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  • SCHEDULE B – GST BUDGET AND ADMINISTRATION ACTIVITIES

    Strategic Costing Framework

    B1

    The strategic costing framework is the ATO’s primary costing attribution method across all of its activities.

    Program Framework Deliverables

    Program Framework Deliverables

    1.1 Policy Advice and Forecasting

    1.2 Design and Build Administrative Solutions

    1.3 Input into Law Design

    1.5 Law Assurance

    1.6 and 1.7 Cross agency Support and Government and Stakeholder Relations

    2.1 Registrations

    2.2 Processing and Accounts

    2.3 Customer Service

    2.4 Manage Payment and Debt

    2.5 Interpretative Assistance

    3.1 Marketing and Communication

    3.4 Client Engagement (ATO)
    3.4 Client Engagement (Home Affairs) 

    3.5 Compliance Intelligence and Risk Management

    5.1 Resolve Disputes

    5.2 Prevent Disputes

    Program 2 - Tax Practitioner Board

    Program 3 - Australian Business Registery Services

    TOTAL

    B2 Cost information against these program framework deliverables may be found in the annual GST administration performance reports provided by the ATO.

    B3 Changes to the ATO Program Framework are reflected in the Strategic Costing Framework activities.

    Notes to the Statement of GST Administration Costs

    Note 1 — Summary of significant accounting policies

    Basis of accounting

    B4

    The GST Administration Cost Statement is a special purpose financial report. The Statement has been prepared for the sole purpose of complying with the requirement in the Performance Agreement for the ATO’s Administration of the GST for the ATO to prepare and distribute an accrual-based financial statement to the Council. As such, it must not be used for any other purpose.

    B5

    The Statement has been prepared having regard to Statements of Accounting Concepts and on an accrual basis.

    Proportion of total ATO costs

    B6

    The financial information and accounting policies used in preparing the GST Administration Cost Statement are the same as used to prepare the ATO’s annual audited Financial Statements.

    B7

    The costs of GST administration activities have been calculated using a model consistent with the Commonwealth Government’s accrual-based outcomes and programs framework. They represent the proportion of the ATO’s total operating expenses that relate to GST administration activities determined by using the cost attribution approach outlined below.

    1. The costs of GST administration activities include:    
      1. direct staff and related costs;
      2. other direct operating costs including payments to other agencies;
      3. line management overhead costs which represent those costs within a Line that do not directly provide Line products, services or outputs but support the Line as a whole;
      4. corporate support costs including accommodation, information technology, office services, human resource services and internal services; and
      5. a proportion of corporate and business management overheads for strategic corporate direction setting (including corporate improvement initiatives), financial management, assurance and governance, and other corporate-related activity based on the total cost of GST administration activities as a proportion of total ATO costs.
       

     

    Note 2 — Definition of deliverables contributing to the GST Administration

    1.1 Policy Advice and Forecasting

    B8

    This framework deliverable focuses on the provision of advice on administrative, compliance and interpretative matters in relation to new government policy. This includes the provision of advice on costings, modelling and forecasting. It covers work done before a decision is made by government to proceed with a new policy proposal.

    1.2 Design and Build Administrative Solutions

    B9

    This includes services that support the identification, development and enhancement of business practices, processes, products and systems to implement new law following a policy decision by government or other initiatives related to administration of taxation law.

    1.3 Input into Law Design

    B10

    It supports the ATO’s role in shaping the taxation and superannuation systems through the provision of technical and interpretative advice on drafting instructions, and draft legislation and explanatory materials.

    1.5 Law Assurance

    B11

    This supports the interpretation and administration of laws administered by the ATO through the delivery services and systems, including the continual improvement of policy, practices and procedures, and end-to-end business processes for technical decision-making. This includes prioritisation of technical issues, and the quality assurance of technical decisions.

    1.6 and 1.7 Cross Agency Support and Government and Stakeholder Relations

    B12

    This focuses on those activities the ATO is required to undertake by law or agreement, but which do not necessarily contribute to the ATO’s business outcome. This includes parliamentary support.

    2.1 Registrations

    B13

    All activities relating to the registration of new clients including processing and maintaining GST client Register.

    2.2 Processing and Accounts

    B14

    This includes activities involved in managing accounts, payments and processing for all products. Account management covers all activities that result in refunds and outward payments being issued, adjustments or updates to accounts.

    2.3 Customer Service

    B15

    This focuses on the ATO’s customer service capability that responds to requests or enquires received through electronic, telephony or paper channels.

    2.4 Manage Payment and Debt

    B16

    The ATO takes a purposeful approach to payment and debt, balancing support for clients trying to do the right thing with timely, firmer, or stronger action against those who don't engage to prevent them gaining an unfair financial advantage.

    2.5 Interpretative Assistance

    B17

    This focuses on the interpretative assistance provided to the community in the form of advice, guidance, and review decisions about the application of laws.

    3.1 Marketing and Communication

    B18

    Marketing and communication activities that focus on supporting the ATO’s business model. This is achieved by helping taxpayers and their advisers understand their rights and obligations, making it as easy as possible to comply, managing relationships and shaping external capabilities. Key client or relationship managers who provide case-specific or one-to-one education or advice to taxpayers to meet their obligations are not included here, but rather form part of the relevant capability.

    3.4 Client Engagement (ATO and Home Affairs)

    B19

    This covers the implementation of engagement strategies such as preventative activities designed to assist clients in getting their tax and super obligations correct before lodgement, and corrective activities that address identified problems with accuracy of information presented by clients and their intermediaries. These strategies influence and promote voluntary compliance on GST including activities in categories such as:

    1. making it easy;
    2. help to comply;
    3. review;
    4. audit and enforcement;
    5. investigation including initiating civil proceedings and prosecution.

     

    3.5 Compliance Intelligence and Risk Management

    B20

    This includes processes associated with the discovery, detection, analysis and reporting of compliance risks at a tactical, operational, and strategic level as well as design of end-to-end risk mitigation strategies to improve voluntary compliance. Risk mitigation strategies are affected through other deliverables such as client engagement, marketing and communication, and interpretative assistance.

    5.1 Resolve Disputes

    B21

    This relates to the resolution of disputes arising from tax technical decisions, including objections, disputes and reviews. Our resolution actions include Independent Review, In-house facilitation, mediation, early engagement, objections and, where appropriate, taking litigation action.

    5.2 Prevent Disputes

    B22

    This includes:

    1. the consolidation of our independent review service and working with taxpayers and/or their representatives to identify opportunities for further improvement, and
    2. the provision of internal systems, processes and training, to support staff to actively pursue the prevention, and early resolution of disputes.

     

    Program 2 Tax Practitioners Board (TPB)

    B23

    This covers the registration and regulation of tax agents, BAS agents and tax (financial) advisers.

    Program 3 Australian Business Registery Services (ABRS)

    B24

    The ABR increases use by business and government of a complete and single source of business information for planning and service delivery. Work associated with the processing of ABN registrations and client-initiated transactions generated after registration is completed, including updates, additions and cancellations.

    Note 3 — Basis of attributing the cost to GST administration

    B25

    The ATO’s GST administration activities include activities that are 100% GST related and others where processes are shared between GST and other taxes. Where a process is shared, the costs are attributed to GST and other revenue products based on the relative consumption of the shared service.

    B26

    The basis used for attributing costs to GST administration activities is summarised as follows:

    Attributing costs to GST administration activities

    No.

    GST administration activities

    Basis of attributing costs to GST administration activities

    1.1

    Policy Advice and Forecasting

    Policy advice numbers relating to administrative implications, technical interpretative advice, advocacy, pro-active suggestions provided or people involved in providing these activities.

    1.2

    Design and Build Administrative Solutions

    Proportion of services required to build administrative solutions to implement new GST law or develop or enhance existing GST-related systems.

    1.3

    Input into Law Design

    Number of drafting instructions or interpretative advice on draft GST legislation or number of people involved in the development of drafting instructions on GST-related law.

    1.5

    Law Assurance

    Number of people involved in managing highest risk technical issues, quality assurance processes, and technical advice products relating to the interpretation and administration of GST-related law.

    1.6

    Cross Agency Support

    Proportion of activities to support cross agencies that is GST-related.

    1.7

    Government and Stakeholder Relations

    Proportion of support provided to portfolio ministers and members of parliament including Senate Estimates and JCPAA processes that is GST-related.

    2.1

    Registrations

    GST proportion of processing of transactions and changes to client register based on volume and tax role.

    2.2

    Processing and Accounts

    GST proportion of Activity Statement (AS) lodgment and payment processing, including corrections, variations and amendments based on volume and profile of taxes, and/or labels on the AS.

    GST proportion of transactions based on volume and profile of client payments and refunds.

    2.3

    Customer Service

    GST proportions of responses to requests from clients received through electronic, telephony or paper channels based on volume and tax type.

    2.4

    Manage Payment and Debt

    GST proportion of debt activity undertaken to secure payment of outstanding debt based on cases on hand and client tax role profile.

    2.5 and 2.6

    Interpretative Assistance

    GST proportion of interpretative assistance including private and public rulings, advice and guidance provided by the ATO to the community. This also includes interpretative guidance to ATO staff.

    3.1

    Marketing and Communication

    GST proportion of externally published products and services, management of community and industry stakeholder relationships, education services and communication programs.

    3.4

    Client Engagement

    (ATO) GST proportion of client engagement activities designed to influence and promote voluntary compliance based on case volumes, standard case times and role profile by case type.

    The activities associated with client engagement strategies can be categorised as:

    1. Making it easy
    2. How to comply
    3. Review
    4. Audit and enforcement

    (Home Affairs) Import and Export cost of TRS scheme compliance to Home Affairs 100% GST.

    3.5

    Compliance intelligence and risk management

    GST proportion of perform intelligence and risk identification, risk assessments, case selection, data matching, data mining and analysis, develop end-to-end risk-mitigation strategies activities based on GST case costs.

    5.1

    Resolve Disputes

    GST proportion of management and response to objections and reviews, conduct litigation, debt litigation and settlement assurance.

    5.2

    Prevent Disputes

    GST proportion of independent reviews and provision of legal advice and maintenance of the law practice management system.

    Program 2

    Tax Practitioner Board (TPB)

    GST proportion of administering the TPB system to register tax practitioners, ensuring they have the necessary competence and personal attributes and providing guidelines and information on relevant matters.

    Program 3

    Australian Business Registery (ABRS)

    GST proportion of ensuring the integrity of a single, authoritative source of business information including lawful use of ABNs.

    Note 4 — Planning and budgetary arrangements

    B27

    This note sets out the agreed processes for developing and modifying budgets and business plans for the ATO’s administration of the GST.

    Budget formulation process

    B28

    The ATO will formulate proposals for levels of funding required to administer the GST for the immediate future year. The ATO will consult with GSTAS (through GPAS) in formulating its proposals. In formulating the proposals, the ATO will review the budget methodology, associated assumptions and accuracy of data underpinning the proposals.

    B29

    The ATO will provide the strategic budget submission to GSTAS (through GPAS). GSTAS will consider the budget submission and forward to the Council, together with any comments or recommendations from GSTAS members on the appropriate level of funding.

    B30

    Whilst the time frames for these processes will change over time to align with Commonwealth budgetary processes, it is anticipated that GSTAS will consider the ATO’s funding submission in February each year.

    B31

    The strategic budget submission to GSTAS will contain an indicative view of the funding against the program deliverables of the strategic costing framework. If required, subject to ATO planning processes and impacts of the Commonwealth budget process, the ATO will provide to GSTAS (through GPAS), within the first quarter of the financial year, a revised view against the program deliverables.

    B32

    The ATO can raise with GPAS, GSTAS and subsequently, if necessary, the Council at any time during a financial year issues that may impact on the agreed Schedule B information.

    Review of actual costs of administration

    B33

    The ATO will report to GSTAS (through GPAS) the actual costs incurred in administering the GST for each financial year. As per the audit arrangements in Schedule C, these costs and the basis of determining these costs are subject to independent review by the ANAO.

    B34

    GSTAS (through GPAS) and the Commissioner of Taxation will consult on the amount of any ex-post adjustments for the prior financial year arising from the administration costs actually incurred. GSTAS will recommend to the Council any agreed adjustments from the ANAO review. It is anticipated that any agreed adjustments will be settled and given effect to by February each year.

    B35

    The Commonwealth may publish revised estimates of the GST Administration Budget in its Budget Updates, and may adjust the monthly advance GST payments accordingly, to reduce the adjustment required after the end of the financial year.

      Last modified: 03 Nov 2021QC 63235