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  • Managing our finances

    We aim to operate within a balanced budget and to allocate resources to optimise our performance.


    • Finishing 2010-11 with a small underspend against budget reflects our continuing commitment to effective resource management and allocation

    Our operating budget

    We began 2010-11 with an operating budget of $3,073.4 million and over 2010-11 our budget increased by $4.3 million as a result of government decisions. Some of this included:

    • an increase of $8.7 million from measures announced as part of the 2011-12 federal budget represented by
      • $3.0 million for the Stronger Super - SuperStream measure
      • $2.8 million for the Temporary flood and cyclone reconstruction levy measure
      • $2.3 million for the Stronger Super - self-managed super funds
      • $0.6 million for the Tax compliance - countering fraudulent phoenix activities by company directors
    • a reduction of $2.9 million following the deferred commencement of the 50% discount for interest income measure announced in the 2010-11 federal budget
    • a reduction of $0.5 million following the decision not to pursue the resource exploration refundable tax offset measure announced in the 2010-11 federal budget.

    During 2010-11 we also recognised other additional revenue, primarily from the provision of services and other gains which resulted in an increase to our overall budget to a total of $3,102.6 million.

    Our final operating result for 2010-11 was a small surplus of $3.5 million comprising a $0.2 million ATO-only surplus and a $3.3 million surplus for the Australian Valuation Office. This result reflects our commitment to effective resource management. We also continued to focus on improving our forecasting practices and on understanding our cost drivers in order to manage within our budget.

    Note 27 of the financial statements shows the ATO-only result for 2010-11, net of unfunded depreciation expenses. The operating result, including the impact of Operation Sunlight, is a 'deficit attributable to the Australian Government' of $129.3 million.

    How we spent our operating budget

    In 2010-11 employee and related costs made up 63% of our total expenditure. The significant proportion of our expenditure related to employee costs reflects our position as a large people-based organisation.

    Other major categories of expenditure in 2010-11 were technology costs, representing 10.3% of expenditure, and property costs, accounting for 7.5% of our expenditure.

    A further 4.3% of our expenditure was largely driven by taxpayer demand, including items such as printing, postage and office operations and marketing ($38 million), bank fees and collection charges ($29 million) and legal expenses ($70 million).

    Depreciation expenses of $133.1 million accounted for a further 4.1% of total expenditure and payments for services provided by the Australian Customs and Border Protection Service on our behalf, relating to GST administration, represented a further $53.9 million or 1.7% of our expenditure.

    FIGURE 6.1: Our operating expenses, 2009-10 to 2010-11, by percentage

    FIGURE 6.1: Our operating expenses, 2009-10 to 2010-11, by percentage

    (a) Other includes payments to other government agencies and learning and development (supplier only).

    Our budget to administer goods and services tax

    We continue to meet our outcomes as agreed with the states and territories for the administration of GST under the GST Administration Performance Agreement between the Commissioner and the Ministerial Council for Federal Financial Relations.

    In 2010-11 our expenditure for administering GST was $659.4 million. This result was $7.2 million or 1.1% under the $666.6 million estimate agreed with the Ministerial Council, allowing for variations in our work program for the year. This is an interim result, and remains subject to a special-purpose audit by the Australian National Audit Office.

    Following the Australian National Audit Office's special purpose audit of our 2009-10 expenditure for administering GST, their unqualified report confirmed that our expenditure was a fair representation of our costs.

    Our capital budget

    As a result of the government's Operation Sunlight reforms, 2010-11 is the first year we received separate capital funding through a departmental capital budget.

    Our 2010-11 departmental capital budget funding was $137.3 million which, along with funding from equity injections of $28.6 million, resulted in total capital funding for 2010-11 of $166 million. Total capital expenditure for 2010-11 was $107.5 million, an underspend of $58.5 million or 36% against the total capital budget.

    Of our total capital expenditure in 2010-11, $31.5 million related to building improvements and $15.1 million to software purchases and $20.5 million in information technology infrastructure and hardware. The balance of $40.4 million was for internally-developed software assets.

    During 2010-11 we forecast we would underspend our capital budget and advised the Department of Finance and Deregulation accordingly. This forecast underspend reflected the winding down of activity following the finalisation of system changes associated with our change program in 2009-10. However, under the Capital Budgeting Policy for Australian Government Agencies, we are seeking the Department of Finance and Deregulation's agreement to apply the underspend to planned work over the next few years, including:

    • our schedule of significant accommodation fit-outs
    • information technology work as we commence our next round of system developments.

    Asset management

    We have an asset management framework, which includes:

    • an asset register, subject to an annual stocktake, which records details of our assets held
    • detailed policy on the management of assets as set out in our Chief Executive Instructions - Public Property Management
    • a capital management plan which sets out information about our proposed capital expenditure from all funding sources. We develop the capital management plan as part of our capital budget process and it is linked to our corporate planning processes.


    Visit our website for information on discretionary grants we awarded during 2010-11.


    We carry out our procurement activities in accordance with the Commonwealth Procurement Guidelines as required under the Financial Management and Accountability Act 1997 (FMA Act).

    We spent 32% of our budget in the 2010-11 financial year on goods and services, the majority provided by the private sector.

    We entered into significant new contract arrangements during the year covering our end-user computing and centralised computing service requirements. Further details of our information technology initiatives are included under Managing our information technology section.

    In addition to these information technology arrangements, we finalised a number of other large requests for tender during the year. This resulted in signing contracts with suppliers for the provision of goods and services, including:

    • a panel for commercial and general legal services
    • a panel for administrative investigations and review services.

    In addition to these finalised arrangements, we undertook a number of other significant approaches to the market during 2010-11, including:

    • a panel for providing a range of information and communications technology services and capability
    • a panel for providing bulk personalised printing and mailing services
    • a contract to engage a partner for the delivery of new systems and processes for managing procurement activity across the ATO.

    All contracts and official orders entered into during the year were gazetted on AusTender in accordance with our obligations under the Australian Government's Guidance on Procurement Publishing Obligations, however in a small number of cases the required timelines were not met.

    We have a strong focus on procurement capability development and all staff working on core procurement activity in our central procurement area are accredited to at least the Certificate IV level.

    Our ethical business relationship statement is aimed at:

    • improving private sector understanding of how we expect services to be delivered
    • strengthening our ability to ensure compliance of suppliers with our ethical standards and values
    • reinforcing a culture of mutual respect and cooperation between us and our suppliers.

    Visit our website to see our ethical business relationship statement.We also recognise the importance of paying our suppliers on time. We consistently exceeded the government's target to pay at least 90% of invoices within 30 days for small business, achieving an average rate of 95% across all suppliers through the year.

    We publish information relating to significant procurement activity we expect to undertake in 2011-12 in our annual procurement plan, available on the AusTender website at

    Connection into whole-of-government initiatives

    We were actively involved in contributing to a number of whole-of-government coordinated procurement initiatives led by the Department of Finance and Deregulation. These included:

    • Senior Executive Service representation on the Reference and Advisory Group for Co-ordinated Procurement and the contract managers working group
    • Senior Executive Service representation on the Agency Travel Contract Management Committee and the Travel Services Project Management Committee
    • participation in the expert working group to develop specifications for the whole-of-Australian-Government stationery tender.

    We are one of three agencies who have been working with consultants engaged by the Department of Finance and Deregulation to develop a set of simple, standardised processes that meet the requirements of the Australian Government's procurement framework for low value (up to $80,000 including GST) procurement activity.

    We are using the following mandatory whole-of-government arrangements:

    • air travel and management services panel
    • legal services standard documentation for approaches to market
    • government advertising centralised arrangement
    • Microsoft volume sourcing head arrangement
    • motor vehicle (fleet) leasing head agreement
    • secure internet gateway services head agreement
    • desktop hardware and associated services panel.

    Consistent with Australian Government policy, we encourage engagement of small-to-medium businesses and Indigenous businesses to provide goods and services to us. For example, we are a member of the Australian Indigenous Minority Supplier Council which provides a direct business-to-business purchasing link between corporate Australia, government agencies and Indigenous-owned businesses.


    During 2010-11 we entered into 404 new consultancy contracts - 221 for the AVO and 183 for the ATO - involving total contract value of $12,988,833, including GST. In addition, 65 ongoing consultancy contracts were active during the year, involving total contract value of $1,803,401, including GST.

    Since 2007-08 there has been a significant reduction in the total value of consultancy contracts awarded, largely due to the finalisation of our change program.

    Appendix 11 summarises the 144 new consultancy contracts let in 2010-11 to the value of $10,000 or more (including GST) and the total contract value.

    Consultancies let for advertising and market research are reported under both consultancy services (Appendix 11) and advertising and market research (Appendix 12).

    TABLE 6.4: Consultancy contracts expenditure, 2007-08 to 2010-11






    Total value of consultancy contracts awarded





    Expenditure against contracts awarded in prior years





    Expenditure against contracts awarded in the current year










    Annual reports contain information about actual expenditure on contracts for consultancies. Information on the value of contracts and consultancies is also available on the AusTender website

    For more information on our consultancy services in 2010-11 refer to Appendix 11.

    Managing our property

    Property management plan

    In 2010 we developed a property management plan as required under the Commonwealth Property Management Framework.

    The Commonwealth property data collection

    We provided property data on time to the Department of Finance and Deregulation. This included advising we had not met the whole-of-government density targets of 16 square metres per occupied work point for 19 of our property holdings. However we have reduced our density footprint, and all new building projects and refurbishments will meet this standard.

    TABLE 6.5: Commonwealth property data collection, 2010 to 2011





    Reported ATO occupational density




    New buildings for our people

    We provide our people with environmentally certified, modern accommodation. In line with the ATO location plan, we are planning four new buildings in the central business districts of Melbourne, Adelaide and Brisbane and in Albury, New South Wales. A new building in Geelong, Victoria was officially opened on 1 September 2011. We are also looking at accommodation opportunities in Box Hill and Dandenong in Victoria, and Wollongong, New South Wales.

    We have strategies in place to reduce the national accommodation vacancy rate, resulting in ongoing incremental savings each year. We expect national targets to be achieved by 2014. The current vacancy rate is 13%, down from 21% in 2009. Several leases due to expire in 2011-12 will not be renewed.

      Last modified: 31 Oct 2011QC 28036