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  • Administered - Expenses

    Note 13A: Subsidies
    Subsidies in connection with 2018$'m 2017$'m
    Fuel tax credits scheme 6,908 6,266
    Research and development tax incentive 2,093 2,607
    Australian screen production incentive 292 315
    Cleaner fuels grant scheme - 1
    Product stewardship for oil 74 72
    Seafarer tax offset 10 9
    National rental affordability scheme 189 180
    Junior mineral exploration incentive 9 -
    Exploration development incentive (25) 2
    Total Subsidies 9,550 9,452
    Note 13B: Personal Benefits
     Direct   2018$'m 2017$'m
    Superannuation co-contribution scheme 109   123
    Private health insurance rebate 266 245
    Low income superannuation contribution 772 731
    Total personal benefits 1,147   1,099

    Accounting Policy

    Administered expenses include subsidies, personal benefits, impairment on taxation receivables, penalty and interest charge remission expenses, interest on overpayments and superannuation guarantee charge.

    Subsidies, personal benefits and superannuation guarantee charge expenses are recognised when they can be reliably measured. This recognition point relies on estimation methodologies and techniques to determine taxpayer liabilities that the ATO is not aware of.  Estimation techniques have inherent risks of error and rely on assumptions such as wage growth, GDP and recent historical information. At the reporting date, the amounts disclosed represent a reliable estimate of expenses incurred in the period.

    For the Research and Development Tax Incentive (R&D) estimate, a change was made to the methodology due to a declining trend of later year lodgements. Under the previous methodology, the later year lodgements were based on the average three year lodgement pattern of the previous two years. Lodgements of 2016-17 income year returns in 2017-18 resulted in negative growth for the first time and as such, the new methodology accounts for the declining trend in later year lodgements by assuming the same growth rate as 2017-18 lodgements. It is unclear at this stage whether this is a temporary or permanent trend. The effect of this change in accounting estimate as at 30 June 2018 is a reduction to the R&D subsidies expense and subsidies provision of $131 million.

    The expense recognition point for each material subsidy and personal benefit expense is noted in the table below.

    The impairment on taxation receivables and penalty and interest charge remission expenses include both actual and accrued amounts in accordance with ATO operational policies. See Note 15.

    Interest on overpayments represents estimates and actual payments of interest in accordance with the Taxation (Interest on Overpayments and Early Payments) Act 1983, and, an estimate of future interest charges, where the ATO considers that the probable outcome of tax in dispute at year-end will result in a refund being issued to the taxpayer.

    Administered expenses

    Administered Expense Product

    Expense recognition point

    Fuel tax credits

    Fuel Tax Credits expense is a subsidy for the fuel tax component of the price of fuel. The expense includes an estimate of claims not yet received relating to transactions that occurred in the reporting period.

    Research and development tax incentive

    Research and Development (R&D) Tax Incentive expense is a subsidy for eligible companies incurring research and development expenditure during the reporting period. Companies claim the R&D tax incentive in their tax return as refundable tax offsets which are generally paid in the subsequent reporting periods.

    Australian screen production incentive

    Australian Screen Production Incentive expense is recognised when film and television production companies receive certificates of eligibility from either Screen Australia or the Ministry for the Arts on qualifying Australian production expenditure during the reporting period.

    National rental affordability scheme

    ATO Expense only

    National Rental Affordability Scheme expense is recognised when participants are eligible to receive incentives from the Secretary of the Department of Social Services (DSS) for the reporting period. Claims paid through the tax system are made on income tax returns.

    Product stewardship for oil

    Product Stewardship for Oil (PSO) expense is recognised when a registered client recycles used oil or consumes eligible oil. Claims for PSO are lodged at any time within three years after the start of the claim period.

    Exploration development incentive

    Exploration Development Incentive expense is recognised when shareholders of mineral exploration companies are provided exploration credits, which is paid as a refundable tax offset. Exploration Development Incentive expense was replaced by the Junior Minerals Exploration Incentive in the 2017-18 year. The expense is still recognised for amounts processed in the current reporting period.

    Junior minerals exploration incentive

    Junior Minerals Exploration Incentive expense is recognised when shareholders of mineral exploration companies are provided exploration credits, which is paid as a refundable tax offset.

    Low income superannuation tax offset

    Low Income Superannuation tax offset expense is recognised when eligible concessional superannuation contributions are made to superannuation fund accounts of eligible individuals during the reporting period.

    Superannuation co-contributions

    Superannuation Co-contributions expense is recognised when individuals make eligible personal superannuation contributions during the reporting period.

    Private health insurance rebate

    ATO expense only

    Private Health Insurance Rebate expense is recognised when eligible claimants have paid private health insurance premiums during the reporting period and receive a rebate through the tax system on assessment of their individual tax return.

      Last modified: 26 Oct 2018QC 57184