The measure is computed using the estimated GST collectable debt amount as a percentage of 12 months GST revenue collections. In calculating 12 months estimated GST revenue collections the latest month figures are included and the corresponding month from the prior year period is removed. This is necessary to smooth out substantial variations that occur around particular due dates, significantly distorting the result.

2(c) Interest paid on delayed refunds

A13 Where a refund would normally be issued to a client but is delayed because the Australian Taxation Office has not processed the activity statement within the required time frame, the client is paid interest on the refund amount. This measure does not solely capture the interest paid on delayed refunds associated with GST BAS credits, it also includes interest paid in relation to other revenue products.

2(d) GST debt non-pursuit

A14 The process employed by the Australian Taxation Office in estimating the amount of GST debt - non-pursuit includes several steps:

(a) All tax file numbers for taxpayers with write off postings on their account in the current financial year are identified.

(b) For each taxpayer, liabilities by head of revenue are identified.

(c) Each taxpayer’s total liabilities are then divided by the total liabilities for each head of revenue to determine a percentage.

A15 The percentage relating to GST is then applied to total amounts with a write off posting to provide an estimate of GST debt non-pursuit for that taxpayer. All estimated amounts are then totalled and applied against the sum of all write off postings to determine an overall percentage for GST debt non-pursuit. This percentage is used to allocate the write off posting amount from the business system.

2(e) Ageing of GST debt — number of cases

A16 The age of analysis by number of cases is derived based on cases in the debt case management system with a GST registration. The age of the case is determined by the earliest period in which any component of the debt can be attributed. Caution must be


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exercised as the debt outstanding (while activity statement related) may no longer be GST related if that has been paid earlier.

2(f) Ageing of GST debt — value

A17 The age of debt profile is based on the date of referral of the debt to the Australian Taxation Office’s debt and lodgment case management system. The process does not identify GST debt and the attribution percentage is utilised against each of the age categories to provide an estimation of the age of GST debt.

A18 For the purposes of this measure, the debt base is slightly higher than the overall collectable debt figure as it has not been adjusted. Adjustments account for components of debt that report as collectable but due to timing or other issues have not had the appropriate actions undertaken (eg ‘dispute’ indicator not input). Given the manual nature of the adjustment process it is only undertaken at the overall level.

3(a) Estimated GST gap – value

A19 This measure estimates the dollar value of theoretical GST losses through non-reporting of GST by businesses and individuals through a failure to register or failure to lodge returns, net under-reporting of GST obligations or over-claiming of GST refunds.

A20 The measure is calculated as the difference between the actual tax liability reported to the ATO or raised by the ATO, and the tax liability that should be reported (assuming businesses and individuals fully complied with their GST reporting obligations) for a given period. The calculation is:

GST gap = theoretical accrual GST revenue – actual accrual GST revenue

A21 The measure is intended to be viewed as a trend over time and in conjunction with other indicators utilised by the ATO to measure compliance effectiveness. The absolute dollar gap represents more of a guide to the level of actual tax gap. Random and systematic errors arising from the assumptions used to derive the estimate may be present.

A22 Theoretical accrual GST revenue is derived from adjusted national accounts data. Actual accrual GST revenue is based on the economic transaction method (ETM) of revenue recognition, being actual liabilities remitted during the year and an estimate of amounts outstanding that relate to transactions that have occurred in the period but are yet to be reported.

A23 Full details of the ATO methodology for GST gap is described in the document “Measuring tax gaps in Australia for the GST and the LCT”, available on the ato.gov.au website.

3(b) Estimated GST gap excluding debt as a percentage of accrual revenue

A24 This measure shows the GST gap relative to estimated theoretical accrual revenue. It is calculated as:

GST gap x 100 Theoretical accrual GST revenue

A25 The calculation does not consider the impact of debt on the size of the GST gap.


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3(c) Estimated GST gap including debt as a percentage of accrual revenue

A26 The estimated GST gap including debt is calculated to allow for international comparisons. It represents the GST gap taking into account GST revenue that has not been collected (debt), relative to theoretical accrual GST revenue. Including debt in the calculation reduces the value of actual GST revenue and thereby increases the size of the estimated GST gap.

A27 The calculation is the same as for 3(b) above however the GST gap figure is adjusted for the debt component.

GST gap (including debt) = Theoretical accrual GST revenue – (actual accrual GST revenue – debt component)

A28 The debt component of the GST gap is the difference between accrual GST revenue and

GST cash collected in the period. The ATO adopts a running-account-balance method in relation to taxpayer liabilities and apply an allocation methodology for deriving GST debt. The precise contribution of GST debt to the GST gap is therefore difficult to determine and indicative only.

Compliance outcomes

1(a) Strike rate

A29 The strike rate (percentage of cases leading to re-assessment) is an OECD measure which can indicate the effectiveness of case selection in detecting “correct reporting”. It should be noted that the measure does not differentiate between upward nor downward liability adjustments.

A30 This measure is currently used within the Australian Taxation Office under a broader definition (to encompass not only audit adjustments but where some other outcome has been achieved e.g. de-registration of a taxpayer).

A31 The indicator gives recognition to the Australian Taxation Office’s risk based audit selection strategy (focused on high risk clients) and is a more appropriate measure of effectiveness than audit coverage.

A32 It should be noted that the strike rate is likely to have an inverse relationship with audit coverage (e.g. risk based audit selection focuses on high risk and often more resource intensive clients. This results in smaller coverage. As coverage is increased, there is more chance that a higher proportion of less risky clients will be included in the audit selection). It also has a relationship with objections increasing in proportion to the number of audits resulting in adjustments.

Number of finalised auditand enforcement cases in × 100

year resulting in an outcomeTotal number of finalised audit

and enforcement cases in year


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1 (b) Compliance liabilities raised

A33 This measure replaces the audit yield measure that tied the investment on compliance activities to a return on investment (ROI) ratio. This limited the decisions on types of compliance activities that focussed more on raising revenue than improving compliance. Replacing the ROI with a liabilities target allows the Australian Taxation Office to define the compliance activities it will undertake and then estimate the liabilities that will be raised from those activities.

A34 From 2009–10, the Australian Taxation Office will submit proposals to GSTAS (through GPAS) on the compliance activities and the likely liabilities that will be raised from those activities.

A35 In March 2010 the Council approved additional expenditure on Australian Tax Office GST related compliance activities. The additional expenditure of $331.0 million over the four years from 2010-11 is estimated to raise an additional $1.5 billion over this period and have ongoing compliance benefits. In October 2012, the States and Territories approved a further $195.3 million in expenditure to extend the GST Compliance Program - Working together to improve voluntary compliance for two more years to 2015-16. The additional two years of expenditure is estimated to raise a further $554.1 million.

1 (c) Voluntary disclosure for large market

A36 This measure has evolved from a recommendation from the Inspector General of Taxation to overtly describe the liabilities raised from the voluntary disclosures by large market clients. This is relevant for the large market because of the proactive work conducted by the Australian Taxation Office with large market clients to promote voluntary review and correction. At this point the measure is restricted to the large market because of this proactive compliance.

Number and dollar amount trend of large market client over

initiated BAS revisions time

1 (d) Compulsory GST registrations compared to potential GST registrations based on income tax return data

A37 The indicator is similar to overseas indicators that try to assess whether we have the right number of registrants in the system compared to another source of information. In this case we are comparing the number of entities that declare business income (in excess of $75,000) in their income tax returns with the number of compulsory registrants.

1(e) BAS lodgment

A38 This measure has two components, one which measures the percentage of business activity statements lodged on time, and the second measures the percentage lodged at a given time. The given time will be at 31 December for the mid year report and 30 June for the full year report.

1(f) Audit coverage

A39 Audit coverage is an outcome of a balanced, risk-based audit program rather than a pre-agreed ‘target’, the pursuit of which can at times be counter-productive to the effectiveness of the overall compliance program.


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A40 Cases are selected based on risk profile. Not all audit cases are the same; therefore a mix of audit case types is used. Cases selected on potentially the highest liability adjustments (the greatest risk to revenue) are generally more complex and time consuming. Essentially, the greater the complexity of a risk the more resource intensive its treatment. Those that focus on other risks to the system such as registration compliance and more procedural cases are simpler and less time consuming and often produce little revenue at the time of contact. In these cases, we often undertake activities that demonstrate a client is fully compliant.

A41 Given the Australian Taxation Office conducts significant compliance activities (non-active compliance) the need for higher coverage rates has been mitigated. Coverage levels of 10% were determined at the time of implementation of the GST. Built on the premise that high visibility was a cornerstone to effective compliance, this was also consistent with the need to maximise our presence in the business community to enable them to understand and meet their obligations under the new system. In a more mature system the Australian Taxation Office can best manage compliance risks by concentrating in areas with the most significant and emerging risks. This may mean more resources being directed at more resource intensive activities rather than at activities which generate high rates of coverage.

DEFINITION:

Audit coverage is defined as the total number of client contact cases conducted in any one year shown as a percentage of the population of GST clients.

A42 Population for coverage purposes is based on the number of BAS issued each quarter. This picks up all entities that have a GST obligation and are required to lodge a BAS. The population at 1 July will be used in determining our audit coverage outcome for the year. Population movements up or down during the year makes it difficult to adjust our case projections. This is notwithstanding the fact that our cases are derived based on risk and not simply derived to reach a coverage projection. Where the population is determined on the number of BAS issued each quarter, this is different to the GST registered population figure as shown in the administration reports. An entity may have other related entities with a GST role under the branching rules and therefore have multiple BAS sent to them at different addresses. Also the reverse can be said to be true where a GST group is concerned. This population figure based on BAS issued, for audit coverage purposes is therefore more logical because this is what generates the risk for which we undertake active compliance.

A43 The Australian Taxation Office also undertakes a range of internal reviews, such as pre-issue refund checks, where issues are resolved without the need to contact the client. As these do not involve client contact they do not contribute to the coverage result. This measure is calculated by:


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Total number of finalised× 100

client contact casesClient population based on

BAS issued at 1 July

1 (g) Objection rate

A44 The objection rate can provide an indicator of objection levels and trends over time. It should be noted that there are a range of factors than can impact on the number of objections received, including improvements in the strike rate (or improved risk identification)

Number of objections× 100

received in yearNumber of audits with a financial

adjustment finalised in year

COST EFFECTIVE ADMINISTRATION

1. Cost effectiveness

1 (a) Cost as a % of revenue

A45 Projections have been adjusted to reflect revenue estimates from the most recent MYEFO. Prior to 2003-04 this was calculated on an accrual basis.

A46 This measure equates to the cost of collecting $100 of GST revenue. This measure is calculated by:

Total GST administration costs × 100

Total GST Revenue (Cash)

1 (b) Cost per registrant

A47 Projections have been calculated assuming a client base of 2.5 million. Due to a high level of uncertainty with future client numbers, projections should not be made beyond the immediate future year. This measure is calculated by:

Total GST administration costs

Total registered client base

2. Operational and cost management

2 (a) Variation of GST administration costs

A48 This measure reflects the percentage by which the actual GST product cost varies from the agreed budget, as specified in Schedule B. It will be reported retrospectively.


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2 (b) Compliance costs as a % of total administration costs

[SCF 3.4 (Tax Office) & 3.5]

Compliance costs× 100

Total GST administration costs

2 (c) Electronic activity statements are finalised in 12 business days

A49 This is a taxpayer charter standard. A 94% target applies.

2 (d) Objections are finalised in 56 calendar days of receiving all necessary information.

A50 A taxpayer dissatisfied with a decision of an assessment, can formally challenge that decision by lodging an objection against the decision. The taxpayer charter for the Australian Taxation Office to respond is 56 calendar days from the time all necessary information is received. A 70% target applies.

2 (e) Written technical advice – taxpayer requests and private rulings are finalised in 28 calendar days.

A51 This is a taxpayer charter standard. An 85% target applies for general taxpayer requests and an 80% target applies to private rulings. The private rulings standard is subject to the ATO receiving all necessary information.

2 (f) Telephone general enquiry service

A52 An 80% target applies for general calls answered within 5 minutes during the Australian Taxation Office’s peak period of July to October.

2 (g) BAS lodgment method — % of BAS lodged electronically

A53 Our objective is to increase the proportion of BAS lodged electronically.

2 (h) Quality of technical advice - percentage of cases that passed

A54 Quality assessment is performed as part of the Integrated Quality Framework. The

framework takes a systemic approach to quality improvement, and focuses on addressing

identified opportunities for improvement. The measure reflects the critical quality elements of

administrative soundness, integrity, correctness and appropriateness in terms of whether a

case is aligned, meets or exceeds standards (which equates to a pass under the prior

method of assessing quality).

A55 Where a case does not receive a pass rating it does not necessarily mean that the client received incorrect advice. Main reasons for a case not to pass — not all of the client's issues were identified and where identified, consequential issues, which would have allowed the client to make an informed GST decision, were not addressed. If advice is incorrect, it is withdrawn and replacement advice issued.


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2 (i) Registrations – Australian resident ABR registrations are finalised in 20 business days

A56 This is a taxpayer charter standard. A 93% target applies.

AUSTRALIAN CUSTOMS AND BORDER PROTECTION SERVICE (ACBPS)

1. Management of GST revenue collection

1(a) GST liability assessed

A57 ACBPS assesses the GST liability on all taxable importations of goods imported via Australian ports and airports, mail imported through all Australian international mail centres and goods entering Australia with passengers and crew via all Australian ports and airports.

1 (b) GST collected

A58 The GST liability assessed by ACBPS on taxable importations is deferred (and accounted for on the BAS) for cargo importers that have been approved by the Australian Taxation Office for GST deferral. In all other cases, ACBPS collects the GST.

2. Maintain compliance

2 (a) Compliance costs

A59 This figure is calculated as:

Cost of import and Costs of Tourist Refund+

export compliance Scheme compliance

A60 ACBPS import and export compliance includes the following:

Intelligence and risk assessment (including associated research, analysis and monitoring)

Pre and post clearance interventions (pre clearance interventions, including real time verification of import declarations, occur before the release of goods from Customs control and post clearance interventions, including formal audits, occur after the release of goods from Customs control)

Enforcement (including investigation, imposition of sanctions and prosecution)

Education and advice (including tariff, valuation and origin advice)

Note: ACBPS captures all Tourist Refund Scheme (TRS) costs as a single figure, comprising administration, processing and compliance.


Page A-15

2 (b) Compliance coverage – imports

A61 Import compliance coverage is defined as the proportion of imports (by customs value) subject to compliance activity.

A62 Customs value is the value on which customs duty is calculated for imported goods and which is established in accordance with Division 2 of Part VIII of the Customs Act 1901. Compliance coverage (imports) is calculated as:

Customs value of imports× 100

subject to compliance activity

Customs value of all imports

A63 ACBPS interprets “compliance” in this item as comprising pre and post clearance

interventions only.

2 (c) Compliance coverage – exports

A64 Export compliance coverage is defined as the proportion of declared exports by Free On Board (FOB) value subject to compliance activity.

A65 The owner of each export consignment that has a FOB value greater than $2,000 must provide ACBPS with an Export Declaration. Compliance coverage (exports) is calculated as:

FOB value of declared exports× 100

subject to compliance activity

FOB value of all declared exports

A66 ACBPS interprets “compliance” in this item as comprising pre and post clearance

interventions only.

2 (d) Compliance coverage – Tourist Refund Scheme

A67 Tourist Refund Scheme (TRS) coverage is defined as the proportion of TRS claims subject to compliance activity. Compliance coverage (TRS) is calculated as:

Number of TRS claims

100subject to compliance activity

Number of TRS claims lodged

A68 The TRS regulations require TRS claimants to present any or all of the goods, the tax

invoice relating to the goods and certain travel documents to an ACBPS officer on request. ACBPS undertakes checks before payment of a refund is authorised. For this reason, audit coverage for the TRS is 100%.

A69 TRS compliance activities include real-time activities undertaken to verify that particular TRS claims meet the requirements of the regulations and any post-transaction compliance activities.


Page A-16

2 (e) Tourist Refund Scheme claims rejected

A70 This is a measure of the proportion of Tourist Refund Scheme (TRS) claims that are rejected because the claim does not meet one or more of the requirements of the regulations. TRS claims rejected is calculated as:

Number of TRS claims rejected × 100

Number of TRS claims lodged

2 (f) GST adjustments – underpaid GST revenue

A71 GST revenue is underpaid in cases where the GST liability assessed by an importer for a taxable importation is less than the correct GST liability (regardless of whether the GST liability was initially paid to ACBPS or deferred for payment on the BAS). A GST underpayment adjustment occurs when the importer’s incorrect assessment is amended to correct the error, resulting in an increase in the assessed GST liability.

A72 Underpaid GST revenue includes additional GST revenue paid to ACBPS (or deferred to the next BAS) in cases where an import declaration has been amended by an importer. It can refer to additional GST revenue paid to ACBPS (or deferred to the next BAS) in relation to notices of assessment or other compliance activity.

A73 A GST assessment error could be the result of incorrect assessment of the value of the taxable importation or incorrect classification as a non—taxable importation.

A74 An incorrect assessment of the value of a taxable importation could result from an error in assessing the customs value, the customs duty, the wine equalisation tax or the amount paid or payable to transport the goods to Australia and to insure the goods for that transport.

A75 An incorrect classification as a non—taxable importation could result from an error in identifying the taxable status of particular goods.

2 (g) GST adjustments – rejected Tourist Refund Scheme claims

A76 International travellers can obtain a GST refund under the Tourist Refund Scheme (TRS) provided that they submit a claim that fulfils all of the requirements set out in the regulations.

A77 Where a TRS claim is checked and found not to comply with the regulations the claim is rejected which results in an adjustment of the GST refund claim down to zero. The value of the GST adjustment is equal to the amount of GST refund that was originally claimed. Certain rejected claims, (for example, not a valid tax invoice) are able to be reviewed by the Tourist Refund Office If the review results in the claim subsequently being approved; a GST adjustment would need to be made.

2 (h) Total GST adjustments

A78 This measure is the sum of the GST adjustments that result from underpaid GST revenue, over claimed GST refunds and rejected Tourist Refund Scheme (TRS) claims.

Total GST GST adjustments GST adjustments

adjustments (underpaid GST revenue) (rejected TRS claims)


Page A-17

A79 ACBPS also refuses and adjusts GST refund claims lodged by importers to correct overpayments. Data on these GST adjustments is not currently available.

2 (i) Compliance yield

A80 This measure reflects the ratio between the Total GST adjustments and the funding provided for compliance. This measure is calculated as:

Total GST adjustments

Active compliance costs

3. Cost-effective administration

3 (a) Costs of import processing

A81 This measure is the costs attributed to the GST element of ACBPS’ import processing function.

A82 This function covers the processing of import transactions and associated revenue functions including establishing the liability for GST, wine equalisation tax and luxury car tax. Included under this function are the recording of amounts of deferred GST and the provision of import data to the Australian Taxation Office (including GST deferred data). Also included under this function is the processing and payment of claims for refund of GST, wine tax and luxury car tax.

A83 This function is carried out in relation to:

(a) all goods imported via Australian ports and airports;

(b) mail imported through all Australian international mail centres; and

(c) goods entering Australia with passengers and crew via all Australian ports and airports.

3 (b) Costs of export processing

A84 This measure is the costs attributed to the GST element of ACBPS’ export processing function.

A85 This function covers the processing of export transactions including collecting export data and providing it to the Australian Taxation Office.

3 (c) Costs of import and export compliance

A86 This measure is the costs attributed to the GST element of ACBPS’ import and export compliance functions.

A87 This function covers compliance activities in relation to self-assessed declarations made by importers. It also covers compliance activities in relation to refund claims that relate to taxable importations.


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A88 The costs of compliance activities in relation to the Tourist Refund Scheme are included in item 3(d) below.

A89 ACBPS utilises a range of monitoring, response and enforcement compliance activities that are proportional to client behaviour and consistent with ACBPS’ Regulatory Philosophy.

3 (d) Costs of administering the Tourist Refund Scheme

A90 This measure is the costs attributed to the administration of the Tourist Refund Scheme.

A91 This function covers the processing and payment of Tourist Refund Scheme claims and associated compliance activities. This function is carried out in relation to passengers departing from all international airports and seaports in Australia.

3 (e) Total costs

A92 This measure is the sum of the costs associated with carrying out ACBPS’ four GST functions.

3 (f) Import declarations processed

A93 Owners of imported goods are required by section 68 of the Customs Act 1901 to make a declaration to ACBPS in relation to each imported consignment. Owners that make an import declaration are making a taxable importation (s13-5 GST Act). An ACBPS officer may refuse to deliver the goods concerned unless the GST has been paid [GST Act subsection 13-15(2)].

A94 An import declaration includes all of the information that is required to assess the GST liability.

3 (g) Export declarations processed

A95 Owners of goods intended for export that have a FOB value greater than $2000 are required by section 113 of the Customs Act 1901 to make a declaration to ACBPS in relation to each export consignment.

A96 ACBPS provides the Australian Taxation Office with a monthly export data report. The Australian Taxation Office uses this information in undertaking compliance functions in relation to item G2 on the BAS.

3 (h) Total Tourist Refund Scheme claims processed

A97 International travellers can obtain a GST refund under the Tourist Refund Scheme (TRS) provided they submit a claim to ACBPS that fulfils all of the requirements set out in the regulations.

3 (i) Total costs as a percent of total GST liability assessed

A98 ACBPS assesses the GST liability on all taxable importations. The GST liability assessed by ACBPS on taxable importations is deferred (and accounted for on the BAS) for importers that have been approved by the Australian Taxation Office for GST deferral. In all other cases, ACBPS collects the GST.


Page A-19

A99 ACBPS processes all taxable importations regardless of whether the GST is paid to ACBPS or deferred for payment on the BAS. It is appropriate, therefore, to compare processing costs to the GST liability assessed rather than to compare those costs to the GST collected by ACBPS.

3 (j) Total costs as a percent of total GST collected

A100 This item could be misleading because it compares the processing costs to a small portion of ACBPS’ taxable importation workload. This item needs to be considered in the context of item (i) Total costs as a percent of total GST liability assessed.

Page B-1

Schedule B

GST BUDGET AND ADMINISTRATION ACTIVITIES G S T A D M I N I S T R A T I O N P E R F O R M A N C E A G R E E M E N T

STRATEGIC COSTING FRAMEWORK

B1 The strategic costing framework is the Australian Taxation Office’s primary costing attribution method across all of its activities.

Strategic costing framework (SCF) deliverables

Program Framework Deliverables

1.0 Design and build administrative services

1.4 Legal services

1.5 Law assurance

2.1 Registrations

2.2 Processing and accounts

2.3 Customer contact

2.4 Debt collection

3.1 Marketing and communication

3.2 Interpretative assistance

3.3 Provision of legal services

3.4 Active compliance (Tax Office)

3.4 Active compliance (ACBPS)

3.5 Compliance intelligence and risk management

3.6 Law assurance

5.3 Government relations and issues

TOTAL

B2 Cost information against these program framework deliverables may be found in the annual GST administration performance reports provided by the Australian Taxation Office.

B3 Changes to the ATO Program Framework are reflected in the Strategic Costing Framework activities.

Page B-2

NOTES TO THE STATEMENT OF GST ADMINISTRATION COSTS

Note 1 — Summary of significant accounting policies

Basis of accounting

B4 The GST Administration Cost Statement is a special purpose financial report. The Statement has been prepared for the sole purpose of complying with the requirement in the Performance Agreement for the Australian Taxation Office’s Administration of the GST for the Australian Taxation Office to prepare and distribute an accrual—based financial statement to the Council. As such, it must not be used for any other purpose.

B5 The Statement has been prepared having regard to Statements of Accounting Concepts and on an accrual basis.

Proportion of total Australian Taxation Office costs

B6 The financial information and accounting policies used in preparing the GST Administration Cost Statement are the same as used to prepare the Australian Taxation Office’s annual audited Financial Statements.

B7 The costs of GST administration activities have been calculated using a model consistent with the Commonwealth Government’s accrual based outcomes and programs framework. They represent the proportion of the Australian Taxation Office’s total operating expenses that relate to GST administration activities determined by using the cost attribution approach outlined below.

(a) The cost of GST administration activities include:

(i) direct staff and related costs;

(ii) other direct operating costs including payments to other agencies;

(iii) line management overhead costs which represent those costs within a Line that do not directly provide Line products, services or outputs but support the Line as a whole;

(iv) corporate support costs including accommodation, information technology, office services, human resource services and internal services; and

(v) a proportion of corporate and business management overheads for strategic corporate direction setting (including corporate improvement initiatives), financial management, assurance and governance, and other corporate—related activity based on the total cost of GST administration activities as a proportion of total Australian Taxation Office costs.

Page B-3

Note 2 – Definition of deliverables contributing to the GST Administration

1.0 Design and build administrative systems to support government, the community and other agencies

B8 This comprises three sub components:

(a) Policy advice and revenue forecasting — Provision of advice on costings, modelling and revenue forecasting in relation to new government policy on GST, including advice on the administrative compliance and interpretative matters.

(b) Design and build administrative solutions — activities to support the identification development and enhancement of business practices and processes, products and systems to implement and administer new GST law.

(c) Input into law design — activities that impacts on the current or proposed GST law through the provision of technical and interpretative advice change including technical/interpretative advice on draft law.

1.4 Legal services

B9 Activities in relation to the delivery of legal services, litigation, provision of internal legal advice, production services and assurance for legal services and management of complaints.

1.5 Law assurance

B10 Law assurance processes support the interpretation and administration of GST laws.

2.1 Registrations

B11 All activities relating to the registration of new clients including processing and maintaining GST client Register.

2.2 Processing and accounts

B12 Processing includes payment and processing for the GST including other products. Activities include managing accounts, through processing lodgments including correction of exceptions, processing claims and manual refunds, amendments, revisions and variations.

B13 Accounts cover all activities that result in refunds and outward payments, adjustments or updates to accounts.

2.3 Customer contact

B14 This includes telephone advice and support to clients through customer call centres and tax agent call centres.

B15 Customer contact activities also include processing inbound correspondence received through a range of channels including mail, fax, portal and email.

Page B-4

2.4 Debt collection and lodgment management

B16 All activities in relation to debt collection and lodgment management for GST, including direct phone calls, correspondence and provision of legal services. Any subsequent action in relation to non lodgment is included under active compliance.

3.1 Marketing and communication

B17 Marketing communication activities supporting tax payers with voluntary compliance, helping taxpayers and their advisers understand their rights and obligations and managing relationships.

3.2 Interpretative advice and assistance

B18 Interpretative advice and assistance provided in relation to GST laws, generally provided in written form but may include oral advice in some limited circumstances.

B19 Activities including the provision of private rulings, public rulings, law interpretation and decisions such as objections, disputes and reviews.

3.4 Active compliance

B20 Incorporates strategies to promote voluntary compliance on GST including activities such as:

(a) investigation and prosecution;

(b) audit and enforcement;

(c) review;

(d) compliance agreement; and

(e) tailored advice.

3.5 Compliance intelligence and risk management

B21 This includes activities such as:

(a) intelligence and risk identification (including associated research, revenue analysis and monitoring);

(b) risk assessment (including work associated with the prioritisation and ranking of identified risks but excluding active compliance review activities); and

(c) development and maintenance of risk parameters for data matching, and case selection.

5.3 Government relations and issues

B22 Government relations and issue management activities focus on provision of advice and information and support processes for Ministers, Parliament, State & Territory Governments and external scrutineers as well as managing issues as they arise.

Page B-5

Note 3 – Basis of attributing the cost to GST administration

B23 The Australian Taxation Office’s GST administration activities include activities that are 100% GST related and others where processes are shared between GST and other taxes. Where a process is shared, the costs are attributed to GST and other revenue products based on the relative consumption of the shared service.

B24 The basis used for attributing costs to GST administration activities is summarised as follows:

GST administration activities

Basis of attributing costs to GST administration activities

Contribution to policy advice

Number of policy advice provided or people who involved in providing policy advice that are related to GST works.

Design and build administrative solutions

GST proportion of the Australian Taxation Office’s corporate systems that are designed and built for GST purposes.

Input into law design Number of new policy implemented or number of people involving in design and implementing GST related law.

Legal services Number of legal services provided or resources involved in providing legal services that are related to GST activities.

Registrations GST proportion of changes to client register based on volume and tax role.

Processing and accounts GST proportion of Activity Statement (AS) processing based on volume and profile of taxes and/or labels on the AS.

GST proportion of transactions based on volume and profile of client payments and refunds.

Customer contact GST proportions of calls to and from customers based on call volume and call tax type.

Debt collection GST proportion of debt and lodgment activity based on cases on hand and client tax role profile.

Marketing and communication

GST proportion of education and campaign material based on product and campaign tax type.

Interpretative assistance GST proportion of interpretative advice and assistance provided by the Australian Taxation Office for taxpayers about the laws administered by the Commissioner. Advice is delivered to external and internal clients.

Active compliance (a) GST proportion of compliance activities based on case volumes, standard case times and role profile by case type.

(b) Import and Export to Australian Customs Office 100% GST.

Compliance intelligence and risk management

GST proportion of fraud analysis and investigation activity based on GST case costs

Government relations and issues

Percentage of FTE in Government relations and issues management related to GST work.

Page B-6

Note 4 — Planning and budgetary arrangements

B25 This note sets out the agreed processes for developing and modifying budgets and business plans for the Australian Taxation Office’s administration of the GST.

Budget formulation process

B26 The Australian Taxation Office will formulate proposals for levels of funding required to administer the GST for the immediate future year. The Australian Taxation Office will consult with GSTAS (through GPAS) in formulating its proposals. In formulating the proposals, the Australian Taxation Office will review the budget methodology, associated assumptions and accuracy of data underpinning the proposals.

B27 The Australian Taxation Office will provide the strategic budget submission to GSTAS through GPAS). GSTAS will consider the budget submission and forward to the Council, together with any comments or recommendations from GSTAS members on the appropriate level of funding.

B28 Whilst the time frames for these processes will change over time to align with Commonwealth budgetary processes, it is anticipated that GSTAS will consider the Australian Taxation Office’s funding submission in February each year.

B29 The strategic budget submission to GSTAS will contain an indicative view of the funding against the program deliverables of the strategic costing framework. If required, subject to Australian Taxation Office planning processes and impacts of the Commonwealth budget process, the Australian Taxation Office will provide to GSTAS (through GPAS), within the first quarter of the financial year, a revised view against the program deliverables.

B30 The Australian Taxation Office can raise with GPAS, GSTAS and subsequently, if necessary, the Council at any time during a financial year issues that may impact on the agreed Schedule B information.

Review of actual costs of administration

B31 The Australian Taxation Office will report to GSTAS (through GPAS) the actual costs incurred in administering the GST for each financial year. As per the audit arrangements in Schedule C, these costs and the basis of determining these costs are subject to independent review by the ANAO.

B32 GSTAS (through GPAS) and the Commissioner of Taxation will consult on the amount of any ex-post adjustments for the prior financial year arising from the administration costs actually incurred. GSTAS will recommend to the Council any agreed adjustments from the ANAO review. It is anticipated that any agreed adjustments will be settled and given effect to by February each year.

Page C-1

Schedule C

MONITORING AND REVIEW ARRANGEMENTS G S T A D M I N I S T R A T I O N P E R F O R M A N C E

REPORTING ARRANGEMENTS

C1 To provide assurance to the Council that the Australian Taxation Office is achieving the agreed performance outcomes, the Australian Taxation Office will report to GSTAS (through GPAS) at least twice yearly. In addition the Australian Taxation Office will provide a brief quarterly overview for the September and March quarters.

C2 The first reporting event will occur in the first half of the financial year and the Australian Taxation Office will provide a report on its performance in administering the GST in relation to the immediate prior year. The Australian Taxation Office will also report on the actual full year costs of administering the GST in the immediate prior year, together with any recommendations on ex-post adjustments that may be necessary.

C3 The second reporting event will occur during the second half of the financial year and the Australian Taxation Office will provide a report on its performance in administering the GST during the first half of the current financial year. The Australian Taxation Office will also provide a strategic budget submission, in accordance with the budget formulation process set out in Note 4 to Schedule B.

C4 In fulfilling these reporting requirements, the Australian Taxation Office will provide to GSTAS (through GPAS) information on the following matters as appropriate:

(a) financial information relating to the Australian Taxation Office’s costs in administering the GST;

(b) reports of audits of GST costs and the systems for control of costs;

(c) reports showing GST workloads and other information necessary to demonstrate performance in relation to the measures outlined in Schedule A;

(d) key emerging compliance issues;

(e) performance on activities specifically related to additional expenditure; refer to Schedule D for the summary spreadsheet that outlines commitments by year for the 2010 Budget Measure, GST Compliance – working together to improve voluntary compliance

(f) As compliance effectiveness measures are developed they will be considered for inclusion during the annual review period; and

(g) significant issues impacting on the GST administrative base.

Page C-2

C5 The Australian Taxation Office will also report on an ad hoc basis as agreed between the parties. Such ad hoc reports may include (but are not restricted to):

(a) matters relating to the material cost-effectiveness of GST administration; ANAO reports directly relating to GST administration;

(b) information on GST related litigation;

(c) updates on relevant compliance and cost of compliance research;

(d) updates on Australian Taxation Office internal governance arrangements as they relate to GST administration; and

(e) information on Australian Taxation Office community surveys.

AUDIT ARRANGEMENTS

Special purpose audit of GST costs and the systems for control of GST costs

C6 The objective of the special purpose audit (the audit) is to provide an independent opinion to the Council as to whether:

(a) the special purpose reports prepared by the Australian Taxation Office relating to GST costs are free as a whole from material misstatement;

(b) the Australian Taxation Office has maintained, in all material respects, effective controls relating to the monitoring and reviewing of GST activity costs; and

(c) the Cost Attribution model is appropriately allocating the correct level of GST administration costs.

C7 The audit will provide reasonable assurance to the Council that:

(a) the GST Cost Statement prepared by the Australian Taxation Office presents fairly in accordance with the accounting policies described in Schedule B; and

(b) the Australian Taxation Office has maintained, in all material respects, effective controls relating to the monitoring and reviewing of GST activity costs as specified in Schedule B.

C8 The terms of reference for the audit engagement will provide for:

(a) an audit report which identifies the scope of the special purpose audit, and an opinion on the matters specified in clause C7;

(b) review of the terms of reference at specified intervals; and

(c) materiality levels to be determined in accordance with applicable Accounting Standards.

C9 In accordance with accepted audit practice, all reports emanating from the special purpose audit will be provided by the ANAO directly to the Australian Taxation Office.

Page C-3

The Australian Taxation Office will provide a copy of the audit report to the Council as soon as it becomes available.

C10 Additional costs to the Australian Taxation Office associated with the audit of GST costs and the system for control of GST costs will be included in the cost of GST administration.

OTHER REVIEWS

C11 The Parties may agree to an independent review of an aspect of GST operations that has a material impact on the agreed outcome. GSTAS (through GPAS) will be consulted when developing the terms of reference for the review.

Page D -1

Schedule D

2010 Budget Measure, GST Compliance – working together to improve voluntary compliance

SUMMARY OF COMMITMENTS BY YEAR

Additional liabilities raised from compliance activities ($ million)

Key objective

2010-11

planned

2011-12

planned

2012-13

planned

2013-14

planned

2014-15

planned

2015-16

planned

1. The detection and reduction of

inflated or fabricated GST refund

claims

$62.6 $127.1 $166.6 $166.6 $136.3 $136.3

2. Investigation of systematic or

deliberate under-reporting of GST $21.5 $62.0 $77.0 $78.6 $193.4 $193.4

3. More direct contact between the

ATO and non-lodgers $164.6 $213.3 $206.2 $172.2 $127.8 $107.5

Total $248.7 $402.4 $449.8 $417.4 $457.4 $437.1

Note: the sum of each column may not exactly match the totals due to rounding of figures within the table

Additional collections from debt activities ($ million)

4. More direct contact between the

ATO and taxpayers with a GST debt $56.5 $86.8 $91.0 $91.0 $52.1 $39.2

Notes:

(a) Objectives 1 – 3 year end plan figure have been represented in liabilities raised as a result of audit activity

(b) Objective 4 year end plan figure is represented in cash collections as a result of debt collection activity

gst administration performance agreement€¦ · (b) a cost—effective and transparent gst...

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