Show download pdf controls
  • Non-Financial Assets

    Note 4A: Current Year - Reconciliation of the Opening and Closing Balances of Property, Plant, Equipment, Intangibles and Assets Held Under Finance Lease 2018
      Buildings - Leasehold Improvements$'000 Plant & Equipment$'000 Plant & Equipment - Finance Lease$'000 Total Plant & Equipment$'000 Computer software purchased$'000 Computer Software - Internally Developed$'000 Total Intangibles Computer Software$'000 Total$'000
    As at 1 July 2017
    Gross book value 243,534   82,524   39,459   121,983   141,089   1,294,964   1,436,053   1,801,570  
    Accumulated depreciation, amortisation and impairment (32,224) (17,500) (19,094) (36,594) (107,505) (830,834) (938,339) (1,007,157)
    Total as at 1 July 2017   211,310   65,024   20,365   85,389 33,584   464,130   497,714   794,413  
    Additions:
    Purchase 11,776   13,894   - 13,894   12,799   -   12,799   38,469  
    Finance lease - - 2,282   2,282   - - - 2,282  
    Internally developed - - - - - 160,934   160,934   160,934  
    Revaluations recognised in other comprehensive income - - - - - - - -
    Revaluations recognised in net cost of services - - - - - - - -
    Change in billing rates by the lessor - - - - - - - -
    Impairment write-offs recognised in net cost of services (211) (1,234) - (1,234) (24) (7,393) (7,417) (8,862)
    Transfers between asset classes in/(out) -   -   - -   (1,499) 1,499   - -
    Disposals - (10) (113) (123) - - - (123)
    Other movements    -  (549)     (549)    -    - -  (549)  
    Depreciation / amortisation expense (27,700) (15,027) (11,615) (26,642) (11,807) (131,477) (143,284) (197,626)
    Total as at 30 June 2018   195,175   62,647  10,370  73,017   33,053   487,693   520,746   788,938  
    Total as at 30 June 2018 represented by
    Gross book value 253,818   92,754   21,646   114,400   149,953   1,243,666   1,393,619   1,761,837  
    Work in progress 1,277   2,097   - 2,097   - 205,085   205,085   208,459  
    Accumulated amortisation and impairment (59,920) (32,204) (11,276) (43,480) (116,900) (961,058) (1,077,958) (1,181,358)
    Total as at 30 June 2018   195,175   62,647   10,370   73,017   33,053   487,693   520,746   788,938  

    Buildings - Leasehold improvement assets were assessed for impairment in accordance with the impairment policy stated below. No indicators of impairment were found in 2018 (2017: nil).

    Plant and equipment assets were assessed for impairment in accordance with the impairment policy stated below. No indicators of impairment were found in 2018 (2017: nil). Impairments were reversed for two plant and equipment assets.

    Intangibles were assessed for impairment in accordance with the impairment policy stated below. Impairment of one purchased software asset was identified, resulting in an impairment expense of $469.34. (2017: nil).

    Plant and equipment under finance lease were not revalued. Their valuation is based on the present value of their minimum lease payments. The carrying amount of finance leases in 2018 of $10.4 million (2017: $20.4 million) is included in the valuation figures above.

    Revaluations of non-financial assets

    All revaluations are conducted in accordance with the revaluation policy stated below. Leasehold improvement assets and plant and equipment assets were not revalued in 2018. An independent valuer has conducted a materiality review of the current values of all tangible assets and has determined that they do not differ materially from fair value at 30 June 2018. Please refer to Note 5 for the full disclosure of fair value measurement.

    Contractual commitments for the acquisition of property, plant, equipment and intangible assets

    There are no contractual commitments for the acquisition of property, plant, equipment and intangible assets for 2018 (2017:$17.0 million).

    Accounting Policy

    Assets are recorded at cost on acquisition except as stated below. The cost of acquisition includes the fair value of assets that are transferred in exchange for liabilities undertaken. Assets are initially measured at their fair value plus transaction costs where appropriate.

    Assets acquired at no cost, or for nominal consideration, are initially recognised as assets and income at their fair value at the date of acquisition.

    Tangible Assets

    Asset Recognition Thresholds

    Purchases of leasehold improvements and plant and equipment are recognised initially at cost in the Statement of Financial Position, except for assets costing less than the relevant asset recognition threshold. Asset recognition thresholds can be found in the table below, except for ACNC and TPB assets which have an asset recognition threshold of $2,000. A review of capitalisation thresholds has been completed for all asset classes in 2017-18. Any changes to asset capitalisation thresholds are effective on 1 July 2018.

    Revaluations

    Following initial recognition at cost, leasehold improvements and plant and equipment assets are carried at fair value less accumulated depreciation and accumulated impairment losses. Valuations are conducted with sufficient frequency to ensure that the carrying amounts of assets do not differ materially from the fair value as at the reporting date. Revaluation adjustments are made on a class basis.

    Any accumulated depreciation and accumulated impairment as at the revaluation date are eliminated against the gross carrying amount of the asset and the asset is restated to the revalued amount.

    Depreciation

    Computer desktop, monitor and printer assets are depreciated using the reducing balance method over four years or three years (laptops), to a residual value of 10%. All other depreciable leasehold improvements and plant and equipment assets are depreciated over their estimated useful lives to their expected residual values using the straight-line method of depreciation.

    Depreciation methods and rates (useful lives) are reviewed at each reporting date and necessary adjustments are recognised in the current or future reporting periods, as appropriate.

    If an asset is not fully constructed at the reporting date, its cost to date is reported as an ‘asset under construction’. Depreciation does not commence until the asset is available for use.

    Depreciation rates applying to each class of depreciable asset

    Asset type

    Threshold

    2018

    2017

    Leasehold improvements

    $1,000,000

    Lesser of lease term or a maximum

    20 year useful life. (Straight line method)

    Lesser of lease term or a maximum

    20 year useful life. (Straight line method)

    Plant and equipment

    Other than computer desktops, laptops, monitors and printers

    Bulk purchases furniture and fittings $200,000

    All other property, plant and equipment $3,000

    5 to 25 years (Straight line method)

    5 to 25 years (Straight line method)

    Computer laptops, desktops, monitors and printers

    Bulk purchases $200,000

    4 to 5 years (Reducing balance method)

    4 to 5 years (Reducing balance method)

    Impairment

    Impairment testing is conducted during the annual review of leasehold improvements and bulk furniture and fittings, as well as the annual stocktake.

    All leasehold improvement, plant and equipment and computer assets were assessed for indicators of impairment as at 30 June 2018.

    De-recognition

    Leasehold improvement and plant and equipment assets are de-recognised upon disposal or when no further future economic benefits are expected from its use or disposal.

    Intangible Assets

    Asset Recognition Thresholds

    The ATO’s intangible assets comprise of internally developed and purchased software. All intangible assets are carried at cost less accumulated amortisation and accumulated impairment and are not subject to revaluation.

    Amortisation

    Computer software assets are amortised on a straight-line basis over their anticipated useful lives. Amortisation rates (useful lives) and methods are reviewed at each reporting date and necessary adjustments are recognised in the current reporting period, or current and future reporting periods, as appropriate. In determining useful life, all known legislative changes are taken into account.

    If an asset is not fully constructed at the reporting date, its cost to date is reported as an ‘asset under construction’. Amortisation does not commence until the asset is available for use.

    Amortisation rates and methods

    Asset type

    Threshold

    2018

    2017

    Purchased software

    $200,000

    3 to 20 years (Straight line method)

    2 to 20 years (Straight line method)

    Internally developed software

    $2,500,000

    Enhancements to previously capitalised software $1,000,000

    5 to 26 years (Straight line method)

    5 to 26 years (Straight line method)

    Impairment

    Impairment testing is conducted through annual reviews of internally developed and purchased software. Where indicators of impairment are evident, the recoverable amount of the intangible asset is estimated and an impairment loss is recognised where the recoverable amount is less than the carrying amount.

    The recoverable amount for purchased software and internally developed software in use is taken to be the depreciated replacement cost.

    The recoverable amount for internally developed software assets under construction is the current replacement cost. In circumstances where the asset would be replaced if the ATO were deprived of it, the recoverable amount is taken to be the original budgeted cost as amended for additional functionality requirements. In circumstances where the asset would not be replaced if the ATO were deprived of the asset, the recoverable amount is assessed to be nil.

    All computer software assets were assessed for indicators of impairment as at 30 June 2018.

    Note 4B: Other Non-Financial Assets

    Item

    2018
    $'000
    2017
    $'000

    Prepayments

    72,833

    73,135

    Lease incentives

    16,711

    16,232

    Total other non-financial assets

    89,544  

    89,367

    No indicators of impairment were found for other non-financial assets.

      Last modified: 26 Oct 2018QC 57143