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  • 3. Costs

    The ATO administers the GST on behalf of the Australian states and territories. The states and territories reimburse the Commonwealth for the ATO’s cost of administering GST. Our obligations to the states and territories are set out in the GST Administration Performance Agreement between the ATO and the Council on Federal Financial Relations, as per the Intergovernmental Agreement on Federal Financial Relations.

    The cost of administering GST is calculated by the ATO’s strategic costing framework (SCF). This is a cost attribution model consistent with the Australian Government’s accrual-based outcomes and programs costing framework. It calculates the proportion of the ATO’s total operating expenses that relate to GST administration activities on a full-cost basis.

    GST administration costs are monitored, with oversight provided by the ATO GST Product Committee. The GST costs are endorsed by the Chief Finance Officer and are subject to an annual independent audit by the Australian National Audit Office (ANAO). Costs are reported against the Program Framework Deliverables set out in Schedule B of the GST Administration Performance Agreement.

    The ATO prepares a Schedule B estimate for consideration by the GST Administration Sub-Committee (GSTAS) ahead of each financial year. Once agreed, the estimate serves as the intended cost of GST administration for the upcoming financial year.

    The Council on Federal Financial Relations agreed to move to a full cost recovery arrangement (as determined by the SCF) in 2020–21.

    Although actual GST administration expenditure was tracking higher than the Schedule B estimate for the first half of the 2019–20 financial year, unaudited full year actual costs for 2019–20 were $575.8 million, $83.2m below 2018–19 and $70.8 million below the agreed Schedule B estimate. This under-spend was driven by the ATO’s reallocation of resources to support clients impacted by natural disasters and to administer the government’s COVID-19 stimulus response.

    Figure 4: Schedule B estimate against actual costs 2015–16 to 2019–20

    2015–16 $680 million Schedule B, $699 million Actual. 2016–17 $682 million Schedule B, $703 million Actual. 2017–18 $631 million Schedule B, $685 million Actual. 2018–19 $599 million Schedule B, $659 million Actual. 2019–20 $647 million Schedule B, $576 million Actual.

    Breakdown of costs (actuals)

    The SCF maps GST activities to program deliverables to capture the ATO’s direct GST administration costs. The percentage of direct costs is also applied to the ATO’s indirect costs to calculate the GST portion of indirect costs. The direct and indirect costs are then added together to provide the total.

    The ATO’s indirect costs increased proportionally in 2019–20 compared with 2018–19, due to investment in technology to improve our:

    • IT security and data storage resilience
    • IT sustainment
    • data analytics.

    The direct cost of GST activities was $303.6 million in 2019–20 (52.7% of the overall cost). This included $70.0 million for the GST compliance program, slightly down from 2018–19 ($72.9 million).

    Table 1: Cost to collect GST revenue and per registrant

     

    2015–16
    $

    2016–17
    $

    2017–18
    $

    2018–19
    $

    2019–20
    $

    Cost to collect $100 GST revenue

    1.16

    1.12

    1.07

    1.01

    0.92

    Cost per registrant

    267

    264

    250

    232

    198

    The administrative cost per registrant and the cost of collecting $100 GST revenue have fallen over the last five years.

      Last modified: 30 Aug 2021QC 64820