GST Administration Performance Agreement
The Intergovernmental Agreement on Federal Financial Relations (the Intergovernmental Agreement) requires accountability and performance arrangements to be established between the Australian Taxation Office (ATO) and the Council on Federal Financial Relations (Council). These accountability arrangements require a GST Administration Performance Agreement (Agreement) to be established between the ATO and the Council.
Part 1 - Formalities
Parties to the Agreement
The Agreement is 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; and
- The Northern Territory of Australia.
The Parties to the Agreement are the Commissioner of Taxation and the Council listed above (the Parties).
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
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.
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
The purpose of the Agreement is:
- to provide accountability between the ATO and the Council on GST administration; and
- to provide an agreed basis for GSTAS (through GPAS) to monitor the administration of the GST by the ATO and its agents in return for the agreed GST administration costs being paid by the States and Territories.
Context of the Agreement
The Parties to the Agreement are committed to:
- achieving world's best practice for GST administration in Australia
- a cost-effective and transparent GST administration; and
- a cooperative relationship between the Parties.
The Parties to the Agreement recognise that:
- 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
- the GST is administered as part of Australia's integrated tax system and its administrative framework
- the Commissioner of Taxation has the general administration of the GST law; and
- the Agreement does not impede the ATO from:
- its accountability to the Commonwealth Government and Parliament for its revenue collection and taxation administration responsibilities
- reporting on GST matters to the Commonwealth Government; and
- complying with statutory and other obligations imposed on the ATO by the Commonwealth Government and/or Parliament.
Part 3 - Performance outcome
The Parties agree that the outcome to be achieved by the ATO 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.
The ATO 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).
In evaluating the performance of the ATO 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
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).
In 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.
The Parties recognise the requirement on the States and Territories to fully compensate the Commonwealth for the agreed costs of administering the GST.
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 ATO.
Part 5 - Process for developing and modifying budgets and business plans
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.
Schedules A and B will be adjusted as necessary to ensure they are consistent with the level of funding provided to the ATO to administer the GST.
Schedule B outlines the ATO GST related activities that form the GST administration budget. The Parties agree the ATO will have flexibility to reallocate resourcing within the agreed budget as required to achieve agreed outcomes.
The ATO undertakes to advise GSTAS (through GPAS) of any material resource reallocations and the associated reasons.
Part 6 - Monitoring and review
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 ATO Parliamentary reporting responsibilities and reporting responsibilities under the Agreement.
The ATO 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 ATO financial statements.
The Parties agree to the special purpose audit arrangements outlined in Schedule C.
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.
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 ATO.
Part 7 - Management of the Agreement
The Parties agree that a cooperative relationship between them will be achieved through commitment to the following:
- communicating on matters relevant to this Agreement outside of the formal reporting arrangements; and
- consultation processes, which promote openness and provide opportunities for input into strategic planning and informal avenues for problem resolution.
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.
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:
- alignment with the stated outcomes to be achieved by the ATO and its agents outlined in Part 3
- alignment with ATO's performance measures as reported to Parliament
- the level of agreed investment and funding in GST administration
- consideration of results of relevant benchmarking activities
- consideration of economic conditions and the context of GST administration as outlined in Part 2 - Objectives and Context of the Agreement; and
- a manageable set of performance indicators focusing on key outcomes.
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.
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.
The Parties agree that the ATO will have the opportunity to provide direct advice to the Council on any matter related to this Agreement submitted for consideration by the Council.