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  • Expenses

    Note 1A: Employee Benefits
      2018$'000 2017$'000
    Wages and salaries 1,341,861 1,299,792
    Superannuation:
    Defined contribution plans 113,365 98,813
    Defined benefit plans 188,498 190,197
    Leave and other entitlements 286,988 242,549
    Separation and redundancies 42,155 22,980
    Other employee expenses 4,812 4,080
    Total employee benefits 1,977,679 1,858,411

    Accounting Policy

    Accounting policies for employee related expenses is contained in Note 8: Employee Provisions.

    Note 1B: Suppliers
      2018$'000 2017$'000
    Goods and services supplied or rendered
    Contractors and consultants 297,205 351,457
    IT and communications 443,649 440,011
    64,919 67,116
    Office operations 143,677 146,875
    Property 65,879 59,059
    Tax administration services provided by the Department of Home Affairs 51,154 53,647
    Travel 25,518 34,706
    Other 77,125 79,187
    Total goods and services supplied or rendered 1,168,826 1,232,058
    Other suppliers
    Operating lease rentals 203,194 214,363
    Workers compensation expenses 12,047 20,433
    Total other suppliers 215,241 234,796
    Total suppliers 1,384,067 1,466,854
    Leasing commitments

    The ATO in its capacity as lessee has a range of long and short term leases with fixed dates for expiry.

    In 2017-18 ATO entered a new 10 year lease in Gosford. Minimum lease payments have been included for four additional leases as market reviews have been finalised.

    Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows:
    Within 1 year 205,859 152,269
    Between 1 to 5 years 664,903 560,540
    More than 5 years 365,248 351,406
    Total operating lease commitments 1,236,010 1,064,215

    Accounting Policy

    Leased Assets

    The ATO leases property for office accommodation under operating lease agreements. Operating lease payments are expensed on a straight-line basis over the life of the lease.

    Some of the ATO’s IT equipment is leased under embedded finance lease arrangements.

    Where an asset is acquired by means of a finance lease, the asset is capitalised at the present value of minimum lease payments at the inception of the contract and a liability is recognised at the same time, for the same amount.

    The discount rate used is the interest rate implicit in the lease. Leased assets are depreciated over the period of the lease and lease payments are allocated between the principal component and the interest expense.

    Lease Incentives

    The threshold for the recognition of new lease incentives received is $250,000 per lease (excluding GST).

    Where an incentive has been received by the ATO (such as a free fit out, rent-free period, reimbursement of lessee expenses or cash) the value of the lease incentive received is recognised as a liability. The liability is reduced over the period of the lease. Lease incentives that represent a rent reduction throughout the lease term are treated as an offset of the rent expense immediately rather than a liability.

    Where an incentive has been provided by the ATO the value of the lease incentive received is recognised as an asset. The asset is reduced over the period of the lease. Lease incentives that represent a rent reduction throughout the lease term, are treated as an offset of the rent revenue immediately rather than an asset.

    Note 1C: Finance Costs
      2018$'000 2017$'000
    Finance leases 706 943
    Unwinding of discount 597 283
    Total finance costs 1,303 1,226

    Accounting Policy

    All finance charges are expensed as incurred.

    Finance expenses disclosed in the Statement of Comprehensive Income relate to changes in:

    • the discounted amount of onerous lease liabilities and provision for restoration obligation due to the passage of time, and
    • the interest expense for IT equipment held under a finance lease.
    Note 1D: Write-Down and Impairment of Assets
      2018$'000 2017$'000
    Impairment and write-offs of non-financial assets
    Buildings 211 1,596
    Plant and equipment 1,234 472
    Intangibles 7,417 140
    Revaluation decrement (plant and equipment) -
    Impairment on financial instruments 931 53
    Other financial assets1 10,449 10,378
    Total write-down and impairment of assets 20,242 12,639
    1 Prior year adjustments have been made to these numbers. Refer to Overview.
    Note 1E: Other Expenses
      2018$'000 2017$'000
    Compensation 554

    1,048

    Act of grace payments - 6,369
    Losses from asset sales 9 1
    Total other expenses 563 7,418
      Last modified: 26 Oct 2018QC 57136