A1

This Schedule provides a range of agreed measures for the Council on Federal Financial Relations to determine whether the ATO has achieved the stated outcomes in clauses 10 and 11 of this Agreement.

A2

Achievements against these measures may be found in the annual GST administration performance reports provided by the ATO.

A3

Notes for Schedule A: where international benchmarking figures are shown, these are based on the latest information available. Definitions of each measure are described in the Schedule A explanatory notes.

Core indicators

1. Revenue outcome

a.

Total GST revenue (cash)

Total cash

Customs cash

2. GST debt

a.

GST debt outstanding

Total

Collectable

b.

GST debt collection rate

Supplementary indicators

c.

GST debt non-pursuit

Dollar

Percentage

d.

Ratio of GST non-pursuits to GST revenue

e.

GST on-time payment rate

f.

Ageing of GST debt - number of cases and % of total debt

<30 days

<60 days

<90 days

>90 days and <one year

>one year

Total

g.

Ageing of GST debt - value and% of total debt

<30 days

<60 days

<90 days

>90 days and <one year
>one year

Total

3. Trend over time in GST gap

a.

Estimated GST gap - value ($m)

b.

Estimated GST gap excluding debt as a percentage of accrual revenue

c.

Estimated GST gap including debt as a percentage of accrual revenue

4. Cross Border Services and Products

a.

Number of imported services registrants by jurisdiction (top 10 and total)

b.

Dollar value of imported services GST by jurisdiction (top 10 and total)

c.

Number of imported low value goods registrants by jurisdiction (top 10 and total)

d.

Dollar value of imported low value goods GST by jurisdiction (top 10 and total)

e.

Number of registrants for both imported services and imported low value goods by jurisdiction (top 10 and total)

f.

Dollar value of GST where registrant imports both services and low value goods by jurisdiction (top 10 and total)

Core indicators

1. Compliance outcomes

a.

b.

c.

d.

Strike rate by market segment

Refund integrity strike rate by market segment

Compliance liabilities raised, cash collection, cash collection rate by market segment

Compulsory GST registrations compared to potential GST registrations based on income tax returns data

e.

BAS lodgment

% lodged - monthly

% lodged - quarterly

Total including yearly

% lodged on time - monthly

% lodged on time - quarterly

Total including yearly

Supplementary indicators

f.

g.

h.

i.

j.

GST returns filed by intermediaries or tax agents

Number of objections

Objection rate

Number of litigation cases

Number of objections which result in litigation

Core indicators

1. Cost effectiveness

a.

Cost as a % of revenue

International benchmark (2007) - Average 1.22, range 0.82 to 1.53

b.

Cost per registrant

International benchmark (2007) - Average $410, range $157 to $527

c.

Total registered client base

2. Operational and cost management

a.

Variation of GST administration costs from agreed budget

(total admin budget)

b.

Compliance costs as a % of total admin costs

Supplementary indicators

c.

Electronic activity statements are finalised in 12 business days

d.

GST electronic payment rate

e.

Written technical advice:

Taxpayer requests are actioned in 28 calendar days

Private rulings are finalised in 28 calendar days of receiving all necessary information

f.

BAS lodgment method - % of BAS lodged electronically
  

overall

monthly remitters

quarterly remitters

annual remitters

g.

Quality of technical advice

Percentage of cases reviewed where improvement opportunity exists for Customer Service, Accountability, Accuracy and Performance.

h.

Australian resident Australian Business Register (ABR) registrations are finalised in 20 business days.

1. Management of GST revenue collection

a.

GST liability assessed

b.

GST collected

c.

Total value of Tourist Refund Scheme (TRS) claims paid

2. Maintain compliance

a.

Costs of compliance

b.

Audit coverage – TRS

c.

TRS claims rejected

d.

GST adjustments – underpaid GST revenue

e.

GST adjustments - rejected TRS claims

f.

Total GST adjustments

3. Cost effective administration

a.

Costs of import processing

b.

Costs of export processing

c.

Costs of import and export compliance

d.

Costs of administering the TRS

e.

Total costs

f.

Import declarations processed

g.

Export declarations processed

h.

Total TRS claims processed

i.

Total costs as a % of total GST liability assessed

j.

Total costs as a % of total GST collected

k.

Compliance yield

A4

Average and range are based on a mix of 2005 and 2007 reviews with benchmarking partners and represent the latest figures available. These figures will be updated and new benchmarks included as information becomes available.

A5

The indicators have been structured to distinguish between those which are considered to be 'core' (or key) and those which are 'supplementary' (or complementary). The distinction has been made to enable the ATO's effort to be driven towards achieving those performance indicators and targets of greatest importance to the parties to the Performance Agreement. The two indicators are:

A6

These indicators are defined as key accountability measures. Collectively core performance indicators enable the ATO to demonstrate it has achieved the desired outcomes for the Council. These indicators are base measures and in general would not require change from year to year.

A7

These indicators are defined as providing additional context or information about an area of performance. They are complementary to the core performance indicators by providing additional information on ATO workloads and or output performance or both. They can also include qualitative or narrative information about an aspect of GST administration. Supplementary indicators may include information on matters such as identified risks strategies and treatment outcomes.

A8

Both the total amount and the DIBP amount are included. All projections are based on the most recently available Mid year Economic and Fiscal Outlook (MYEFO) estimates.

A9

The ATO's client accounting system for activity statement tax obligations features a running account balance. Liabilities for various revenue products including GST are posted to the accounts while credits (payments) are applied to the balance of the account, rather than being matched to individual liabilities. This necessitates the estimation of GST debt. To enable this estimation, a measurement process is undertaken. The process requires the disaggregation of liabilities by heads of revenue for each taxpayer, after exclusion of certain categories and subsequent apportioning of total debits having regard to the sum of each head of revenue. These debit balances by heads of revenue are then summed to allow an attribution percentage to be derived.

A10

This percentage is then applied to activity statement collectable debt, as adjusted to reflect the exclusion of any amounts subject to dispute or insolvency, to derive an estimated collectable GST debt amount.

A11

The ratio of estimated collectable GST debt to net GST revenue, expressed as a percentage, is a measure used by a number of revenue agencies to gauge their relative effectiveness in managing their debt holdings. The net GST revenue amount is provided by Revenue Analysis Branch. (Note - from the financial year 2003 onwards this measure is reported based on collectable debt. Prior to that date, the measure was based on total debt, which included amounts subject to dispute.)

A12

This measure was reported for the first time in 2003–04. The outcome reported was that of estimated collectable GST debt as a percentage of GST revenue (as agreed). The measure is computed using the estimated GST collectable debt amount as a percentage of 12 months GST revenue collections. In calculating 12 months estimated GST revenue collections the latest month figures are included and the corresponding month from the prior year period is removed. This is necessary to smooth out substantial variations that occur around particular due dates significantly distorting the result.

A13

The process employed by the ATO in estimating the amount of GST debt non-pursuit includes several steps:

1. All tax file numbers for taxpayers with write off postings on their account in the current financial year are identified.
2. For each taxpayer, liabilities by heads of revenue are identified.
3. Each taxpayer's total liabilities are then divided by the total liabilities for each head of revenue to determine a percentage.

A14

The percentage relating to GST is then applied to total amounts with a write off posting to provide an estimate of GST debt non-pursuit for that taxpayer. All estimated amounts are then totalled and applied against the sum of all write off postings to determine an overall percentage for GST debt non-pursuit. This percentage is used to allocate the write off posting amount from the business system.

A15

This ratio compares GST debt non-pursuit to GST revenue and is calculated as :

A16

This ratio measures the compliance level for GST payments and is calculated as:

   

A17

The age of analysis by number of cases is derived based on cases in the debt case management system with a GST registration. The age of the case is determined by the earliest period in which any component of the debt can be attributed. Caution must be exercised as the debt outstanding (while activity statement related) may no longer be GST related if that has been paid earlier.

A18

The age of debt profile is based on the date of referral of the debt to the ATO’s debt and lodgment case management system. The process does not identify GST debt and the attribution percentage is utilised against each of the age categories to provide an estimation of the age of GST debt.

A19

For the purposes of this measure, the debt base is slightly higher than the overall collectable debt figure as it has not been adjusted. Adjustments account for components of debt that report as collectable but due to timing or other issues have not had the appropriate actions undertaken (e.g. ‘dispute’ indicator not input). Given the manual nature of the adjustment process it is only undertaken at the overall level.

A20

This measure estimates the dollar value of theoretical GST losses through non-reporting of GST by businesses and individuals through a failure to register or failure to lodge returns, net under-reporting of GST obligations or over-claiming of GST refunds.

A21

The measure is calculated as the difference between the actual tax liability reported to the ATO or raised by the ATO, and the tax liability that should be reported (assuming businesses and individuals fully complied with their GST reporting obligations) for a given period. The calculation is:
  

A22

The measure is intended to be viewed as a trend over time and in conjunction with other indicators utilised by the ATO to measure compliance effectiveness. The absolute dollar gap represents more of a guide to the level of actual tax gap. Random and systematic errors arising from the assumptions used to derive the estimate may be present.

A23

Theoretical accrual GST revenue is derived from adjusted national accounts data. Actual accrual GST revenue is based on the economic transaction method (ETM) of revenue recognition, being actual liabilities remitted during the year and an estimate of amounts outstanding that relate to transactions that have occurred in the period but are yet to be reported.

A24

Full details of the ATO methodology for GST gap is described in the document “Measuring tax gaps in Australia for the GST and the LCT”, available on the ato.gov.au website.

A25

This measure shows the GST gap relative to estimated theoretical accrual revenue. It is calculated as:
   

A26

The calculation does not consider the impact of debt on the size of the GST gap.

A27

The estimated GST gap including debt is calculated to allow for international comparisons. It represents the GST gap taking into account GST revenue that has not been collected (debt), relative to theoretical accrual GST revenue. Including debt in the calculation reduces the value of actual GST revenue and thereby increases the size of the estimated GST gap.

A28

The calculation is the same as for 3(b) above however the GST gap figure is adjusted for the debt component.
  

A29

The debt component of the GST gap is the difference between accrual GST revenue and GST cash collected in the period. The ATO adopts a running-account-balance method in relation to taxpayer liabilities and apply an allocation methodology for deriving GST debt. The precise contribution of GST debt to the GST gap is therefore difficult to determine and indicative only.

A30

This indicator is based on the simplified registration for non residents, count of registrations and total amount of GST payable by top ten jurisdictions.

A31

The strike rate (percentage of cases leading to re-assessment) is an Organisation for Economic Co-operation and Development (OECD) measure which can indicate the effectiveness of case selection in detecting 'correct reporting'. It should be noted that the measure does not differentiate between upward nor downward liability adjustments.

A32

This measure is currently used within the ATO under a broader definition (to encompass not only audit adjustments but where some other outcome has been achieved for example, de-registration of a taxpayer).

A33

The indicator gives recognition to the ATO's risk based audit selection strategy (focused on high risk clients) and is a more appropriate measure of effectiveness than audit coverage.

A34

It should be noted that the strike rate is likely to have an inverse relationship with audit coverage (for example, risk based audit selection focuses on high risk and often more resource intensive clients. This results in smaller coverage. As coverage is increased, there is more chance that a higher proportion of less risky clients will be included in the audit selection). It also has a relationship with objections increasing in proportion to the number of audits resulting in adjustments.

A35

Market Segments align to ATO categories: Micro, Small and Medium Business, Large, Government, Not for Profit, and Other.

A36

Historically refund integrity (business activity statement (BAS) refund compliance activity) has been excluded from the overall strike rate.

A37

Significant costs are carried by both government and business because of the time lag involved when a refund is stopped, including delayed cash flows and GST administration costs. Although some major inroads in streamlining the refund integrity system, it is important to better identify BAS subject to validation and improve risk metrics. This measure will over time indicate if improvements have been made to the ATO’s risk based audit selection strategy.

A38

Compliance liabilities are the net value of debit and credit amendments from active compliance intervention. Compliance liabilities excludes; penalties and interest. Collections are a combination of actual collections and estimates of collections based on sampling. Cash collections includes; penalties interest and some amounts raised in previous financial years but collected during the financial year specified.

A39

The indicator is similar to overseas indicators that try to assess whether we have the right number of registrants in the system compared to another source of information. In this case we are comparing the number of entities that declare business income (in excess of $75,000) in their income tax returns with the number of compulsory registrants.

A40

This measure has two components, one which measures the percentage of business activity statements lodged on time, and the second measures the percentage lodged at a given time. The given time will be at 31 December for the mid-year report and 30 June for the annual (full-year) report.

A41

This is an international benchmark measure which indicates the usage of the tax intermediaries and or tax agents, or both, for the filing of GST or VAT returns. It is calculated as:
   

A42

It should be noted that there is a range of factors that can impact on the number of objections received including improvements in the strike rate (or improved risk identification).

A43

The objection rate can provide an indicator of objection levels and trends over time.
 

A44

Litigation of tax disputes is conducted either in the Administration Appeals Tribunal (AAT) or the Federal Court in the first instance with appeals to the Full Federal Court and by special leave to the High Court. The focus is on ensuring we are litigating the right cases including through the Test Litigation Program. Completed test cases clarify the law and provide precedential certainty. The ATO ensures that cases are funded in the interests of the wider community.

A45

This is an ATO wide Information and assistance services performance measure, with the 2016–17 target being 20 per thousand (2%).

A46

Projections have been adjusted to reflect revenue estimates from the most recent MYEFO. Prior to 2003–04 this was calculated on an accrual basis.

A47

This measure equates to the cost of collecting $100 of GST revenue. This measure is calculated by:
 

A48

Projections have been calculated assuming a client base of 2.5 million. Due to a high level of uncertainty with future client numbers, projections should not be made beyond the immediate future year. This measure is calculated by:
 

A49

This is the total registered population as at 1 July of the current year. Over time this measure will show how fluid the client base is through GST registrations.

A50

This measure reflects the percentage by which the actual GST product cost varies from the agreed budget as specified in Schedule B. It will be reported retrospectively.

A51

This ratio is calculated as:
   

A52

This is a taxpayer charter standard. A 94% target applies.

A53

This rate measures the extent to which electronic services are used to make GST payments.

A54

This measure will be used to assess the effectiveness of the ATO’s new electronic payment strategies and is calculated as:
   

A55

This is a taxpayer charter standard. An 85% target applies for general taxpayer requests and an 80% target applies to private rulings. The private rulings standard is subject to the ATO receiving all necessary information.

A56

Our objective is to increase the proportion of BAS lodged electronically.

A57

A new ATO quality model was introduced in July 2014. Under the new model there is no pass or fail grading applied to cases. Assessors are required to stand in the shoes of taxpayers and look at cases from an ‘end to end’ perspective looking for opportunities to improve both the client and staff experience. This model focuses on developing a culture of continuous improvement across the ATO. Cases are assessed against four criteria: Customer Service, Accountability, Accuracy and Performance.

A58

This is a taxpayer charter standard. A 93% target applies.

A59

DIBP assesses the GST liability on all taxable importations of goods imported via Australian ports and airports mail imported through all Australian international mail centres and goods entering Australia with passengers and crew via all Australian ports and airports.

A60

The GST liability assessed by DIBP on taxable importations is deferred (and accounted for on the BAS) for cargo importers that have been approved by the ATO for GST deferral. In all other cases, DIBP collects the GST.

A61

This is the dollar amount of total TRS claims paid in a specified financial year.

A62

This figure is calculated as:
Cost of import and export compliance + Costs of TRS compliance

A63

DIBP import and export compliance includes the following:

• intelligence and risk assessment (including associated research, analysis and monitoring)
• pre and post clearance interventions (pre clearance interventions, including real time verification of import declarations, occur before the release of goods from Customs control and post clearance interventions, including formal audits, occur after the release of goods from Customs control)
• enforcement (including investigation, imposition of sanctions and prosecution)
• education and advice (including tariff, valuation and origin advice).

A64

TRS coverage is defined as the proportion of TRS claims subject to compliance activity. Compliance coverage for TRS is calculated as:

A65

The TRS regulations require TRS claimants to present any or all of the goods, the tax invoice relating to the goods and certain travel documents to a DIBP officer on request. DIBP undertakes checks before payment of a refund is authorised. For this reason, audit coverage for the TRS is 100%.

A66

TRS compliance activities include real-time activities undertaken to verify that particular TRS claims meet the requirements of the regulations and any post-transaction compliance activities.

A67

This is a measure of the proportion of TRS claims that are rejected because the claim does not meet one or more of the requirements of the regulations. TRS claims rejected is calculated as:
   

A68

GST revenue is underpaid in cases where the GST liability assessed by an importer for a taxable importation is less than the correct GST liability (regardless of whether the GST liability was initially paid to DIBP or deferred for payment on the BAS). A GST underpayment adjustment occurs when the importer’s incorrect assessment is amended to correct the error, resulting in an increase in the assessed GST liability.

A69

Underpaid GST revenue includes additional GST revenue paid to DIBP (or deferred to the next BAS) in cases where an import declaration has been amended by an importer. It can refer to additional GST revenue paid to DIBP (or deferred to the next BAS) in relation to notices of assessment or other compliance activity.

A70

A GST assessment error could be the result of incorrect assessment of the value of the taxable importation or incorrect classification as a non-taxable importation.

A71

An incorrect assessment of the value of a taxable importation could result from an error in assessing the customs value, the customs duty, the wine equalisation tax or the amount paid or payable to transport the goods to Australia and to insure the goods for that transport.

A72

An incorrect classification as a non-taxable importation could result from an error in identifying the taxable status of particular goods.

A73

International travellers can obtain a GST refund under the TRS provided that they submit a claim that fulfils all of the requirements set out in the regulations.

A74

Where a TRS claim is checked and found not to comply with the regulations the claim is rejected which results in an adjustment of the GST refund claim down to zero. The value of the GST adjustment is equal to the amount of GST refund that was originally claimed. Certain rejected claims, (for example, not a valid tax invoice) are able to be reviewed by the Tourist Refund Office. If the review results in the claim subsequently being approved; a GST adjustment would need to be made.

A75

This measure is the sum of the GST adjustments that result from underpaid GST revenue, over claimed GST refunds and rejected TRS claims.
  

A76

DIBP also refuses and adjusts GST refund claims lodged by importers to correct overpayments. Data on these GST adjustments is not currently available.

A77

This measure is the costs attributed to the GST element of DIBP’s import processing function.

A78

This function covers the processing of import transactions and associated revenue functions including establishing the liability for GST, wine equalisation tax and luxury car tax. Included under this function are the recording of amounts of deferred GST and the provision of import data to the ATO (including GST deferred data). Also included under this function is the processing and payment of claims for refund of GST, wine tax and luxury car tax.

A79

This function is carried out in relation to:

1. all goods imported via Australian ports and airports;
2. mail imported through all Australian international mail centres; and
3. goods entering Australia with passengers and crew via all Australian ports and airports.

A80

This measure is the costs attributed to the GST element of DIBP’s export processing function.

A81

This function covers the processing of export transactions including collecting export data and providing it to the ATO.

A82

This measure is the costs attributed to the GST element of DIBP import and export compliance functions.

A83

This function covers compliance activities in relation to self-assessed declarations made by importers. It also covers compliance activities in relation to refund claims that relate to taxable importations.

A84

The costs of compliance activities in relation to the TRS are included in item 3(d) below.

A85

DIBP utilises a range of monitoring, response and enforcement compliance activities that are proportional to client behaviour and consistent with DIBP Regulatory Philosophy.

A86

This measure is the costs attributed to the administration of the TRS.

A87

This function covers the processing and payment of TRS claims and associated compliance activities. This function is carried out in relation to passengers departing from all international airports and seaports in Australia.

A88

This measure is the sum of the costs associated with carrying out DIBP’s four GST functions.

A89

Owners of imported goods are required by section 68 of the Customs Act 1901 to make a declaration to DIBP in relation to each imported consignment. Owners that make an import declaration are making a taxable importation (s13-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)). A DIBP officer may refuse to deliver the goods concerned unless the GST has been paid [GST Act subsection 13-15(2)].

A90

An import declaration includes all of the information that is required to assess the GST liability.

A91

Owners of goods intended for export that have a Free On Board (FOB) value greater than $2,000 are required by section 113 of the Customs Act 1901 to make a declaration to DIBP in relation to each export consignment.

A92

DIBP provides the ATO with a monthly export data report. The ATO uses this information in undertaking compliance functions in relation to item G2 on the BAS.

A93

International travellers can obtain a GST refund under the TRS provided they submit a claim to DIBP that fulfils all of the requirements set out in the regulations.

A94

DIBP assesses the GST liability on all taxable importations. The GST liability assessed by DIBP on taxable importations is deferred (and accounted for on the BAS) for importers that have been approved by the ATO for GST deferral. In all other cases, DIBP collects the GST.

A95

DIBP processes all taxable importations regardless of whether the GST is paid to DIBP or deferred for payment on the BAS. It is appropriate, therefore, to compare processing costs to the GST liability assessed rather than to compare those costs to the GST collected by DIBP.

A96

This item could be misleading because it compares the processing costs to a small portion of DIBP taxable importation workload. This item needs to be considered in the context of item (i) Total costs as a percent of total GST liability assessed.

A97

This measure reflects the ratio between the Total GST adjustments and the funding provided for compliance. This measure is calculated as: