Show download pdf controls
  • Administered - Income

    Taxation Revenue

    Note 14A: Income Tax

    Item

    2018$'000   2017$'000  

    Individuals and others withholding tax1

    211,475

    197,366

    Companies1

    85,729

    70,943

    Superannuation funds1

    10,927 8,227

    Fringe benefits tax1

    3,813

    3,904

    Resources rent tax

    993

    977

    Total income tax

    312,937

    281,417

    Note 14B: Indirect Tax

    Item

    2018$'000   2017$'000  

    Goods and services tax1

    65,282

    62,721

    Excise duty

    22,763  

    21,895

    Wine equalisation tax

    903  

    850

    Luxury car tax

    735  

    674

    Total indirect tax

    89,683  

    86,140

    Note 14C: Other Taxes

    Item

    2018$'000   2017$'000  

    Superannuation guarantee charge

    1,107

    604

    Major bank levy

    1,527

    -

    Self managed superannuation fund levy

    148

    124

    Other

    246  

    281

    Total other taxes

    3,028

    1,009

    1 Prior year adjustments have been made to these numbers. Refer to Overview.

    Accounting Policy

    The ATO recognises revenue when, and only when the following three conditions have been satisfied:

    1. there is a basis establishing the ATO’s right to receive the revenue
    2. it is probable that future economic benefits will be received by the ATO
    3. the amount of revenue to be received can be reliably measured.

    Estimating some revenues can be difficult to measure, due to impacts of economic conditions and timing of final taxable income, hence the ATO uses two bases of recognition:

    1. Economic Transaction Method (ETM)

    Revenue is recognised when the ATO, through the application of legislation to taxation and other relevant activities, gains control over the future economic benefits that arise from taxes and other statutory charges.

    Where a taxation revenue type is able to be measured reliably, including transactions that are yet to occur but are likely to be reported, the ETM is applied.

    Estimation techniques have inherent risks of error and rely on assumptions such as wage growth, GDP and recent historical information. Based on the information and evidence available at the date of these financial statements, the amounts disclosed represent a reliable estimate of revenue.

    2. Taxation Liability Method (TLM)

    Revenue is recognised at the earlier of when an assessment of a tax or superannuation liability is made, or payment is received by the ATO. Further, revenue is recognised when there is sufficient information to raise an assessment but an event has occurred which delays the issue of the assessment. This method is permitted under AASB 1004 Contributions (paragraph 30) in circumstances when there is an ‘inability to reliably measure taxes when the underlying transactions or events occur’. Revenue recognised under the TLM basis is generally measured at a later time than would be the case if it were measured under ETM.

    In accordance with the revenue recognition approach adopted by Government, the ATO applies the ETM and TLM approaches as set out in the following tables.

    Revenue types recognised on a TLM basis

    Type of taxation and superannuation revenue

    Nature of revenue type

    Income tax – individuals

    Individuals income tax includes Income tax withholding, Other individuals, Medicare levy, and Income tax refunds.

    Income tax withholding represents amounts withheld from remuneration paid during the year. Other individuals includes income tax instalments for the year and prior year final tax returns received by the ATO during the year. Income tax refunds are made where tax credits exceed the final liability on assessment. Refunds include prior year refunds made or assessed during the year.

    Individuals income tax does not include estimates of revenue or refunds related to the current taxation year that will be recognised in tax returns lodged after the end of the current financial year.

    Income tax – companies

    Company tax includes company tax payable that relates to income tax instalments and final payments received/raised for the current and prior reporting periods.

    It does not include estimates of revenue related to the current taxation year that will be recognised in tax returns lodged after the end of the current financial year.

    Income tax – superannuation funds

    Superannuation income tax includes amounts payable by superannuation funds that relate to income tax instalments and final payments for the current and prior reporting periods. Superannuation funds income tax is levied on earnings and taxable contributions.

    It does not include estimates of revenue related to the current taxation year that will be recognised in tax returns lodged after the end of the current financial year.

    Minerals resource rent tax

    Minerals resource rent tax was a project based tax on the extraction of iron ore and coal and was abolished in 2015-16.

    Revenue is still recognised for amended assessments that are processed in the current reporting period.

    Superannuation surcharge

    This tax was abolished from 1 July 2005. However, assessments and amendments continue to be issued for 2004–05 and previous financial years.

    Different arrangements exist for unfunded defined benefit funds (UDBs). Superannuation surcharge revenue relating to UDBs is recognised at the time it can be assessed, even though it may not be collected for some years, until which time an annual interest charge accrues.

    Superannuation guarantee charge

    Superannuation guarantee charge is a charge on employers that have not paid the compulsory superannuation guarantee for their employees. The ATO assesses and collects the guarantee, interest owing and an administrative fee.

    Revenue types recognised on an ETM basis

    Type of taxation and superannuation revenue

    Nature of revenue type

    Fringe benefits tax

    Fringe benefits tax (FBT) is recognised on fringe benefits provided by employers to employees during the reporting period and includes an estimate of outstanding instalments and balancing payments for the annual FBT return.

    Petroleum resource rent tax

    Petroleum resource rent tax is recognised based on actual taxable profits for the year in respect of offshore petroleum projects excluding some of the North-West Shelf production and associated exploration areas, which are subject to excise and royalties.

    Goods and services tax

    The Goods and services tax (GST) is a broad-based tax of 10 per cent on most goods and services supplied or sold during the reporting period. GST revenue includes actual liabilities raised during the year and an estimate of amounts outstanding that relate to transactions occurring in the reporting period.

    Excise duty

    Excise duty is recognised based on the actual and estimated duty payable to the Government. Excise duty becomes payable when certain goods are distributed for home consumption during the reporting period.

    Wine equalisation tax

    The Wine equalisation tax revenue is recognised when an assessable dealing occurs within the reporting period giving rise to a tax liability and an estimate of amounts outstanding that related to transactions occurring in the reporting period.

    Luxury car tax

    The Luxury car tax revenue is recognised at the time the sale (or private import) of a luxury vehicle occurs within the reporting period and an estimate of amounts outstanding that relate to transactions occurring in the reporting period.

    Unclaimed superannuation money

    Revenue is recognised based on the annual amount of unclaimed superannuation received by the ATO less an estimate of future outflows relating to the annual amount received when account owners initiate a claim or the account owner is identified.

    Major bank levy

    Major bank levy is a levy calculated within the reporting period on authorised deposit-taking institutions (ADIs) with a total liability threshold of greater than $100 billion.

    Accounting Policy

    Allowance for Credit Amendments and Provision for Refunds

    Taxpayers are entitled to dispute amounts assessed by the ATO. Where the ATO considers that the probable outcome will be a reduction in the amount of tax owed by a taxpayer, an allowance for credit amendment (if the disputed debt is unpaid) or a provision for refund (if the disputed debt has been paid) will be created and there will be a corresponding reduction in revenue.

    Penalties and Interest Charges

    Penalties and interest arising under taxation legislation are recognised as revenue at the time the penalty or interest is imposed on the taxpayer. Generally, subsequent remissions and write-offs of such penalties and interest are treated as an expense of the period. Penalties and interest that are imposed by law and immediately remitted by the Commissioner are not recognised as revenue or as an expense. Additional interest is raised for the period between the last imposition and the end of the financial year to recognise amounts not yet recorded on taxpayer accounts.

    Settlements

    A settlement involves an agreement between the ATO and the taxpayer to resolve matters in dispute where one or more parties make concessions on what they consider is the legally correct position. Where this results in a reduction of the amounts payable by the taxpayer, the reductions for the assessment and any associated penalties and interest charges, excluding failure to lodge penalty, are recognised as a reduction in revenue. This is consistent with AASB 1004 as the ATO never obtained control to impose the original assessment.

    Pay as you go (PAYG) system

    The ATO collects compulsory repayment amounts of accumulated HELP debt through the PAYG tax system. The repayment of HELP reduces the loan that a person owes to the Commonwealth.

    An adjustment is made to Income Tax – Individuals revenue in respect to compulsory repayments of HELP as collection of these amounts through the PAYG tax system does not represent revenue for the ATO and the compulsory repayments figure can be reliably estimated.

      Last modified: 26 Oct 2018QC 57186