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 1 – Australian Taxation Office
- 1.1.1 Policy advice and forecasting
- 1.1.2 Design and build administrative solutions
- 1.1.3 Input into law design
- 1.1.5 Law assurance
- 1.1.6 Cross-agency support and 1.1.7 Government and stakeholder relations
- 1.2.1 Registrations
- 1.2.2 Processing and accounts
- 1.2.3 Customer service
- 1.2.4 Manage payment and debt
- 1.2.5 Interpretative assistance
- 1.3.1 Marketing and communication
- 1.3.4 Improving compliance in the tax and super system (ATO)
- 1.3.4 Improving compliance in the tax and super system (Home Affairs)
- 1.3.5 Compliance intelligence and risk management
- 1.5.1 Resolve disputes
- 1.5.2 Prevent disputes
Program 2 – Tax Practitioners Board (TPB)
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 is prepared for the sole purpose of complying with the requirement in this Agreement for the ATO’s Administration of the GST for the ATO to prepare and distribute an accrual-based financial statement to the CFFR. As such, it must not be used for any other purpose.
B5 – The Statement is 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. The costs of GST administration activities include:
- direct staff and related costs
- other direct operating costs including payments to other agencies
- business 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
- corporate support costs including accommodation, information technology, office services, human resource services and internal services, and
- 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
Program 1 – Australian Taxation Office
1.1.1 Policy advice and forecasting
B8 – This focuses on the provision of advice on administrative, compliance and interpretative matters in relation to government policy. This includes the provision of advice on costings, modelling and forecasting before a decision is made by government.
1.1.2 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 policy following a decision by government or other initiatives related to administration of taxation, superannuation law and registry administration.
1.1.3 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.
1.1.5 Law assurance
B11 – This supports the interpretation and administration of laws administered by the ATO through the delivery of 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.
1.1.6 and 1.1.7 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 outcomes. This includes parliamentary support.
1.2.1 Registration
B13 – This includes activities related to the processing of registrations (including applications for tax file numbers, ABN and role registrations) and maintenance of the registers and integrity of taxpayer records.
1.2.2 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.
1.2.3 Customer service
B15 – This focuses on the ATO’s customer service capability that responds to requests or enquiries received through electronic, telephony or paper channels.
1.2.4 Manage payment and debt
B16 – The ATO takes a purposeful approach to payment and debt, balancing support for taxpayers 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.
1.2.5 Interpretative assistance
B17 – This focuses on the interpretative assistance provided to the community in the form of advice, guidance and reviewing decisions about the application of laws.
1.3.1 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 taxpayer 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.
1.3.4 Improving compliance in the tax and super system (ATO and Home Affairs)
B19 – Compliance activities the ATO undertakes including preventative compliance activities, that aim to:
- positively change the compliance behaviour of taxpayers
- address non-compliance
- disrupt or prevent evasion and fraud activities.
Activities start from support, encouragement and via cooperative compliance relationships, then on to review and audit, and finally to direction, enforcement, debt recovery, removal from the system, and prosecution.
All compliance strategies whether preventative or corrective, influence and promote future voluntary compliance and do not just correct the past. Activities are linked to a risk treatment strategy designed to improve compliance in the tax and super system.
Activities to improve compliance by taxpayers and other entities are designed proportionate to the risk, severity, and frequency of the identified or potential non-compliance to improve either correct participation in the systems and programs we administer or compliance with the taxpayer’s regulatory obligations across the 5 pillars of compliance:
- registration
- lodgment
- correct assessment
- payment
- third party reporting.
Activities include:
- influencing compliance behaviour
- examining compliance behaviour
- making compliance decisions
- applying the full force of the law.
1.3.5 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 active compliance, marketing and communication, and interpretative assistance.
1.5.1 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.
1.5.2 Prevent disputes
B22 – This includes:
- the consolidation of our independent review service and working with taxpayers and/or their representatives to identify opportunities for further improvement, and
- 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.
Note 3 – Basis of attributing the cost to GST administration
B24 – 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.
B25 – The basis used for attributing costs to GST administration activities is summarised as follows.
Attributing costs to GST administration activities
1.1.1 Policy advice and forecasting
Policy advice and forecasting numbers relating to administrative implications, technical interpretative advice, advocacy, proactive suggestions provided, or people involved in providing these activities.
1.1.2 Design and build administrative solutions
Proportion of services required to build administrative solutions to implement new GST policy or develop or enhance existing GST-related systems.
1.1.3 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.
1.1.5 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.
1.1.6 Cross-agency support
Proportion of activities to support GST-related work across agencies.
1.1.7 Government and stakeholder relations
Proportion of GST-related support provided to portfolio ministers and members of parliament, including Senate Estimates and Joint Committee of Public Accounts and Audit processes.
1.2.1 Registrations
GST proportion of processing of transactions and changes to taxpayer register based on volume and tax role.
1.2.2 Processing and accounts
GST proportion of activity statement lodgment and payment processing, including corrections, variations and amendments based on volume and profile of taxes, and/or labels on the activity statement. GST proportion of transactions based on volume and profile of taxpayer payments and refunds.
1.2.3 Customer service
GST proportions of responses to requests from taxpayers received through electronic, telephony or paper channels based on volume and tax type.
1.2.4 Manage payment and debt
GST proportion of debt activity undertaken to secure payment of outstanding debt based on cases on hand and taxpayer tax role profile.
1.2.5 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.
1.3.1 Marketing and communication
GST proportion of externally published products and services, management of community and industry stakeholder relationships, education services and communication programs.
1.3.4 Improving compliance in the tax and super system (ATO and Home Affairs)
GST proportion of compliance 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 compliance strategies can be categorised as:
- Influencing compliance behaviour
- Examining compliance behaviour
- Making compliance decisions
- Applying the full force of the law.
1.3.5 Compliance intelligence and risk management
GST proportion of performing compliance intelligence and risk identification, risk assessments, case selection, data matching, data mining and analysis, developing end-to-end risk-mitigation strategies and activities based on GST case costs.
1.5.1 Resolve disputes
GST proportion of management and response to objections and reviews, conduct litigation, debt litigation and settlement assurance.
1.5.2 Prevent disputes
GST proportion of independent reviews and provision of legal advice and maintenance of the law practice management system.
Program 2
Tax Practitioners 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.
Note 4 – Planning and estimate arrangements
B26 – This note sets out the agreed processes for developing and modifying estimates and business plans for the ATO’s administration of the GST.
Planning and estimate formulation process
B27 – The ATO will formulate proposals for levels of funding estimated 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 estimate methodology, associated assumptions and accuracy of data underpinning the proposals.
B28 – The ATO will provide the strategic intent statement and estimate to GSTAS (through GPAS). GSTAS will consider the strategic intent statement and the estimate submission and forward to the CFFR, together with any comments or recommendations from GSTAS members on the appropriate level of funding.
B29 – 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 strategic intent statement and estimate submission in February each year.
B30 – The strategic intent statement and estimate to GSTAS will contain an indicative view of the funding against the program deliverables of the strategic costing framework. If required, due to extraordinary or significant circumstances, and subject to ATO planning processes and impacts of the Commonwealth budget process, the ATO will provide to GSTAS (through GPAS), a revised view against the program deliverables.
B31 – The ATO can raise significant issues between the forecast and the estimate with GPAS, GSTAS and subsequently, if necessary, the CFFR at any time during a financial year.
Review of actual costs of administration
B32 – 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.
B33 – 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 CFFR any agreed adjustments from the ANAO review. It is anticipated that any agreed adjustments will be settled and given effect by February each year.
B34 – 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.