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Commissioner of Taxation—Report for 2019-20


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Commissioner of Taxation annual report

Commissioner of Taxation annual report

2019-20

Contact Mail Director Measures, Enterprise Strategy and Design Australian Taxation Office PO Box 9977 Civic Square ACT 2608

Phone (02) 6216 1111 Email annualreport@ato.gov.au Annual report ato.gov.au/annualreport Website ato.gov.au

Copyright © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA, 2020

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Published Australian Taxation Office Canberra, October 2020 NAT 0995-10.2020 DE-23485

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Commissioner of Taxation annual report 2019-20

Commissioner of Taxation

annual report 2019-20

II

Commissioner’s review

It is my privilege to report on our performance for 2019-20. The year has presented many new and unexpected challenges, but it has also allowed us to demonstrate the vital work we do in serving all Australians and further validate the community’s trust and confidence in our administration.

We started the year with a clear focus on making the ATO a leading tax and superannuation administration, known for its contemporary service, expertise and integrity. Through 2019-20, we:

ƒ collected gross tax of around $537 billion, and provided refunds of around $132 billion, with net tax collections of $405 billion - down $21 billion (5%) over the previous year as a result of the economic impact of bushfires and COVID-19

ƒ delivered a successful Tax Time 2019, receiving over 14 million individual current-year income tax returns, resulting in over 10.8 million refunds ƒ delivered on our government commitments, including through our funded taskforces on corporate tax avoidance, the black economy and serious financial crime

ƒ completed one of the biggest data migrations ever undertaken in the public or private sector, consolidating data into a single account processing system that provides a whole-of-client account view for around 17 million accounts

ƒ improved and streamlined businesses’ interactions with government, by enhancing systems like Single Touch Payroll (STP), delivering myGovID and the Relationship Authorisation Manager (RAM) for business, and continuing our work on ABN reforms

ƒ finalised a secure robust data network that allows Australian businesses to seamlessly exchange invoices with suppliers and buyers in over 34 countries ƒ supported Australians affected by summer bushfires by facilitating lodgment and payment deferrals, and adjustments to pay as you go (PAYG) instalments to alleviate cash flow pressures.

Much of this work was completed before the onset of the global COVID-19 pandemic, and from February 2020 our priorities and focus shifted: the Australian Government announced a series of escalating emergency responses designed to slow the spread of the disease, as well as stimulus measures to help Australians and the economy withstand and recover from the economic impact of the pandemic.

The ATO contributed to the design of several economic stimulus measures, as well as being entrusted to deliver key programs. Staff from across the organisation contributed to our response and rose to meet the surge in demand for our services.

ƒ In the first day JobKeeper enrolments opened, we received 170,000 enrolments and more than 270,000 logins to our online services using myGovID, on top of our ‘business-as-usual’ demand.

ƒ In the first day early release of super was available, we received applications from over 315,000 individuals. By 30 June, we approved $20 billion to almost 2.5 million individuals.

ƒ Between March and June 2020, we had answered over 3 million calls - some days this was more than double the daily call volumes of the previous year.

ƒ By 30 June, we had paid over $35 billion to businesses through JobKeeper and refunds from boosting cash flow for employers.

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III

Much of our ability to deliver these outcomes was due to initiatives we had already implemented as part of our reinvention, which made it easier for the community to quickly access the support they needed. As STP was already being used by the majority of employers across Australia to report salary and wage information, it was key to enabling JobKeeper, and provided a level of integrity across the program. The flexibility and intuitive interfaces of myGovID and RAM also proved critical, enabling businesses and tax and BAS agents to access a range of stimulus measures like JobKeeper and Cash Flow Boost for employers.

Our response to COVID-19 also relied heavily on the dedication of our staff and our ability to mobilise, to meet numerous high-level priorities, deliver on new commitments to government, and provide support to Australians experiencing financial hardship. During this period:

ƒ Over 4,000 staff from across the ATO were temporarily reassigned to answer calls from the community and trained to perform priority tasks like arranging debt and lodgment deferrals.

ƒ We ensured our staff were as safe as possible, able to stay connected and productive, and kept up to date on changes affecting them.

ƒ We worked at an extraordinary pace to facilitate remote working; within weeks we had over 14,500 staff working from home, including over 1,000 front-line staff from our contact centres.

ƒ We upheld our high governance and risk management standards to protect the integrity of the tax and superannuation systems and ensure support went to where it was needed most.

ƒ Our June 2020 staff engagement survey showed strong improvements in employee engagement, culture and commitment to the ATO.

By July and the start of a new financial year, there was a second surge in demand for our services. This included a new round of stimulus applications and payments, and many people lodging income tax returns early to access much-needed refunds. By 30 September 2020, we had received over 7.9 million individual current-year income tax returns, and issued over 6.6 million current-year refunds totalling over $17.2 billion - a decrease of 6% on the same time last year.

Our hard work and commitment to put clients at the centre of everything we do did not go unnoticed, with client and community confidence in the ATO increasing significantly over this trying period.

Of course, these accomplishments were not achieved overnight or in isolation. Our ability to deliver through this time of major social and economic disruption is in large part thanks to the contributions of our stakeholders, as well as our previous work to become a more streamlined, integrated and data-driven organisation.

When launching our vision towards 2024, I said the journey would be challenging but worth it. The events of 2019-20 have shown how true that statement was, and it both reinforces and validates the importance of our goals in delivering better outcomes for the Australian community.

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Commissioner of Taxation

annual report 2019-20

IV

Looking forward The events of this year have seen the ATO called upon to deliver more, and to do so in new and resourceful ways - this task will only continue in the year ahead. Our role delivering the government stimulus measures is ongoing, while upholding our regular services remains vital. As such, we need to think carefully about how we prioritise our work moving forward.

To guide the organisation, my Executive team and I have set four key themes for the year ahead:

ƒ responding to COVID-19 - contributing to Australia’s economic recovery while meeting community expectations of fairness in the system and our administration ƒ continuing our transformational journey - building our systems and capability so we can deliver for the community when it matters most, and simplifying our processes to drive better outcomes

ƒ continuing to become more streamlined and integrated - improving the way we collect, manage, share and use data to build confidence and drive actions that maximise value ƒ establishing the Commonwealth Business Registry Service - simplifying business registration to make it easier for businesses to interact with government and further unlock the value of

business registry data to support economic growth.

There are more challenges on the horizon for the ATO. But whether we are administering the tax and superannuation systems, delivering new measures, helping design new policy, or improving our services, the challenges are outweighed by the opportunities.

My Executive team and I would like to take a moment to thank the people of the ATO and our partners; they have provided an extraordinary level of commitment and service to our clients and organisation in what has been an extremely challenging year. We have done great things together and I look forward to seeing what we will deliver in 2020-21.

Chris Jordan AO Commissioner of Taxation Registrar of the Australian Business Register

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COMMISSIONER OF TAXATION

The Hon. Michael Sukkar MP Minister for Housing and Assistant Treasurer Parliament House CANBERRA ACT 2600

Senator the Hon. Zed Seselja Assistant Minister for Finance, Charities and Electoral Matters Parliament House CANBERRA ACT 2600

Dear ministers

As the Accountable Authority for the Australian Taxation Office (the ATO), the Australian Charities and Not-for-profits Commission (ACNC) and the Tax Practitioners Board (TPB), I present you with the annual reports for the year ended 30 June 2020 for presentation to Parliament, in compliance with section 46 of the Public Governance, Performance and Accountability Act 2013.

The reports follow the guidelines approved by the Joint Committee of Public Accounts and Audit, as well as other legislative reporting requirements as listed in: ƒ sections 17AA to 17AJ of the Public Governance, Performance and Accountability Rule 2014 ƒ subsection 60-130(1) of the Tax Agent Services Act 2009 (for the TPB)

ƒ Division 130 of the Australian Charities and Not-for-profits Commission Act 2012 (for the ACNC).

Due to their operational independence and statutory obligations, the TPB and the ACNC have produced their own annual reports.

As required by section 10 of the Public Governance, Performance and Accountability Rule 2014, I certify that we have: ƒ prepared fraud risk assessments and fraud control plans ƒ appropriate fraud prevention, detection, investigation and reporting mechanisms that meet the

specific needs of the ATO ƒ taken all reasonable measures to appropriately deal with fraud.

Yours sincerely

Chris Jordan AO Commissioner of Taxation and Registrar of the Australian Business Register 2 October 2020

The Hon. Dr Gary Johns Commissioner Australian Charities and Not-for-profits Commission

Ian Klug AM Chair Tax Practitioners Board

Commissioner of Taxation

annual report 2019-20

VI

Contents

II Commissioner’s review

V Letter of transmittal

01 Overview 1 About us

2 Outcome and program structure

4 ATO client landscape

4 Our ministers

5 ATO Executive

10 Organisational structure

02 Annual performance statement 11 Statement by the Accountable Authority

12 Program 1.1 Australian Taxation Office

47 Program 1.2 Tax Practitioners Board

48 Program 1.3 Australian Business Register

52 Program 1.4 Australian Charities and Not-for-profits Commission

53 Administered programs 1.5 to 1.19

03 Revenue performance 59 Revenue collection

62 Tax performance

66 Total revenue effects

VII

04 Management and accountability 71 Corporate governance

84 Workforce management

105 Financial performance

05 Financial statements 115 About the financial statements

115 Financial statements

06 Appendixes 180 Appendix 1: Laws conferring powers on the

Commissioner

181 Appendix 2: Taxpayers’ Charter - our performance

183 Appendix 3: Public advice and dispute management

187 Appendix 4: Legal services expenditure

189 Appendix 5: Strategic litigation

194 Appendix 6: Debt management

196 Appendix 7: Compensation statistics

197 Appendix 8: Service commitments and activities

203 Appendix 9: Advertising, direct mail, media placement and market research

206 Appendix 10: Use of access powers

207 Appendix 11: Information provided to law enforcement agencies

212 Appendix 12: Corrections

214 Reference material

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Commissioner of Taxation

annual report 2019-20

VIII

01 Overview

About us

Our vision is to be a leading tax and superannuation administration known for our contemporary service, expertise and integrity

As a Commonwealth entity within the Treasury portfolio, the ATO is accountable under the Public Governance, Performance and Accountability Act 2013 (PGPA Act) and the Public Service Act 1999 (PS Act).

Our role and responsibilities The Commissioner of Taxation is responsible for administering Australia’s tax system and significant aspects of Australia’s superannuation system. For the purposes of the PGPA Act, the Commissioner is the accountable authority for the ATO, the Tax Practitioners Board (TPB) and the Australian Charities and Not-for-profits Commission (ACNC). He is also the Registrar of the Australian Business Register (ABR).

The ATO is the Australian Government’s principal revenue collection agency, administering the legislation governing tax, and supporting the delivery of government benefits to the community. Our roles and responsibilities are set out in more detail, by agency program, on pages 2-3.

The TPB and ACNC operate independently of the ATO and each produces its own annual report. Their reports are available at tpb.gov.au and acnc.gov.au, respectively.

01Commissioner of Taxation annual report 2019-20

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Outcome and program structure

In 2019-20, the ATO had one outcome and was funded to deliver this through four agency programs and 15 administered programs. All deliverables for administered programs are achieved through making payments to eligible recipients in accordance with relevant laws.

ATO outcome Confidence in the administration of aspects of Australia’s taxation and superannuation systems through helping people understand their rights and obligations, improving ease of compliance and access to benefits, and managing non-compliance with the law.

Agency programs

1.1 Australian Taxation Office

The ATO effectively manages and shapes the tax and superannuation systems that support and fund services for Australians, by:

ƒ collecting revenue ƒ making it easy for the community to understand and comply with obligations ƒ administering the goods and services tax (GST) on behalf of the Australian states and territories ƒ administering major aspects of Australia’s superannuation system.

1.2 Tax Practitioners Board (TPB)

The TPB program is delivered through five overarching strategies:

ƒ Client services - supporting consumers and practitioners in the delivery of tax services, legal and ethically ƒ Investigations and enforcement - data-driven compliance activities focusing on high risk and unregistered tax practitioners

ƒ Law and policy - providing guidance and legal advice to shape the law through litigation and legislation ƒ Corporate services - providing a complete and uniform governance framework, including budgeting, people, planning, risk assessment, change management, and corporate strategy

ƒ Technology - supporting business outcomes with digital and information technology (IT) solutions for clients and staff, including improved data analytics.

While the TPB is included in the ATO program structure and under the ATO outcome, it operates independently of the ATO and produces its own annual report. The TPB’s annual report is available at tpb.gov.au.

01Overview

Outcome and program structure

3

1.3 Australian Business Register (ABR)

The ABR program works with government, digital service providers, the business community and other key stakeholders to support a fairer business environment that fosters greater economic growth and job creation. This will be achieved through increased use of a trusted national business dataset and use of consistent information exchange standards.

1.4 Australian Charities and Not-for-profits Commission (ACNC)

The ACNC effectively manages a regulatory system for the Australian charitable sector by:

ƒ registering eligible not-for-profit entities as charities in accordance with the Australian Charities and Not-for-profits Commission Act 2012 (ACNC Act) and the Charities Act 2013 ƒ providing information, guidance and advice about good governance practices and assisting charities to meet their obligations to maintain charity registration

ƒ assessing concerns raised about registered charities, investigate where appropriate and initiate compliance action against charities that contravene the ACNC Act, governance standards or external conduct standards

ƒ working with other government agencies (Commonwealth, state and territory) to reduce unnecessary regulation on charities and align regulatory obligations through various mechanisms, including the ACNC’s Charity Passport.

While the ACNC is included in the ATO program structure and under the ATO outcome, it operates independently of the ATO and produces its own annual report. The ACNC’s annual report is available at acnc.gov.au.

Administered programs

Administered programs may be administered by the ATO with policy and delivery assistance from other Commonwealth agencies, or directly through the tax and superannuation systems. Our administered programs for 2019-20 were:

1.5 Australian Screen Production Incentive

1.6 Junior Minerals Exploration Incentive

1.7 Fuel Tax Credits Scheme

1.8 National Rental Affordability Scheme

1.9 Product Stewardship for Oil

1.10 Research and Development Tax Incentive

1.11 Low Income Superannuation Tax Offset

1.12 Private Health Insurance Rebate

1.13 Superannuation Co-contribution Scheme

1.14 Superannuation Guarantee Scheme

1.15 Targeted Assistance Through the Taxation System

1.16 Interest on Overpayment and Early Payments of Tax

1.17 Bad and Doubtful Debts and Remissions

1.18 Other administered programs - Seafarer Tax Offset

1.19 Economic Response to the Coronavirus

01Commissioner of Taxation annual report 2019-20

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ATO client landscape

The ATO interacts with a vast number of clients in the community - and each client group has different requirements and outcomes they seek from the tax and superannuation systems. Figure 1.1 shows the clients we interact with.

FIGURE 1.1 ATO client landscape, at 30 June 2020

11.5 million individuals not in business

4.2 million small businesses including sole traders

910,000 employers

595,000 super funds

593,000 self-managed super funds

220

large APRA-regulated super funds

1,670 small APRA-regulated super funds

205,000 not-for-profit organisations

178,500 privately owned and wealthy groups linked to 866,000 entities

36,000 public and multinational business groups linked to 84,000 entities

36,000 registered and active tax and BAS agents

Our ministers The ministers with responsibility for matters relating to the tax and superannuation systems in 2019-20 were:

ƒ The Hon. Josh Frydenberg MP, Treasurer ƒ The Hon. Michael Sukkar MP, Assistant Treasurer and Minister for Housing ƒ Senator the Hon. Jane Hume, Assistant Minister for Superannuation, Financial Services and Financial Technology.

ƒ The minister responsible for the ACNC in 2019-20 was Senator the Hon. Zed Seselja, Assistant Minister for Finance, Charities and Electoral Matters.

For more information on our ministers, see ministers.treasury.gov.au.

01Overview

The ATO Executive

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The ATO Executive

The Commissioner is supported by an executive team, with each member having responsibility for key aspects of the ATO’s performance.

The ATO Executive sets our strategic direction and monitors delivery of our commitments to government and the community. Its focus is on strategic matters that relate to the direction and positioning of the organisation. The Executive also provides leadership, driving the client-focused culture of the ATO.

For more details about our senior leaders, see ato.gov.au/about-ato.

The Commissioner of Taxation Chris Jordan AO was appointed as the 12th Commissioner of Taxation on 1 January 2013.

Chris has broad and lengthy experience in tax policy and law development and implementation, having held influential roles in the private sector and as a government advisor to both Labor and Coalition governments.

He was Chair of the Board of Taxation from June 2011 to December 2012 and a member of the Board since its inception in 2000. He also served as Chair of the Business Tax Working Group from 2011 to 2012, and as Chair of the New Tax System Advisory Board (1999 to 2001). He was a member of the Working Group that consulted with the mining industry about the resource rent tax (2011-12).

Chris has diverse experience in the tax and consulting profession. He started his accounting career with Arthur Andersen in 1979, was a senior lecturer in taxation at Sydney’s University of Technology from 1982 to 1985, and then worked at KPMG for over 25 years. From 1995 to 2000, he was Partner in Charge of the NSW Tax and Legal Division of KPMG, and from 2001 to 2012 was Chairman of Partners for KPMG NSW.

Until taking up his role as Commissioner of Taxation, Chris was the Chairman of the Committee for Sydney, a director of the Bell Shakespeare Company and the Sydney Children’s Hospital Foundation, as well as a member of the Audit and Risk Committee for the NSW Art Gallery.

Chris has a Master of Laws (Sydney University) and Bachelor of Commerce and Law (University of NSW). He is a Fellow of Chartered Accountants Australia and New Zealand, Fellow of the Institute of Company Directors and a Chartered Tax Adviser with The Tax Institute.

Chris’s term as Commissioner of Taxation and Registrar of the Australian Business Register runs until 29 February 2024.

Chris Jordan AO, Commissioner of Taxation and Registrar of the Australian Business Register

01Commissioner of Taxation annual report 2019-20

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Executive team responsibilities Janine Bristow is the Chief Finance Officer, supporting the delivery of ATO outcomes through efficient and effective investment of public monies.

Janine acted in the role from July 2019 and was formally appointed on 8 May 2020. The previous occupant, Frances Cawthra, left the ATO on 12 July 2019.

Janine leads finance professionals across ATO Finance to deliver on resource management and strategy, budgeting, financial accounting and tax reporting, procurement and contract management, corporate IT systems, as well as property and portfolio management services.

ATO Finance provides the ATO with investment insight, advice and support, enabling the effective and efficient management of resources to deliver on organisational strategies and government commitments.

Janine Bristow Chief  Finance Officer

Jacqui Curtis, as Chief Operating Officer, is responsible for leading the ATO’s Enterprise Strategy and Corporate Operations Group.

Jacqui was also appointed the inaugural Head of the APS HR Professional Stream in October 2019 and was Co-Chair of the ATO COVID-19 Steering Committee from March 2020.

The role of Enterprise Strategy and Corporate Operations is to ensure we are well positioned for Australian Public Service (APS) wide reforms of corporate and shared services - and that our people management, communication solutions, planning, governance, finance, risk and change management are strategic and effective.

Jacqui brings together an integrated picture of people and resource management, ensuring the ATO has the right capability and culture to deliver on our strategic intent. She plays a lead role in managing relationships with key stakeholders including scrutineers. All of these underpin our ability to deliver a better experience for both clients and staff.

As Head of the APS HR Professional Stream, Jacqui builds strategic human resources (HR) capability through initiatives that help identify core, long-term capability needs, standards and career pathways to support HR professionals in the APS.

Jacqui Curtis Chief Operating Officer, Enterprise Strategy and Corporate Operations Group

01Overview

The ATO Executive

7

Kirsten Fish was a member of the ATO Executive from 19 March to 30 June 2020 and acted in the role of Second Commissioner of the Law Design and Practice Group from 1 April to 30 June 2020.

Kirsten had overall responsibility for the ATO’s law practice, including law interpretation, public advice and guidance, independent dispute prevention and resolution, and our role in policy and law design.

The Law Design and Practice Group contributes to the administration of the tax and superannuation systems by seeking to make tax fair, simple and understood. We work collaboratively with Treasury and other agencies in supporting government outcomes and leading the ATO’s work on design of new policies and law. Law Design and Practice is involved at the early stages of advice and review, providing certainty through interpretation of the law and publication of guidance to support our clients in getting it right the first time.

We are committed to understanding the drivers of disputes, litigating only the right cases, and encouraging prevention and ensuring earlier resolution where disputes happen.

Kirsten Fish A/g Second Commissioner, Law Design and Practice Group

Jeremy Geale was Co-Chair of the ATO COVID-19 Steering Committee from 19 March to 30 June 2020 and member of the ATO Executive. The role has oversight of internal and external processes to ensure our response to the COVID-19 pandemic is comprehensive and coordinated.

The committee was established to provide high level strategic leadership. It ensures we are safeguarding the health and safety of our staff and protecting our business continuity, so we can continue to deliver services for the community. The committee also provides guidance and advice on the implementation of related government measures and whole-of-government responses.

Prior to taking on this role, Jeremy was acting Second Commissioner of the Law Design and Practice Group after Andrew Mills retired from the office of Second Commissioner of Taxation effective 31 December 2019.

Jeremy Geale Chief Officer, COVID-19 Response

01Commissioner of Taxation annual report 2019-20

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Jeremy Hirschhorn is the Second Commissioner with overall responsibility for the ATO’s Client Engagement Group, which fosters willing participation in Australia’s tax and superannuation systems through well-designed client experiences. Jeremy acted in the role from December 2018 and was formally appointed on 16 April 2020.

Across all client experiences - from the very largest public and multinational businesses to small businesses and individuals - the Client Engagement Group uses insights from client interactions to help design a tax system that makes it easier to comply, and harder not to. The group supports the integrity of the tax and superannuation systems by addressing non-compliance, and ensures increasing transparency about the operation of the system for taxpayers and key partners.

The group also plays an important role in working with the international tax community. Through collaborating with other jurisdictions, the Client Engagement Group improves the way tax administrations work together to address arrangements used to evade and avoid tax.

Jeremy Hirschhorn Second Commissioner, Client Engagement Group

Ramez Katf is the Second Commissioner with overall responsibility for the Enterprise Solutions and Technology Group, and the ATO’s Chief Information Officer.

Ramez provides leadership and strategic direction to modernising the revenue collection system and contributing to the government’s broader digital agenda.

Enterprise Solutions and Technology ensures we are taking advantage of the most innovative trends in technology to improve the experience of ATO staff and the community. This role has become increasingly important in balancing expectations and demand as new technology solutions continue to emerge. Ramez Katf Second Commissioner, Enterprise Solutions and Technology Group

01Overview

The ATO Executive

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Melinda Smith, as Chief Service Delivery Officer, has overall responsibility for the Service Delivery Group.

This part of the ATO is responsible for a broad range of the ATO’s foundation services for all segments of the community. These include processing payments, activity statements, income tax returns, superannuation lodgments and other forms, as well as administering the tax file number register, Australian Business Register and registers held on behalf of the superannuation industry.

The group focuses on working with ATO clients to understand their needs. It offers a tailored approach to help them meet their obligations as easily as possible through contemporary tools, systems and services. It also engages with clients on a large scale and uses a strategic early intervention approach to educate them and influence willing participation.

The group is leading or contributing to a number of transformational initiatives for government. It works closely with other areas of the ATO to improve the experience for clients and drive greater efficiency and quality outcomes. The focus on better use of data, digitisation and building a strong service culture ensures the ATO is well positioned for the future.

Melinda Smith Chief Service Delivery Officer, Service Delivery Group

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01Commissioner of Taxation annual report 2019-20

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Organisational structure

The ATO is structured in five groups, each reporting to a member of the ATO Executive. Each group consists of a number of business areas.

FIGURE 1.2  ATO organisational structure, at 30 June 2020

Commissioner of Taxation and Registrar of the Australian Business Register Chris Jordan AO

Client Engagement Group Second Commissioner Jeremy Hirschhorn

Superannuation and Employer Obligations Deputy Commissioner John Ford (acting)

JobKeeper Payment Program Deputy Commissioner James O’Halloran

Small Business Deputy Commissioner Deborah Jenkins

Individuals and Intermediaries Deputy Commissioner Hoa Wood

Integrated Compliance Deputy Commissioner Will Day

Private Wealth Deputy Commissioner Tim Dyce

Smarter Data Program Deputy Commissioner Marek Rucinski

Public Groups and International Deputy Commissioner Rebecca Saint (acting)

Deputy Commissioner Michael Ingersoll (acting)

COVID-19 Steering Committee Chief Officer COVID-19 Response

Jeremy Geale

Law Design and Practice Group Second Commissioner Kirsten Fish (acting)

Policy, Analysis and Legislation Deputy Commissioner Louise Clarke

Review and Dispute Resolution Deputy Commissioner Scott Treatt (acting)

Tax Counsel Network Chief Tax Counsel Fiona Dillon

Deputy Chief Tax Counsel Peter Walmsley

Deputy Chief Tax Counsel Karen Rooke (acting)

Deputy Chief Tax Counsel Grahame Hager (acting)

Deputy Chief Tax Counsel Public Advice and Guidance

Andrew Orme

Service Delivery Group Chief Service Delivery Officer Melinda Smith

Debt and Lodgment Deputy Commissioner Vivek Chaudhary

Client Account Services Deputy Commissioner Grant Brodie

Strategy and Support Deputy Commissioner Emma Rosenzweig

Commonwealth Business Registry Services Deputy Commissioner

Michelle Crosby

ASIC Transition Deputy Commissioner Andrea Paschalis (acting)

Enterprise Solutions and Technology Group Second Commissioner Chief Information Officer

Ramez Katf

Enterprise Capabilities Deputy Commissioner Matthew Hay

Technology, Architecture and Security Deputy Commissioner Jenson Spencer (acting)

Digital Delivery Deputy Commissioner Chief Digital Officer John Dardo

Service Operations Deputy Commissioner Alex Adams

Enterprise Strategy and Corporate Operations Chief Operating Officer

Head of APS HR Professional Stream Jacqui Curtis

ATO People Deputy Commissioner Brad Chapman

ATO Finance Chief Finance Officer Janine Bristow

Enterprise Strategy and Design Deputy Commissioner David Allen

Shared Services Deputy Commissioner Andrea Jones (acting)

ATO Corporate Deputy Commissioner Sue Sinclair

Independent internal functions

Internal Audit Chief Internal Auditor Ben Kelly

Fraud Prevention and Internal Investigations Assistant Commissioner Janine Clark

Notes ƒ The independent internal functions support the Commissioners and, for administrative purposes, are functionally included in ATO Corporate.

ƒ The COVID-19 Steering Committee was formed in March 2020 to provide high level strategic leadership and oversight of the ATO’s internal and external response to the COVID-19 pandemic.

02 Annual performance statement Statement by the Accountable Authority

As the Accountable Authority of the Australian Taxation Office (ATO), I present the following annual performance statement. This statement has been prepared as required under paragraph 39(1)(a) of the Public Governance, Performance and Accountability Act 2013 (PGPA Act) and covers the period from 1 July 2019 to 30 June 2020.

In my opinion, and having considered the recommendations from the ATO Audit and Risk Committee, the annual performance statement is based on properly maintained records, accurately presents the ATO’s performance for the reporting period and complies with subsection 39(2) of the PGPA Act.

Chris Jordan AO Commissioner of Taxation and Registrar of the Australian Business Register

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Program 1.1 Australian Taxation Office

Purpose The ATO’s purpose is to contribute to the economic and social wellbeing of Australians by fostering willing participation in the tax and superannuation systems.

We have two aspirations for 2024:

ƒ building trust and confidence ƒ being streamlined, integrated and data-driven.

Our purpose is underpinned by nine strategic objectives. As shown in the ATO corporate plan 2019-20, the objectives are grouped into five perspectives - Government, Client, Workforce, Operational and Financial.

Critically, the integrity of the tax and superannuation systems will be maintained by supporting those who choose to do the right thing and dealing with those who do not. Ultimately, client experience and participation will be the true measure of success. The following sections outline the results of our performance measures and progress on reaching our objectives.

Program overview This overview of ATO program performance aligns with the ATO corporate plan 2019-20, and presents our 2019-20 performance against each of the nine strategic objectives.

For each strategic objective, we outline our key 2019-20 achievements in relation to the strategic initiatives outlined in the corporate plan.

A summary of performance results is provided for each strategic objective, with more detail and analysis provided on pages 36-46.

02Annual performance statement Program 1.1 Australian Taxation Office

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Response to bushfires and COVID-19 The events that dominated much of the past year have shown just how important the work we do is in serving the community.

The 2019-20 year was one in which large parts of Australia were devastated by a series of catastrophic bushfires, starting in August 2019 and continuing to March 2020. For individuals and businesses in identified postcodes, we provided a range of measures to help alleviate cash flow pressures and assist with their recovery efforts, including:

ƒ automatically deferring due dates for lodgment and payment of activity statements and some income tax returns ƒ allowing businesses paying their pay as you go (PAYG) instalments on a quarterly basis to vary these instalments to zero for the December 2019 quarter and claim a refund for any instalments

made in the September 2019 quarter.

In the first quarter of 2020, Australians were also facing an increasing risk from the coronavirus disease (COVID-19). Escalating emergency response measures were introduced from late February 2020 - including closures of non-essential businesses and restrictions on travel and public gatherings - and COVID-19 was declared a global pandemic by the World Health Organisation in March. The Australian Government introduced a range of economic stimulus measures to support businesses and employees whose livelihoods were affected, and to help the economy withstand and recover from the impact of the pandemic.

We worked with Treasury to rapidly design and implement law changes needed to introduce the government’s COVID-19 economic stimulus measures. This included advising Treasury on policy and law design, revenue implications, and implementation matters, such as the impacts on systems, administration and compliance. In 2019-20, the COVID-19 stimulus measures included:

ƒ JobKeeper Payment scheme - $20.6 billion in payments were made to around 960,000 organisations, with 97% of businesses receiving the payments within four business days of lodging their claim; these payments covered 3.5 million individuals

ƒ Boosting Cash Flow for Employers - $14.5 billion in payments were made to approximately 750,000 employers across Australia ƒ Early Release of Super - $20 billion of superannuation was approved for early release to almost 2.5 million applicants, or 96% of all applicants

ƒ changes to existing measures, such as increasing the instant asset write-off threshold, and accelerated depreciation.

The support provided by the ATO extended beyond the design and administration of these vital measures. The ATO helped individuals and businesses through deferrals of some payments, quicker access to GST refunds, and options to enter low-interest payment plans for existing or future tax debts. Taxpayers being audited were given the choice of continuing or pausing the audits. Most of those who chose to pause their audits were individuals and small businesses.

Before the emergence of COVID-19, we had already made significant changes to our systems, which made it easier for clients to continue effectively engaging with us during the pandemic:

ƒ For businesses, we had delivered myGovID and Relationship Authorisation Manager (RAM). These tools provide businesses and tax practitioners with more secure and streamlined access to government online services as they mobilised to a home-based workforce.

ƒ We had successfully transitioned all tax and BAS agents to our new Online services for agents platform, a substantially more reliable and tailored service they could use working remotely.

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ƒ Our single client accounting system, which went live in December 2019, assisted us in tailoring our approach to each individual’s unique circumstances as we could see their data in one place.

ƒ Improvements to our systems meant we were well placed to manage the large volumes of transactions arising from the stimulus measures.

The significant tasks of delivering the stimulus measures and supporting people who were suddenly unable to meet their tax and superannuation obligations were met with efficiency, with no additional funding sought from the government during 2019-20. We re-prioritised our resources and activities to meet emerging needs as the government’s response developed. For more information on the impact this had on our performance outcomes, see the results analysis on pages 38-46.

To meet the dramatic increase in demand for our services, we extended our contact centre hours and mobilised our staff - with around 2,000 staff diverted to support our front-line services (such as contact centres) and around a further 3,800 redirected to priority work on the delivery of stimulus measures.

Many employers, including the ATO, moved to working-from-home arrangements for their staff. We used four key principles to underpin our approach - keeping our staff safe and healthy, delivering essential services, implementing the stimulus measures, and ensuring consistency with whole-of-government approaches.

We shifted rapidly to facilitate working from home for those staff who could do so, eventually having over 14,500 staff - or more than half of our workforce - working from home either full- or part-time. For the first time, we were able to have our contact centre staff working remotely, with over 1,000 staff migrated to remote working from home. Along with providing the IT infrastructure and equipment necessary to work from home, we fast-tracked the implementation of new digital communication tools. Feedback from many of our staff was that they were more connected despite being physically distanced from their colleagues.

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Strategic objective: G1 Government

We build community confidence by sustainably reducing the tax gap and providing assurance across the tax and superannuation systems

Overview

The ATO aims to provide the community with confidence in our administration of the tax and superannuation systems and that this results in the collection of the right tax at the right time, for the wellbeing of all Australians. To provide that confidence, we need to understand the effectiveness of our approach, which we do by using revenue-based performance measures and tools such as tax gap analysis.

We will continue to shift to a more preventative and pre-emptive approach, sustainably reducing the tax gap. Our prevention and education products and systems improvements are aimed at making it easier for people to understand and meet their commitments. These complement our activities targeting those taxpayers who intentionally avoid their obligations.

Of the eight performance measures for strategic objective G1, we fully met five targets, and failed to meet three targets.

Strategic initiatives summary

We delivered on our government commitments, including through our taskforces on tax avoidance, serious financial crime, illegal phoenix activity and the black economy. Significant achievements for our taskforces this year include:

ƒ The Tax Avoidance Taskforce raised $2.7 billion in tax liabilities and almost $1.6 billion in cash collections (apportioned figures).

ƒ The Serious Financial Crime Taskforce raised $131 million in liabilities and $59 million in cash collections.

ƒ The Black Economy program raised $787 million in liabilities and an estimated $696 million in cash collections.

ƒ The Phoenix Taskforce raised $112 million in liabilities and $47 million in cash collections.

ƒ The Superannuation Guarantee Taskforce raised almost $111 million in liabilities.

We worked with the ‘top 1,000’ public and multinational companies and superannuation funds to ensure they reported the right amount of income tax and, under the black economy program, we made over 5,100 business assistance visits in 22 metropolitan, regional and remote locations, predominantly to small businesses. We continued our program to educate future taxpayers, with around 420 presentations reaching an audience of over 28,000 students. We also connected with migrant communities, with over 270 presentations reaching around 10,500 people.

At the other end of the scale, we target serious crimes that present the highest risk to Australia’s tax and superannuation systems. Serious financial crime affecting the ATO-administered measures of the Commonwealth Coronavirus Economic Response Package was recognised as a priority for the Serious Financial Crime Taskforce in May 2020.

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We also work internationally. In 2019, the ATO was the first agency to internationally connect to the Financial Crime Intelligence Network, a decentralised computer system that enables financial crime investigation services from different jurisdictions to work together, while respecting each jurisdiction’s autonomy.

We also contributed to operations as part of the Illicit Tobacco Taskforce, as well as ATO-specific operations. This work resulted in the seizure and destruction of domestic illicit tobacco with an estimated excise duty of $171 million, a 400% increase on 2018-19.

Work continued on activities to address the individuals tax gap (for those individuals not in business), including strategies to streamline income tax reporting and enhance our use of data to make it available for pre-filling of income tax returns. This tax gap relates to individual taxpayers who earn an income as salary and wage earners, as investors or both. However, it excludes those in business and high wealth individuals, who are covered in other areas of our tax gap program.

The individuals tax gap was first published in July 2018 and an update for the 2017-18 tax return year shows that our strategies and approaches are starting to take effect, as the gap has declined. However, it is important to note that a small amount of overclaiming across a large population does add up to a significant amount and that this area requires continued focus. The tax gap is discussed in greater detail on page 62 and on our website at ato.gov.au/taxgap.

To better support individual taxpayers and address the mistakes we see in tax returns, we will continue to explore opportunities to pre-fill income tax returns, with a focus on areas that are driving the individuals tax gap. In 2019-20, we:

ƒ collected data on taxpayers who acquired and disposed of cryptocurrency and, through our pre-fill service, we used this data to remind them of their obligations to report income from these transactions

ƒ collected data from short-term rental platforms and used this to better understand the use of online platforms and whether taxpayers are reporting their income correctly ƒ continued to explore and pilot potential new data sets to help manage errors that are commonly made for work-related expenses and rental claims

ƒ piloted approaches where selected taxpayers were advised in advance of lodging their returns that they would be required to provide substantiation to support their claims at the time of lodging. The pilot showed improved accuracy of work-related expense claims and reduced stress on taxpayers about expected contact from the ATO following up on their claims.

Through our focus on payment and debt management the ATO aims to improve taxpayers’ understanding of their obligations and, where possible, prevent debt. We work proactively with taxpayers, and have developed new products and services to make payment easier and to address debts as soon as possible. In 2019-20, we:

ƒ enhanced our payment plan services, introducing opt-in payment plan instalment reminders, with nearly 800,000 reminders sent during the year ƒ incorporated the online payment plan service into Online services for agents ƒ implemented our single client accounting system and further developed our data and analytics

program (this is discussed further under Strategic Objective F1 on page 33) ƒ through our ‘Better as Usual’ program, began raising staff awareness of the interconnectedness of taxpayers’ interactions with the ATO as an end-to-end process.

These initiatives have also improved our understanding of whether a client’s behaviour is driven by an inability to engage with us or an ongoing intentional failure to do so, and to provide the most appropriate support according to the circumstances. During the latter part of 2019-20, assisting clients impacted by disasters such as flooding, bushfires and the COVID-19 pandemic has been a critical focus for our organisation.

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Our complex issue and case program manages matters that do not fit within our standard processes. We adopt tailored approaches to suit each situation, using innovative solutions, showing empathy, and looking through the client’s ‘lens’. Along with complex cases and issues that threaten system integrity, this work is providing insights into how the ATO can work ‘better as usual’. The program is helping to improve processes, procedures, communications and systems across our less-complex client interactions.

Our work on superannuation guarantee assurance focuses on using data in our approach to reducing the super guarantee gap and on improving transparency of member information, enabling individuals to proactively engage with their superannuation through ATO Online.

Our use of data to identify risks to the superannuation system has also enabled us to influence positive behavioural change through preventative approaches, and to identify and address employers who make an overt decision not to comply with their obligations. In 2019-20, we:

ƒ implemented targeted education and prevention activities for industries with a history of underpayment or late payment ƒ conducted a pro-active communications campaign, contacting employers with a history of paying their super guarantee contributions late, reminding them of their obligation to lodge

super guarantee charge statements and pay the charge - resulting in improved lodgment of statements without further intervention and a corresponding improvement in on-time payment by these employers the following quarter ƒ responded to complaints from employees who had not received their super guarantee payment

from their employer ƒ undertook compliance activities focusing on employers who had made the decision not to comply with their obligations.

Overall, our superannuation guarantee compliance program completed over 17,000 cases and raised over $670 million in liabilities.

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Strategic objective: G2 Government

We design for a better tax and superannuation system to make it easy to comply and hard not to

Overview

The tax and superannuation systems need to evolve to remain sustainable for collecting Australia’s revenue and funding. They need to be easy to comply with and hard not to, transparent in their operations, and provide a seamless client experience. The ATO is well placed to influence the design of the law to fix system irritants, make use of new technology, and address loopholes that allow people to avoid their obligations.

We use our understanding of the tax system to help design improvements to our administration.

The ‘influence’ measure for strategic objective G2 achieved a rating of very good, meeting the target.

Strategic initiative summary

Through our role in developing integrated policy and legislative design, we leverage digital and data opportunities and apply expertise and insights from across the tax and superannuation systems to improve integrity and the client experience.

We work closely with Treasury on the development of legislation for measures announced by the Australian Government, providing advice on how the drafted law can be best administered and meet the intent of the policy. Our advice takes into account insights from across the ATO, including revenue implications, feedback from front-line activities, interactions with IT systems, and administrative and compliance impacts.

Our relationship with Treasury is a significant component in successfully influencing new legislation (see performance measure: Influence on page 41).

In 2019-20, we played a key role in designing and implementing law for the Australian Government’s response to national disasters and the COVID-19 pandemic, including:

ƒ bushfire legislative measures - tax exemption for natural disaster relief and compensation payments and other tax-related measures ƒ the COVID-19 stimulus package - JobKeeper, Cash Flow Boost, Backing Business Investment, PAYG/GST instalment indexation suspension measures, Early Release of Superannuation and

the JobKeeper Review.

Using data available to the ATO, we provide analysis on the effects that these major events and the government’s response will have on revenue available to deliver programs for the Australian people. We provided data analysis on the effect of responses to COVID-19 on tax collections and the operation of COVID-19 stimulus measures. Our data analysis, costing and forecasting has been relied on for the government’s economic update in July 2020 and the development of the Federal Budget, to be delivered in October.

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This year we also contributed policy and legislative advice to the following bodies of work:

ƒ modernising business registers and introducing director identification numbers - to make it easier and faster for businesses to interact with the government, and to create a single, accessible and trusted source of business data

ƒ combatting illegal phoenix activity - building on the work of the Phoenix Taskforce to deter and disrupt illegal phoenix activity and reduce the impact on businesses, employees and government ƒ superannuation - facilitating the closure of eligible rollover funds and, in certain circumstances, allowing fund trustees to voluntarily transfer amounts they hold to the ATO

ƒ National Tax Clinic Program - securing $4 million over four years to fund tax clinics across the country, following the success of a pilot program.

We continue foundational, strategic work with our partners to develop a Data sharing ethical framework to position responsibilities and rights in an increasingly data-driven world. The Data and Analytics Steering Committee is putting related governance arrangements in place and a data ethics review panel will be established. Working with Treasury and the Australian Bureau of Statistics (ABS), we are making data available to the Australian Government and individual agencies, including employment and tax debt data.

We also work with other agencies to provide integrated ATO insights, advice and expertise for designing a better tax and superannuation system. ATO officers assisted the Board of Taxation, providing advice on working groups for the Fringe benefits tax compliance cost review, consultation for Reforming the income tax residency rules for individuals, for the Corporate tax residency review and through the provision of secretariat services.

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Strategic objective: C1 Client

Our client experience and interactions are well designed, tailored, fair and transparent

Overview

We are improving the experience of our clients by designing a tax and superannuation system that is seamless and easy to use, including for those clients who may disagree with our decisions and seek some form of formal review. We are taking advantage of the growing opportunities offered by the expanding digital world to provide people with the information they need, when they need it and in their preferred format.

Of the two performance measures for strategic objective C1, we fully met both targets.

Strategic initiatives summary

In July 2019, we introduced our ‘Better as Usual’ program - a new way of thinking about how we interact with clients. Better as Usual is the next stage in the ATO’s reinvention and looks at ways to change our processes to put clients at the centre of our work. It’s not a complete overhaul. It’s about continuous, systemic and sustained improvements.

To improve the end-to-end client experience, we are implementing a multi-year, ATO-wide program. This is transforming our approach to deliver an integrated experience for clients, recognising that a single person may be interacting with us in various roles. We call the series of interactions a client has with us ‘the pipeline’. There are a number of ‘pipes’ taxpayers may move through as they deal with us around particular matters. We are committed to understanding the end-to-end experience they have with us - from lodgment, to disputes and debt management, to their lodgment again next year.

As a starting point, we conducted a pilot to examine the experience for certain groups of taxpayers who don’t meet their lodgment obligations. Working closely with the tax and BAS agent community, we also applied the pipeline methodology to the new Cash Flow Boost stimulus measure, to ensure the process was as efficient and effective as possible.

Complementing our pipeline reviews, is an increased focus on actions that can have the highest client impact to the unintended detriment of the client. By improving our understanding of the potential impact of these interactions, we can design the right safeguards to deliver services better cognisant of the client’s circumstances. In these interactions, our staff consider not only the power they can apply, but whether they should apply it in a particular situation in preference to alternatives available to resolve the issue. This initiative also allows us to identify opportunities for systemic improvements earlier in the pipeline, which will reduce the need for high client impact actions.

Some clients will disagree with our assessment of their tax and superannuation system obligations. We aim for our dispute resolution process to build trust and confidence within the community that our decisions are fair, reasonable and made in accordance with the law. To support the Better as Usual program, we improved the way we collate information from objections, facilitation,

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Dispute Assist and complaints. This allows us to develop actionable insights to improve our client engagement and ultimately reduce the proportion of actions that result in objections and complaints.

For more information on the numbers of disputes, see Appendix 3.

By improving the digital channel experience, we can also improve the way we provide information to clients. Our goal is to optimise the channels to achieve the best outcome for clients, reducing the scope for error and the administration effort required of them and us. We continued our five-year program to digitise more of our outbound communications and significantly reduce reliance on non-preferred channels.

The implementation of Single Touch Payroll (STP) provided employers (and tax practitioners) with digital end-to-end services to report payroll and superannuation information and allowed this payroll data to be pre-filled into individuals’ income tax returns and business activity statements.

As at 30 June 2020, over 707,000 or 86% of employers were reporting through STP, comprising 99% of employers with 20 or more employees and 82% of employers with 19 or fewer employees. We received 10.8 million income statements from 196,000 employers during Tax Time 2019, on behalf of over 8.6 million individuals, some of whom had multiple employers.

STP was a key enabler for the JobKeeper program. Having the majority of all employers across Australia reporting their salary and wage information through STP provided a level of inbuilt integrity across the program and improved the experience for those employers through pre-populated STP data.

STP has been recognised through the Institute of Public Administration Australia (IPAA) Awards 2020, awarded as the winner in the category for ‘Culture and Capability’, demonstrating the innovation and scale of the program and the broader cultural change for the ATO and businesses.

More information about STP is available at ato.gov.au/STP.

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Strategic objective: C2 Client

We work with and through others to deliver efficient and effective tax and superannuation systems

Overview

Our goal is to make it as easy as possible for clients to meet their tax and superannuation obligations and to interact with our systems when they need to in a seamless way. Working closely with tax practitioners and digital service providers, not only makes our role as an advocate for change easier, we can build better tools that support our clients, whether they deal with us directly or through a third party.

It is also important to maintain a strong relationship with our international counterparts so effective action can be taken when people attempt to use jurisdictional borders to block our effective administration.

The ‘working together’ measure for strategic objective C2 fully met the performance target.

Strategic initiatives summary

It is becoming increasingly possible for individuals and businesses to meet tax and superannuation obligations as part of their day-to-day activity. We are enhancing the digital ecosystem, by integrating more digital services into existing systems, including payroll systems, accounting software, practice management software and superannuation funds. Enhancement includes both expanding and assuring the digital ecosystem. We have seen the benefits of the integrated and streamlined ecosystem through Single Touch Payroll.

We continued to work with the New Zealand Ministry of Business Innovation & Employment to implement a standardised approach to e-invoicing, based on the Pan-European Public Procurement On-Line (PEPPOL) interoperability framework, for use within Australia and New Zealand. E-invoicing enables the direct exchange of invoices between the financial systems of suppliers and buyers, helping to create a seamless Trans-Tasman business environment. The ATO became a PEPPOL Authority on behalf of the Australian Government in October 2019.

E-invoicing will improve business cash flow through faster payments and processing times and delivers significant benefits to suppliers and the government by reducing transaction costs.

E-invoices were first received by Australian government agencies in December 2019 and the ATO became e-invoicing-enabled in June 2020. By the end of 2019-20, the Australian PEPPOL Authority had accredited 13 providers as access points to deliver and translate electronic documents or messages and was assessing a further 18 applications.

For more information on e-invoicing:

ƒ for software developers, see softwaredevelopers.ato.gov.au/e-invoicing ƒ for businesses, see ato.gov.au/business/e-invoicing.

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We continued our ongoing work to improve our digital services for agents. We transitioned all tax and BAS agents to our Online services for agents and decommissioned the Tax and BAS Agent portals. This provides a more reliable and personalised service and a consistent user-interface across ATO Online platforms, as well as the ability to conduct more transactions online in real time.

With the availability of the new myGovID digital identity credential, tax practitioners were better positioned to access government online services securely and remotely, particularly in the COVID-19 environment.

Our work in improving digital services for tax practitioners via software and online was recognised in:

ƒ the iTnews Benchmark Awards 2020 - with the ATO named a finalist in the category of ‘Best Federal Government Project’ ƒ the Digital + Technology Collective 2019 AMY Awards - with Online services for agents selected as the winning entry in the category of ‘Utility’, an award for the best in tools, apps, online

services and other digital offerings devoted to simplifying, streamlining or just improving the daily life of clients.

We were able to achieve this through our close partnership with tax practitioners and software developers.

Our 2019-20 corporate plan introduced a new initiative to deliver online services for business. By replacing the Business Portal with our ATO Online platform, we will be able to introduce additional tailored services. During 2019-20, all key milestones and readiness activities were met. These include high-level design, mapping out the change and transition approach, and planning for beta testing with specific users in readiness for Online services for business being released in 2020-21.

Support for tax practitioners extends beyond providing a better way to interact with our systems. Another factor is ensuring those who are doing the right thing are not disadvantaged by those who are not. Our Intermediaries engagement and assurance strategy and tax practitioner model are used to inform our interactions with tax agents and reflect the level of risk we see in their client base, their business practices and their own tax affairs. We also improved the way we work with key partners in the system, such as the Tax Practitioners Board (TPB) and professional associations, giving them visibility of our tax practitioner model.

In response to the introduction of the COVID-19 stimulus measures, we focused on a ‘disrupt and protect’ strategy to identify and deal with tax practitioners exploiting those measures. We developed a rolling assurance approach to refine our view of risk and tailored treatment approaches throughout each phase of the administration of the payments.

The ATO and TPB are enhancing the integrity of the system through activities such as data sharing, ensuring that our separate roles are coordinated in applying strategies to address risks, and improving guidance material and communications. Throughout the year, we worked closely with the TPB to share intelligence early and ensure that the activities of the highest risk practitioners are addressed, implementing the Joint Compliance Program. In 2019-20, the ATO made actionable referrals related to around 300 tax agents and unregistered preparers.

Through our international partnerships with other tax administrators, we share information to influence tax reform and identify global trends and best practices. In 2019-20, our international program included our participation as members of the Organisation for Economic Co-operation and Development (OECD) - including its Forum on Tax Administration and the Joint International Taskforce on Shared Intelligence and Collaboration (JITSIC), which we chair. We met with revenue agencies in North America, Europe and South East Asia.

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We provided advice to jurisdictions adopting the Australian cross-border framework approach to managing consumption tax, including Thailand, Norway, Singapore, the European Union and New Zealand.

Closer to home, we worked with multilateral organisations, such as the Study Group on Asian Tax Administration & Research (SGATAR) and Pacific Islands Tax Administrators Association (PITAA). Through our involvement in official development programs, we provided assistance to Indonesia and Papua New Guinea in 2019-20. We hosted several delegations - including Indonesia, China, Malaysia, Cambodia, Korea, New Zealand and Vietnam - and ran our inaugural Multilateral Partners Program Workshop with 37 participants from 13 jurisdictions, sharing insights and discussing key issues affecting revenue administrations.

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Strategic objective: W1 Workforce

We are a high-performing, responsive and professional workforce with the right culture and capability to deliver now and for the future

Overview The ATO provides staff with support and strategies to help transform our workforce and culture so we can deliver existing and future programs and commitments, with the right balance of capability to deliver the best client and staff experiences. We aim to drive a positive cultural change, with a focus on integrity, to foster collaborative and contemporary ways of working.

Of the three performance measures for strategic objective W1, we fully met one target, substantially met one target, and the target was unavailable for one measure.

Strategic initiatives summary Our future workforce needs to be able to respond to a rapidly changing internal and external environment with a strategic and holistic approach to workforce planning that supports delivery now and into the future. We launched our 2024 Workforce strategy in August 2019, through a range of channels to maximise engagement with our people.

The strategy has allowed us to start developing operational workforce plans across the ATO, tailored for our different business areas. This work will continue in 2020-21. The plans are underpinned by insights from our data and are now guiding or, in some cases, triggering:

ƒ targeted recruitment and engagement activity ƒ development of attraction strategies that build on the ATO employee ‘value proposition’ ƒ capability assessment and development activities ƒ succession and talent management approaches.

In line with our Workforce Strategy objectives, and in recognition of the capability our staff have, we have facilitated large workforce shifts across the ATO to deliver on economic stimulus packages (such as JobKeeper) and our response to COVID-19 more broadly. We have also supported other APS-wide workforce shifts and played a critical role in the APS-wide Productivity Data Working Group, which commenced in June 2020.

We commenced a review of our learning and development planning and relaunched the ATO’s Professional Stream approach, ensuring links to the broader APS model. We are developing new tools to assist in identifying and prioritising learning and development to ensure we have the right mix of skills to continue delivery for government and the community.

Key elements of our approach in refining our enterprise capability framework include:

ƒ developing role-specific information across the ATO, identifying core skills and portable job-specific skills, and mapping these to approximately 600 job profiles - work continues to define essential knowledge requirements for roles across the organisation

ƒ undertaking staff capability appraisals during operational workforce planning processes, providing richer data to support workforce shifts, planning, targeted skills development and talent management. Approximately 6,600 staff had completed capability appraisals by the end of June.

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Building on the APS Review, 2019 saw the launch of a more structured approach to the continued professionalisation of the APS workforce. ATO chief operating officer Jacqui Curtis was appointed as the first head of profession for Human Resources (HR), taking on the additional responsibility of leading work to bring together, invest in, and build an expert HR workforce that is valued for its professional expertise and ability to deliver outstanding people outcomes across the service.

Key elements of the HR Professional stream strategy progressed to date include establishment of the HR Professional Stream Network, the regular publication of an engaging professional newsletter focused on creating connections across the service and building capability, the development of a whole-of-APS HR graduate recruitment and development program, a speaker series to promote sharing of expertise, and the implementation of one of the strategy’s key initiatives, ‘Getting it right from the start’, designed to improve the recruitment and selection of strategic HR leaders for public service.

In September 2019, we launched our 2024 Culture strategy to clarify our focus on culture and integrity. To achieve our 2024 aspirations, we are prepared to take well considered risks, adapt to our changing environment and continue to learn as we evolve. We want to be an organisation that collaborates, holds ourselves accountable and operates as one - and as part of a broader system.

Building on this initiative also recognises we need to address the cultural traits that hold us back. This year, we worked across the ATO to identify and address lower levels of engagement and cultural alignment. At the end of 2019, we were seeing a consistent upward trend in alignment o employees with cultural traits and high employee engagement scores.

In transitioning to the COVID-19 environment, our cultural traits have provided a base to position our staff engagement. The cultural themes of client service, accountability, flexibility, adaptability, and working better together have been consistent throughout our staff communications. We received substantial feedback from the community and government on our positive culture as our staff shifted to respond to the crisis. Our June 2020 staff engagement survey showed strong improvements in employee engagement, culture and commitment to the ATO.

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Strategic objective: W2 Workforce

We provide the right tools and workspace so staff can deliver the best client experience

Overview

We are committed to providing our staff with contemporary tools that make it easier for them to help our clients and collaborate with each other. The tools we had invested in during 2019 meant we were well placed to support our workforce as we shifted rapidly to working from home in March 2020 in response to the COVID-19 pandemic.

The ‘staff experience’ measurement target for strategic objective W2 was unavailable this year.

Strategic initiative summary

Significant investment in new systems to improve the staff experience continued in 2019-20. The right tools mean our staff are more effective in their roles.

This year, we completed the organisation-wide refresh of our desktops and laptops.

The upgrade to our hardware and software has paved the way for new contemporary collaboration tools, which are a significant step in assisting the ATO in becoming more streamlined, integrated and data-driven. By June 2020, we had:

ƒ upgraded to Office 365 across 26,000 computers ƒ modernised the ATO’s telephony platform, with the rollout of over 31,400 new desk and meeting-room phones across all sites to improve the experience for our staff and clients.

In addition, over 6,500 staff now use the Communication Toolbar, an enterprise-wide solution that lets staff manage client interactions across multiple channels from one place.

Our plans for introducing new tools were revised with the outbreak of COVID-19 and the need to support our staff as they shifted to working from home. We re-prioritised the tools we were developing and releasing.

ƒ We rapidly rolled out a new remote desktop application (RDA) solution across the organisation to supplement the existing virtual desktop platform (VDP) solution that had reached its capacity. This allowed more employees to log into their office desktop computers remotely from home.

— In the 12 months leading up to the pandemic, each day approximately 1,800 employees used the VDP solution that enabled remote access and working from home. The new RDA solution from March enabled rapid growth in working from home arrangements.

— By early April 2020, approximately 13,500 employees were working remotely each day, using either RDA or VDP, and this increased to approximately 14,500 employees per day by the end of June.

ƒ Equipment, such as laptops and monitors, was provided on a prioritised basis to enable staff to work from home where they were unable to come to the office and could be productive from home but did not have the necessary hardware.

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ƒ The rollout of Microsoft Teams was accelerated to support staff in collaborating and staying connected while working remotely. Between 2 April and 30 June 2020, staff had used Microsoft Teams for 770,000 instant messages, 21,000 group calls, 48,000 calls between individuals, and 9,000 meetings.

ƒ As the majority of ATO staff began to work from home, we used a variety of media to connect with them and to encourage productivity and engagement.

— To help support staff and managers, we created ‘Supporting our People’, a series of 17 webinars, which were viewed over 14,000 times by 30 June 2020. — To promote health, wellbeing and connectivity, we ran the ‘Keeping Connected’ campaign led by the Chief Operating Officer, using online media, such as webinars, newsletter articles, tip

sheets and screen savers. — Recognising that daily interactions are an important part of our working life, we created a new ‘virtual office’ Yammer group to help staff stay connected and feel supported as they adjusted to working remotely.

Our new Townsville office which opened in mid-June 2020, was designed to provide staff with technology that supports flexibility in working, complemented by access to sit-stand desks for all staff, in a fit-for-purpose workspace. Changes to our accommodation are designed to ensure we have the right environment to meet ATO business needs now and into the future, while achieving value for money and efficient, effective and ethical management of Commonwealth property, as required under the Commonwealth management property framework.

We were finalists in the Mumbrella CommsCon Awards 2020 for our ‘Rethink’ campaign, which used humour to encourage staff to do the basics brilliantly, take ownership and initiate grassroots change. This shift in how we connect with staff was the result of a communications ‘rethink’. It has built a bond between staff and the organisational journey that continues to deliver positive outcomes.

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Strategic objective: O1 Operational

We use data, information and insights to deliver value for our clients and inform decision-making across everything we do

Overview

Our transition towards being a streamlined, integrated and data-driven organisation relies on having the right data available for our staff and clients, and the right tools and capabilities to understand and use the data in innovative ways. We also need to provide assurance that our use of data is ethical and soundly governed.

We are embracing new technologies, including data-learning programs, to ensure our staff have the data, insights and skills needed to work smarter and improve interactions with clients. Our use of automation, artificial intelligence and sophisticated analytical techniques help us better understand our clients and provide the tailored and timely services they expect.

The measure for strategic objective O1 fully met the performance target.

Strategic initiatives summary

Data and analytics are a key priority for the ATO. We have been developing our data backbone - the infrastructure and tools to continue to manage, use and share information across our organisation. This needs to be scalable and flexible to cope with increasing data needs.

In recent years, we have focused on enterprise-wide client data, one component of our data backbone, to provide timely and accurate information to help staff perform their role. The Enterprise Client Profile (ECP) tool provides staff with access to a range of client facts and insights. It generates consistent and timely information in a contemporary way and can be tailored to specific work requirements. We have around 13,000 staff currently using ECP, with users accessing the system over 70,000 times a day. ECP helps guide staff and ensure a more empathetic treatment of clients - for example, those faced with difficulty meeting their obligations due to the COVID-19 pandemic.

While our data backbone is about the infrastructure to manage our data, analytics integration is about using data to help us to work smarter and deliver better outcomes for the community. Data analytics is increasingly integrated in work across the ATO.

We ran our inaugural Data and Analytics Expo for staff in November 2019. This included webinars, a ‘hackathon’, demonstrations of our latest tools, and a panel discussion looking at the complexities of data ethics to answer the question of ‘how far is too far’. In June 2020, we introduced Data and Analytics as a new professional stream within the ATO, providing strategic direction on workforce capability development. This new professional stream covers data analytics, data management, data science, data engineers and revenue analysis. Analytics integration will transform the nature of ATO work and the outcomes we deliver.

Our data democratisation and visualisation strategy aims to give staff access to the trusted data they need in a faster and more effective way. This will make it easier for them to draw insights for well informed and timely actions in supporting the community.

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We are progressing new and innovative ways of using automation and artificial intelligence to improve decision-making, streamline business processes and automate repetitive tasks. Machine learning and robotic process automation (RPA) technologies provide opportunities to increase our understanding of client behaviours and create efficiencies for more repetitive tasks. In 2019-20, we undertook scoping, governance, funding and delivery planning for implementing RPA at scale in the ATO. We will continue to look for new ways to use our existing technology and new tools to expand our capability.

Underpinning the use of our data is the need for sound data governance and ethics, to ensure we maintain the trust and confidence of the community. In 2019-20, we developed our overarching data governance model and drafted principles for our Data ethics framework (with contributions from the ATO’s Integrity Advisor and across our organisation). Data governance also applies to the sharing of data and intelligence with our external partners. We worked with digital service providers to publish our Reasonable use of ATO digital services policy, which ensures services are used appropriately and system access is available.

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Strategic objective: O2 Operational

Our technology and digital services deliver a reliable and contemporary client experience

Overview

Meeting community expectations that our systems will be secure and available when required, and on a variety of platforms, is an ongoing challenge. Our focus has been on making it easier for our clients to interact with us, as well as updating the systems we use to manage the tax and superannuation systems.

The ‘availability’ measure for strategic objective O2 fully met the performance target.

Strategic initiatives summary

By improving ATO IT systems we can keep pace with technology and the exponential growth in the digital economy, and meet the changing needs of our clients and staff. Our IT systems underpin many of our initiatives. In response to the surge in demand for ATO online services following the announcement of the COVID-19 stimulus measures, we worked closely with our partners to increase the capacity of key ATO systems.

Our staff experience was enhanced through hardware and software improvements, including the rollout of new desktop computers and laptops, telephones and a communications toolbar allowing over 6,500 staff to manage client interactions across multiple channels from one place. Having these tools in place contributed to the ATO’s ability to respond to the demand for our services arising from the COVID-19 pandemic, when we received record-breaking daily call volumes. Our staff were able to manage community interactions across all channels while working remotely. For more information, see W2 on page 27.

We brought together our client systems into a single client accounting system. This transitioned almost 17 million activity statement accounts, consisting of around 6 billion individual records, into the same system we were already using for income tax and superannuation. This was one of the largest and most complex data conversions in ATO - and APS - history. Planned enhancements include the incorporation of enterprise payments and receivable management using ATO data science and analytic modelling. As part of this, ‘Decision Optimisation’ technology will allow us to tailor our interactions with clients and select the best treatment strategy based on risk and previous compliance history.

With rapid growth in online activity, there is greater need for governments to be able to verify the digital identity of individuals and businesses. It also brings greater opportunity for fraudsters to steal and sell personal data. The ATO continues to invest in securing taxpayer information through robust identity, authentication and authorisation platforms.

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In June 2019, we delivered myGovID and RAM as a new whole-of-government identity solution for individuals and businesses. This enabled the replacement of AUSkey as the log-in credential for businesses by March 2020. Access to participating online services now requires an individual to obtain a verified digital identity (myGovID) and establish who is authorised to act on behalf of a business online (via RAM). In the future, this will provide the option for people to use digital identity as an alternative to the legacy myGov credential for individual services.

The major elements of our digital identity solution are:

ƒ myGovID - a digital identity credential that is unique to an individual and is used to access online government services for business purposes ƒ Relationship Authorisation Manager (RAM) - a system that enables an individual to act on behalf of a business with government online services and businesses to manage all their business

authorisations in one place ƒ Business Authentication Manager (BAM) - a system that enables government agencies to accept digital identity and user authentication from their portal ƒ the new machine-to-machine solution (M2M) - which leverages myGovID and RAM and has been

implemented by digital service providers, already enabling millions of client transactions per day.

The transition from AUSkey to myGovID and RAM exceeded expectations on all indicators, including client adoption, usage and sentiment and has provided increased security. It has led to a reduction in calls to our contact centres. Having myGovID and RAM in place became a critical enabler for a range of stimulus measures, including cash flow boost and JobKeeper payments for businesses. By 30 June 2020:

ƒ over 1.4 million users had set up their myGovID ƒ over 1.6 million authorisations were established for 1.1 million unique ABNs in RAM ƒ 28 Commonwealth and state agencies and 51 services onboarded to myGovID and RAM ƒ 370 digital service providers (DSP) - including accounting software providers and super gateways -

had transitioned all their services to the new machine credential for software interactions ƒ over 55 million authentication events were facilitated by myGovID and RAM to enable businesses to access online and machine-to-machine services such as Standard Business Reporting.

Improving our security capabilities - in terms of cyber and other security threats - is an ongoing priority. In 2019-20, we upgraded our network access controls, increased the visibility of inbound email traffic to our security systems, and extended our system and network asset information to allow better analysis of potential vulnerabilities. In December 2019, the ATO executed a new service contract with a Secure Internet Gateway provider for ATO services and applications. The new gateway will improve the ATO’s security posture and scalability to expand into cloud services by providing a more agile and resilient solution to meet current and future security threats.

As a major provider of data and services, we allow DSPs to access our systems through their software if they comply with our DSP operational framework. To secure our digital ecosystem, we completed 255 annual reviews of compliance with the framework and assessed a further 81 new DSPs as being compliant. We partnered with the Australian Business Software Industry Association (ABSIA) to implement Security Standard for Add-on Marketplaces (SSAM) to improve the security posture of the broader industry.

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Strategic objective: F1 Financial

We strive for operational excellence to achieve efficiency and quality outcomes

Overview

We are committed to efficiently delivering high quality outcomes, boosting our operational productivity through improved data quality and more streamlined systems and processes. This ensures we can meet client expectations in a cost-effective way, reduce operating costs and achieve better value.

Of the two performance measures for strategic objective F1, we fully met both targets.

Strategic initiative summary

As an organisation, we are passionate about driving operational excellence and delivering benefits for our staff and clients. We achieve operational excellence by making better use of what we have (such as our data and resources), eliminating irritants in our systems and processes, and fostering a ‘continual improvement mindset’.

In 2019-20, we developed case studies to map and test smaller change processes, enabling us to refine how we manage these smaller changes, including how we record, track and report on new ideas.

We recognise innovation as a core skill across the ATO. Our annual Innovation Month encourages staff to propose new ideas and ways of working. This year, one such change - improving our processing to speed up payments made through the Small Business Superannuation Clearing House - has resulted in superannuation guarantee payments reaching super fund accounts sooner, maximising employees’ retirement savings.

Additional process improvements are identified through quality assurance activities across the ATO as part of our Better as Usual program. In 2019-20, we started testing an operating model for quality improvement, which includes:

ƒ a centralised register of enterprise-wide insights about the client and staff experience ƒ a robust and consistent assessment and prioritisation framework ƒ governance and accountability principles and approaches.

Our goals are to improve the experience clients have when interacting with us, streamline our processes, and improve our quality and timeliness.

We continued our work to replace our outbound paper correspondence with electronic options and find ways to update our content more efficiently. In March 2020, we finalised development and deployment of a tool - the campaign portal - which enables us to build and issue some of our high-volume bulk communications within much shorter time frames. This has proved critical in the development of many bulk communications about COVID-19 stimulus measures.

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We continued to develop our strategic procurement capability in line with the Commonwealth procurement rules and industry best practice. With our strong commitment to continuous improvement, this year we further refined our Procurement Capability Program to mature procurement related skills and knowledge across the ATO and deliver value for money outcomes. With so many active contracts to support our successful operation, we are conscious of our responsibility to ensure integrity in our procurement supply chain and deliver social outcomes. We focus on building collaborative partnerships that create value for the ATO and our providers, and we are proud of the positive social impacts supported through our supplier diversity initiatives.

As the government responded to the COVID-19 pandemic, the ATO has seen an increased demand for our services this year, including:

ƒ a dramatic increase in calls to our helplines ƒ work associated with the development and administration of new stimulus measures.

In response to the increased demand, we re-prioritised our work and resources to manage the costs of our COVID-19 response within our 2019-20 appropriation. Some work has been slowed or paused, while other activities were accelerated, such as the implementation of IT solutions to enable our staff to work remotely. To do so, we have drawn on initiatives implemented in the past few years to be a more efficient organisation with a clear focus on what it takes to deliver our services.

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Performance results overview The ATO has 20 measures for Program 1.1 to demonstrate how well we are achieving our purpose. These are set out in the Australian Taxation Office Budget Statements in the Treasury Portfolio Budget Statement (PBS), and in the ATO corporate plan 2019-20.

Our results for 2019-20 show a year of strong performance in an extremely challenging environment.

All ATO measures had a 2019-20 performance target, and the target was fully achieved for 14 measures, substantially achieved for one measure, and not achieved for three. The target result is not available for two measures as they rely on results of the APS census, which was not conducted this year.

In 2020-21, we will build on the progress we have made this year, continuing to support Australia’s economic recovery, serving our clients through these difficult times, and administering the tax and superannuation systems for the benefit of all Australians.

The intention of the annual performance statement is to report on the performance criteria included in the PBS and corporate plan to accurately reflect the performance of the ATO in achieving its purpose. In considering our overall assessment of fostering willing participation we look at:

ƒ the complexity of the tax and superannuation environment and how our activities influence the behaviour of clients in meeting their obligations ƒ the interrelated nature of performance criteria - results should be viewed as a suite of indicators, rather than in isolation

ƒ the use of estimates for some criteria.

It is also important to look at trends in the results over time, both in absolute terms and relative to the performance target for the relevant year. We assess our performance targets annually to determine where existing results are expected to be maintained and where future performance is expected to be stronger. We will continue to monitor and assess performance as we build on the outcomes we have achieved to date.

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Performance results

Our performance criteria are set out on pages 188-191 of the Australian Taxation Office Budget Statements (in the Treasury PBS), and pages 4-12 and 21-22 of the ATO corporate plan 2019-20.

TABLE 2.1 Performance results, 2017-18 to 2019-20

Results Target

Performance criterion Source 2017-18 2018-19 2019-20 2019-20

G1: We build community confidence by sustainably reducing the tax gap and providing assurance across the tax and superannuation systems

Confidence - community confidence in the ATO PBS 188 CP 4, 21

65/100 66/100 65/100

Registration - proportion registered in the system PBS 188 CP 4, 21

The ATO aims to ensure that all entities required to participate in the tax and superannuation system

are registered on the ATO client register

ƒ companies 66.2% 66.1% 66.1%

ƒ individuals 105.8% 105.9% 106.0%

Lodgment - Proportion lodged on time PBS 189 CP 4, 21

ƒ activity statements 77.6% 76.9% 74.6% 78% activity

statements

ƒ income tax returns 83.0%

(2016-17 returns)

83.5% (2017-18 returns)

83.9% (2018-19 returns)

83% income tax returns

Payment - Proportion of liabilities paid on time by value

PBS 189 CP 4, 21

89.5% 89.9% 88.7% 88%

Correct reporting - Tax gap as a proportion of revenue

PBS 189 CP 4, 21

See

Commissioner of Taxation annual report 2017-18

(page 79) for detailed information

See

Commissioner of Taxation annual report 2018-19

(page 50) for detailed information

See page 62 for detailed information

Reduce the gap to a level as low as practicable given the nature and complexity

of the law and the resources available

Debt - Ratio of collectable debt to net tax collections

PBS 189 CP 4, 21

5.7% 5.7% 6.7% Below 5.5%

Total revenue effects - Tax revenue from all compliance activities

PBS 189 CP 4, 21

$16.0b $15.3b $13.7b $15b

Tax assured — Proportion of the tax base where the ATO has justified trust that tax paid is correct based on the proportion of income, deductions and tax offsets assured

PBS 189 CP 4, 21

See

Commissioner of Taxation annual report 2017-18

(page 82)

See

Commissioner of Taxation annual report 2018-19

(page 52)

47.6%

(2017-18 year)

See page 65 for detailed information

Increase the proportion of the tax base where the ATO has justified trust to a level as

high as practicable given the nature and complexity of the law and resources available

G2: We design for a better tax and superannuation system to make it easy to comply and hard not to

Influence - Government and Treasury perceptions of the ATO and the quality of our advice

PBS 189 CP 5, 21

Satisfactory Good Very good Good

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TABLE 2.1 Performance results, 2017-18 to 2019-20 continued

Results Target

Performance criterion Source 2017-18 2018-19 2019-20 2019-20

C1: Our client experience and interactions are well designed, tailored, fair and transparent

Compliance cost - Adjusted median cost to individual taxpayers of managing their tax affairs

PBS 190 CP 6, 22

Unchanged(a) (2016-17 returns)

Unchanged(b) (2017-18 returns)

2.5%

decrease (2018-19 returns)

Remain steady

Digital - Proportion of inbound transactions received digitally for key services

PBS 190 CP 6, 22

88% 89% 91% 90%

ƒ income tax returns 97% 97% 98% -

ƒ activity statements 82% 85% 88% -

ƒ tax file number (TFN) registration 96% 97% 97% -

ƒ payment arrangements 25% 28% 48% -

ƒ ABN registrations 100% 100% 100% -

ƒ role registrations 73% 75% 70% -

ƒ ABN cancellations - 67% 62% -

ƒ DASP applications - 100% 100% -

ƒ role cancellations - 81% 77% -

ƒ TPAR lodgments - 36% 64%

ƒ Client Register updates - - 90% -

C2: We work with and through others to deliver efficient and effective tax and superannuation systems

Working together - Partner perceptions of how the ATO is working together with them to administer the tax and superannuation system

PBS 190 CP 7, 22

- 64/100 67/100 Equal to or better than

the 2018-19 result

W1: We are a high-performing, responsive and professional workforce with the right culture to deliver now and for the future

Culture - Level of employee engagement(c) PBS 190 CP 8, 22

6.9/10 6.9/10

(72%)

78% Equal to or better than the average result for large agencies

Gender equality - Female representation in the following classification levels

PBS 190 CP 8, 22

ƒ senior executive service (SES)

44.2% female

55.8% male

44.9% female

55.1% male

46.6% female

53.4% male

Approx. 50% of SES

ƒ executive level (EL) 48.6% female

51.4% male

49.1% female

50.9% male

50.2% female

49.8% male

Approx. 50% of EL staff

Indigenous representation - Proportion of ATO staff who identify as Indigenous

PBS 190 CP 8, 22

2.1% 2.5% 2.3% 2.5%

W2: We provide the right tools and workplace so staff can deliver the best client experience

Staff experience - Employee perceptions around whether they have access to the tools and resources needed to perform well(c)

PBS 190 CP 9, 22

63% 86% Equal to or better than

the average result for large agencies

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TABLE 2.1 Performance results, 2017-18 to 2019-20 continued

Results Target

Performance criterion Source 2017-18 2018-19 2019-20 2019-20

O1: We use data and insights to deliver value for our clients and inform decision-making across everything we do

Tax returns - Proportion of items that are pre-filled PBS 190 CP 10,

22

87.5% 87.9% 87.1% 85%

O2: Our technology and digital services deliver a reliable and contemporary client experience

Availability - Key digital systems availability PBS 190 CP 11,

22

99.4% 99.5% 99.7% 99.5% (excluding

planned outages)

F1: We strive for operational excellence to achieve efficiency and quality outcomes

Budget - ATO manages its operating budget to balance

PBS 191 CP 12, 22

1.0% deficit

0.1%

deficit

0.2% surplus +/- 0.6% of budget allocation

Cost of collection - Cost to collect $100 PBS 191 CP 12,

22

$0.74 (incl GST)

$0.67 (excl GST)

$0.71 (incl GST)

$0.64 (excl GST)

$0.66 (incl GST)

$0.62 (excl GST)

Consistent with trend

Target achieved Target substantially achieved Target not achieved Result or target not available - = New, not previously reported in the annual report for the given years

Notes (a) The unchanged result for 2017-18 reflects a less than 0.1% change in the adjusted median.

(b) The unchanged result for 2018-19 reflects a 0.2% increase in the adjusted median.

(c) The target is not available this year as it relies on APS census results for other large agencies, which has not been run for 2019-20.

Results analysis

Confidence - community confidence in the ATO

For the first three quarters of 2019-20, community confidence in the ATO was tracking on target, with an average score of 65/100. This is consistent with previous years.

In the final quarter, coinciding with the government’s response to COVID-19, community confidence increased to 69/100 indicating confidence in our ability to deliver COVID-19 stimulus packages, while maintaining the quality of the tax and superannuation systems.

The overall confidence score for 2019-20 was 66/100, which is slightly higher than the 2018-19 score of 65/100, and slightly above the target of 65/100.

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Registration - Proportion of companies and individuals registered in the system

Companies This measure compares the number of companies registered by the ATO to the number of companies registered by the Australian Securities and Investments Commission (ASIC).

Not all companies that are registered with ASIC have taxation and reporting requirements. This is due to the nature of their corporate structure or because they are not operational yet. Therefore, the proportion of companies registered in the system is always expected to be well below 100%.

This measure remained fairly stable, with no significant change in 2019-20. This is expected, as the ATO-ASIC Registered Company client population continues to trend in line with Active Company Registrations data direct from the ASIC website.

Individuals This measure compares active Individual clients (aged 15-64) in the ATO Client Register, to the ABS Estimated Resident population within the same age group.

The trends in registration of individuals are closely aligned to population growth. The proportion remains fairly stable, with no significant change during 2019-20.

The proportion is always expected to remain above 100% for the following reasons:

ƒ The ATO’s definition of a ‘resident’ captures a greater number of people than the ABS estimated ‘resident’ population, because the duration of time spent in Australia to be considered a resident by the ATO is shorter than that required for the ABS definition.

ƒ The ATO currently has difficulties identifying and deactivating tax file numbers (TFNs) for expatriates, resulting in unused TFNs within the system. The ATO does not currently receive information relating to expatriates exiting the country.

Lodgment - Proportion of activity statements and income tax returns lodged on time

Activity statements On-time lodgment performance for 2019-20 activity statements finished the year at 74.6%. This is 2.3 percentage points below the 2018-19 end-of-year result and 3.4 percentage points below the end-of-year target of 78%.

The 2019-20 bushfires and the effects of the COVID-19 pandemic across Australia, particularly for small business, were significant factors. By volume of activity statements, small business is the largest segment, so a change in on-time lodgment behaviour for small business has a significant impact on the on-time lodgment performance across the overall population.

Income tax returns On-time lodgment performance for 2018-19 income tax returns finished the year at 83.9%. This is an improvement of 0.4 percentage points, compared to the 2018-19 end-of-year result for 2017-18 income tax returns. This result is 0.9 percentage points above the end-of-year target of 83%.

The trend of increased on-time lodgment of income tax returns is due to ongoing improvements in end-to-end strategies, including tax time messages, an increase in the quantity and timeliness of pre-fill data, and tailored client engagement designed to encourage a change in lodgment behaviour.

In addition, a higher proportion of individuals are lodging before the due date to access the low to middle income tax offset, which is available over a four-year period commencing from the 2018-19 income year.

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Payment - Proportion of liabilities paid on time by value

In 2019-20 (to 30 June 2020) the proportion of liabilities paid on time by value was 88.7%, which is 1.2 percentage points lower than last year. This result was still above the target of 88%.

This slight decrease in performance is reflective of the broader economic environment, which has been impacted by droughts, bushfires and the COVID-19 pandemic. However, the fact that the decrease was minimal and the result is still above target indicates that the majority of the community who had the capacity to pay continued to meet their obligations on time.

Correct reporting - Tax gap as a proportion of revenue

Tax gaps are an estimate of the difference between the amount the ATO collects and we would have collected if every taxpayer was fully compliant with tax law.

As these are estimates, previous year figures may be revised upwards or downwards.

The latest tax gap estimates are for the 2018-19 year or earlier. Any impacts from the bushfires and COVID-19 will materialise when we report the estimates for the 2019-20 tax year.

For more information, refer to page 62 of this report.

Debt - Ratio of collectable debt to net tax collections

At 30 June 2020, the ratio of collectable debt to net tax collections was 6.7%. This is an increase from last year’s measure of 5.7%. The increase to the measure is a result of an increase to the collectable debt and a decrease in the net tax collections. The deterioration in performance is reflective of the broader economic recessionary environment, caused by substantial natural disasters and the COVID-19 pandemic.

Total revenue effects - Tax revenue from all compliance activities

The total revenue effects measure is an estimate of the additional tax revenue that comes from our client engagement activities and is a combination of audit yield and wider revenue effects.

In 2019-20, total revenue effects was $13.7 billion against a performance target of $15 billion. Our results for the first six months to December 2019 indicated we were likely to exceed our target for the year. However, changes to our approaches to assist taxpayers impacted by natural disasters and then COVID-19 meant that we were only just above plan by the end of March 2020. In the final quarter, COVID-19 led to the ATO implementing changes to our approach in order to support the community including:

ƒ introducing deferrals for impacted clients and pausing our firmer action work, except for high risk clients, and stopping all outbound campaigns relating to debt and lodgment ƒ redeployment of our client engagement staff to support delivery of the government’s stimulus measures

ƒ pausing and slowing down of interventions and other compliance-related activities other than those initiated by the client.

These factors, combined with reduced capacity for many Australians and their businesses to pay compliance liabilities raised before the onset of COVID-19, led to a significantly lower than planned quarter four, resulting in the ATO not achieving the $15 billion target by the end of the year.

For more information, refer to page 66 of this report.

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Tax assured — Proportion of the tax base where the ATO has justified trust that tax paid is correct based on income, deductions and tax offsets assured

For the 2017-18 tax year, we estimate 47.6% of the total tax reported to be assured. In most cases, we can only assure tax reported by taxpayers once they have lodged and we have completed our data matching and one-to-one engagements.

Due to this lag effect, our estimate for tax assured is based on the 2017-18 tax year. The proportion of tax assured has increased for the third consecutive year due to the completion of more direct engagement and data matching.

Any impacts on our assurance of tax reported from the bushfires and COVID-19 will materialise when we report on the 2019-20 tax year.

For more information, refer to page 65 of this report.

Influence - Government and Treasury perceptions of the ATO and the quality of our advice

In 2019-20, the ATO and Treasury working relationship continued to mature towards being highly collaborative and sufficiently agile to promptly deliver the government’s agenda. Throughout 2020, the ATO worked closely with Treasury on the design and implementation of a suite of measures developed in response to the bushfires and then the COVID-19 pandemic. In particular, the collaborative working relationship was instrumental to the rapid design and implementation of the JobKeeper Program.

The ATO also worked closely with Treasury providing data relating to revenue collections and the economic response to COVID-19 measures. The provision of this data has been of great assistance in the analysis and design of new policy and law, including the design of JobKeeper 2.0. We received positive feedback on the quality and timeliness of our analysis and advice through our feedback channels.

Since January 2020, we have received positive feedback on the ATO’s contribution to completed measures. The ATO has provided quality assurance on new measures, assuring that proposed draft law can be interpreted consistently with the policy intent.

Our Treasury secondment program has continued to be an important initiative in developing capability for both agencies, as well as fostering collaboration and a stronger working relationship between the ATO and Treasury.

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Compliance cost - Adjusted median cost to individual taxpayers of managing their tax affairs

This measure shows any movement in the cost to individual taxpayers of managing their tax affairs.

The adjusted(a) median cost of managing tax affairs for 2018-19(b) income tax returns was relatively lower compared to the previous year (a marginal decrease of 2.5%) and the performance target is considered to be fully met. Taxpayers who do not report an amount on this label are not captured in this calculation; however, over recent years a slight declining trend has emerged in the ratio of taxpayers claiming the cost of managing their tax affairs to the total individual taxpayer lodging population.

The cost of managing tax affairs includes the costs of preparing and lodging tax returns and activity statements, fees paid to tax advisers, and the costs of tax reference material. While the impact of external market forces can influence these, our strategies for making it easier to comply, through the provision of better guidance and advice and contemporary and digital services, also influence this trend.

Digital - proportion of inbound transactions received digitally for key services

In 2019-20, our methodology for measuring the proportion of inbound transactions received digitally was broadened to incorporate updates to the Client Register, including information on:

ƒ address - business, postal and residential ƒ email ƒ phone number - after-hours, business hours and mobile.

An overall result of 91% was achieved, which exceeds the target and represents a two-percentage-point increase compared with the previous year.

The introduction of a new taxable payments annual report (TPAR) online form in June 2019 contributed to an increase of 28 percentage points in digital lodgments of the TPAR.

Online services for agents has increased the ability for agents to engage digitally using the ATO Online platform. This has resulted in a 20-percentage-point increase in digital payment arrangements.

Digital lodgments of activity statements increased by three percentage points compared to the previous year. This is partly due to online registrations for activity statement obligations now defaulting the client’s lodgment preferences to digital rather than paper. Single Touch Payroll and increasing registrations for myGov have also played a part in the increase in digital lodgments.

(a) AWOTE - average weekly ordinary time earnings (for full-time adults) is used to adjust these costs.

(b) For the 2017-18 and 2018-19 income tax return, the D10 label is split into three components:

ƒ interest charged by the ATO ƒ litigation costs ƒ other expenses incurred in managing tax affairs.

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Working together - partner perceptions of how the ATO is working with them to administer the tax and superannuation system

For 2019-20, the overall result for partner perceptions of how the ATO is working together with them to administer the tax and superannuation systems was 67/100. This is an increase of 3 points on the previous year and achieves the target of equal to or better than the 2018-19 result.

The result captures perceptions from tax professionals, APRA-regulated superannuation entities and digital service providers. Perceptions across tax professionals and digital service providers have significantly improved this year.

The improved result reflects the significant investment to enhance our digital partner experience and our response to the bushfires and COVID-19, including:

ƒ supporting our partners and their clients to successfully transition over 1.7 million users to myGovID and RAM, enabling the decommissioning of AUSkey ƒ helping over 150,000 tax agent users migrate to the new Online services for agents, providing an enhanced experience and significantly more online functionality than previously available

ƒ supporting a 652% increase in machine-to-machine transactions between our clients and the ATO, whilst also improving the performance and resilience of our core systems and infrastructure ƒ engaging with 2,000 DSP representatives in over 17 sessions within 3 months through rapid and targeted engagement to support delivery of stimulus measure initiatives in software

ƒ over 400 improvements implemented to enhance the experience of Online services for DSPs used by 465 software developers ƒ developing an improved Tax Time 2020 certification process for DSPs to consume current-year returns

ƒ establishing a dedicated mailbox for queries from tax professionals and DSPs for the stimulus measures ƒ demonstrating a more empathetic approach when engaging with the tax profession, particularly for debt and compliance activities, as well as granting bulk lodgment deferrals

ƒ recognising the diversity of the tax profession by offering differentiated transition pathways, including visits to assist regional tax practices.

Culture - Level of employee engagement

The ATO focus on strengthening its culture continued during 2019-20. While comparison with APS data is not available, internal measures have shown that our overall staff engagement continues to trend upwards. In an all-staff survey conducted in June 2020, our overall engagement score using the Say, Stay, Strive model increased to 78% when compared to the 2019 APS Census result of 72%. In addition to higher levels of engagement, results show a consistent upward trend in employees' perceptions that behaviour is aligning with ATO cultural traits.

The significant increase in the Say, Stay, Strive score may be influenced by the unifying nature of the COVID-19 pandemic. Sustained engagement results over the last few years reflect our continued investment in organisational culture, and a refreshed strategy for the next phase of our transformation.

Since the launch of the 2024 Culture strategy, which outlines how we will invest in our people, we have focused on reinforcing awareness of our cultural traits, identifying espoused behaviours, and implementing initiatives that will drive our culture forward. As a result, we have started to see shifts in behaviour that we are proud of.

Our response to COVID-19 required ATO staff to be flexible and adaptable in actioning new work, adopting new ways of working. Our response has been a testament to our people which demonstrates our progress as an organisation towards our desired culture.

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Gender equality - Female representation in the SES and EL classification levels

As at 30 June 2020, female representation in the senior executive service (SES) was 46.6%, an increase from 44.9% the previous year, and continuing a positive long-term trend.

The percentage of female staff at the executive level (EL) classifications increased from 49.1% to 50.2%, which reflects our ongoing commitment to achieving and sustaining gender equality across the ATO.

The end-of-year targets for female representation in both the SES and EL classifications are considered to be met. We acknowledge that normal fluctuations in staffing levels make it highly unlikely for these results to be exactly 50% (for SES) and 50% (EL) at the end of financial year.

Indigenous representation - Proportion of staff who identify as Indigenous

As at June 2020, the proportion of our staff identifying as Aboriginal and Torres Strait Islander was 2.3%, decreasing from 2.5% the previous year, and slightly below the target of 2.5%. A planned June intake of the ATO’s Evergreen Indigenous employment program was delayed until September 2020 due to the COVID-19 pandemic and associated response work, contributing to the target not being achieved.

We are committed to engaging, developing and retaining Aboriginal and Torres Strait Islander people in our workforce and supporting inclusion within and outside of the ATO.

During the year, we delivered employment strategies, through Career Trackers internships, affirmative measures recruitment, and Indigenous secondment programs, to support the development of Aboriginal and Torres Strait Islander employees in the organisation.

Staff experience

We continued our focus on improving the digital experience for ATO staff in 2019-20. This included modernising our telephony platform, as well as an aged-desktop and laptop refresh and an upgrade to Microsoft Office (Pro Plus).

The impact of COVID-19 has seen the ATO support a greater number of staff to work remotely with the rollout of the remote desktop application (RDA) solution across the organisation and the provision of equipment such as laptops and monitors to enable staff to work from home.

In light of COVID-19 and its impacts on the workforce, the 2020 APS Employee Census was postponed until late in 2020, so we do not have a result with which to assess our performance against the target. However, in the all-staff survey conducted in June 2020, 86% of staff agree that they have the technology, tools and resources they need to perform well. Improving the digital experience for staff is an ongoing program of work that will continue into 2020-21. The full impact of improvements made to date to the digital experience of ATO staff is expected to be reflected in the 2020 APS Employee Census results.

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Tax returns - Proportion of items that are pre-filled

The 2019-20 result of 87.1% is slightly below the previous year but exceeds the target, reflecting the continued quality and timeliness of our pre-filling program to support our clients and tax agents to lodge tax returns and meet their obligations. The decrease is the result of receiving data from some third-party reporters later than the previous year due to them undertaking additional quality assurance processes on their data prior to providing it to us.

The measure is solely focused on individuals who are not in business. It reflects the proportion of their total income where our pre-filling exactly matched their final income tax result. A dollar-based systems-assurance approach is used, where pre-filling makes it easier for our clients to meet their obligations and increases trust and confidence in the accuracy of final tax outcomes.

To allow for appropriate checking of pre-fill results against the final income tax return, the methodology for this measure applies a time lag and reflects Tax Time 2018 results. This is to allow sufficient time for lodgment program periods to be completed and results to be assured by the ATO.

Availability - Key digital systems availability

Measuring availability of our digital systems ensures that we understand the reliability of services for clients interacting digitally. In 2019-20, the overall result was 99.7%, a 0.2 percentage point increase from the previous year, and exceeding the target.

The methodology for this measure comprises the availability of seven externally facing and two internally facing key IT systems. Availability is the comparison between the planned availability with the actual availability of a system for users.

For externally facing systems used by our clients and partners (community, tax and super professionals, and software developers), the average availability was 99.6% and for internally facing systems used by staff, the average availability was 100.0% (99.99% when rounded to two decimal places).

Budget - ATO manages its operating budget to balance

The ATO’s operating expense budget (excluding depreciation) was $3.6 billion at the commencement of 2019-20. During the year, the following budget changes occurred:

ƒ Combatting Illegal Phoenixing (increase of $4.0 million) ƒ National Tax Clinic Program (increase of $0.5 million) ƒ Modernising Business Registers (including Director Identification Numbers) (increase of $25.0 million)

ƒ Accelerating Digital Identity - giving Australians easy and secure access to services (increase of $0.6 million) ƒ Data Centre Migration (increase of $6.7 million) ƒ Foreign Investment - Discovery and Second Pass Business Case (increase of $0.8 million)

ƒ Superannuation Guarantee Amnesty - extension of the amnesty period (increase of $5.1 million) ƒ Women’s Economic Security Package handback (reduction of $13.7 million) ƒ Efficiency Dividend (reduction of $17.5 million) ƒ Own source revenue - credit card merchant fees (reduction of $13.5 million).

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The ATO’s 2019-20 financial result was an operating surplus of $8.2 million or 0.2% under budget. This result includes lease principal repayments under the AASB16 leasing standard and excludes non-cash financial accounting adjustments, such as write-off expenses, depreciation, amortisation, finance lease and revaluation adjustments made for our financial statements.

The ATO’s operating surplus was driven by environmental factors outside of the ATO’s control which caused the ATO to re-prioritise planned work and response to COVID-19 stimulus packages.

Refer to our financial statements in Part 5 for detailed information.

Cost of collection - Cost to collect $100

The cost of collection measures the cost of collecting every $100 of cash collections.

The cost to collect $100 decreased from $0.64 in 2018-19 to $0.62 in 2019-20, excluding GST and its administration costs. The decrease reflects a 9% decrease in costs associated with collecting tax, offset by a 5% decrease in collections in 2019-20.

Decreased revenue resulted from economic factors relating to the global COVID-19 pandemic. The significant decrease in costs was as a result of the ATO’s response to several natural disasters (bushfires, floods and drought) by re-prioritising planned work and reducing certain activities, such as debt and legal work. The ATO supported the community by deferring lodgments, enabling faster refunds, deferring recovery action for debt and remitting interest and penalties. This was followed by significant staff redeployments to support the COVID-19 government stimulus measures in the last quarter of 2019-20.

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Program 1.2 Tax Practitioners Board

The TPB The Tax Practitioners Board (TPB) is an independent statutory body. It is responsible for the general administration of the Tax Agent Services Act 2009 and for registration and regulation of tax practitioners, including tax agents, business activity statement (BAS) agents and tax (financial) advisers.

Due to its operational independence and statutory obligations, the TPB has produced its own annual report, which is available at tpb.gov.au.

Purpose The TPB seeks to protect consumers of taxation services by regulating tax practitioners in a fair, consistent and practical way, thereby strengthening the integrity of the tax practitioner profession by:

ƒ protecting all consumers of tax practitioner services ƒ maintaining, protecting and enhancing the integrity of the registered tax practitioner profession ƒ strengthening the TPB as an efficient and effective regulator.

Annual performance statement The annual performance statement for the TPB is included in the Tax Practitioners Board annual report 2019-20.

This year’s performance criteria for the TPB are set out on page 197 of the Australian Taxation Office Budget Statements (in the Treasury PBS) and pages 6-8 of the Tax Practitioners Board corporate plan 2019-20.

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Program 1.3 Australian Business Register

The ABR The Commissioner of Taxation is also the Registrar of the Australian Business Register (ABR). The Registrar has separate and distinct responsibilities as outlined in section 28 of the A New Tax System (Australian Business Number) Act 1999.

The ABR program encompasses:

ƒ the Register, which is a trusted national business dataset, and business registry services ƒ Standard Business Reporting (SBR), which defines a common language for business information and standards, for digital information exchange and sharing with businesses and government ƒ secure authentication options, giving business easy access to a range of services.

Purpose The purpose of the ABR program is to:

ƒ deliver effective and efficient business registry services that provide trusted and accessible national business data ƒ encourage trust and confidence in the broader use of national business data - by the community, businesses and government - to promote the development of new and better

services for businesses, using the Australian business number (ABN) as a key identifier ƒ reduce the administrative cost to businesses in their dealings with other businesses and government.

Program overview This overview of ABR program performance aligns with the ATO corporate plan 2019-20 and presents our 2019-20 performance against the three strategic initiatives to deliver the program.

Overview

The ABR program supports a fairer business environment for the community, businesses and government through trusted business registry services and digital standards. We are constantly working to increase the value of ABR data through understanding how it can be better used by businesses, governments and communities to unlock social and economic value for Australia.

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We continue to collaborate across the ATO to support ABN holders meeting their tax and super obligations, through intuitive and easy-to-use systems and tools. The ABR program authentication credential (AUSkey) was decommissioned on 31 March 2020 and replaced by the whole-of-government Relationship Authorisation Manager (RAM) and myGovID solutions.

This objective had two measures, both of which were fully met.

Strategic initiatives summary

The ABR program commitments for 2019-20 included maintaining trust and confidence in the ABR and maintaining the digital exchange standards through SBR.

ƒ We removed close to 424,000 ABNs, including around 175,000 ABNs that had not reported any business income in previously lodged income tax returns. From January 2020, in recognition of the national bushfire and COVID-19 relief programs, we paused our cancellation campaigns so that we do not unduly disadvantage businesses that may be impacted.

ƒ We improved our service offering through system updates to provide better information to business registrants about their business obligations. ABN refusal advice has now been digitised and clients and their agents can also download a complete ABN record for review and update, making it easier to maintain accurate data holdings.

We previously developed a whole-of-government catalogue of application programming interfaces (APIs) for digital service providers - the API Catalogue - which includes data definitions from the SBR program. The number of agencies that listed their APIs in the Catalogue grew in 2019-20.

In November 2019, the government announced that the Modernising Business Registers (MBR) program would form part of the government’s Deregulation Agenda. The MBR program will unite the Australian Securities and Investments Commission's (ASIC) 31 business registers and the ABR on a new platform to be administered by the Australian Business Registrar within the ATO.

Director identification numbers will also be introduced under the MBR program to help address illegal phoenixing and help protect honest businesses and individuals from directors involved in unlawful activity. The legislation relating to director identification numbers and modernising business registers received royal assent on 22 June 2020.

The integrity of ABNs is essential to maintaining trust in the ABR. In the 2019-20 Budget, the government announced it will strengthen the ABN system to disrupt black economy behaviour by requiring ABN holders:

ƒ from 1 July 2021, with an income tax return obligation, to lodge their income tax return ƒ from 1 July 2022, to confirm the accuracy of their details on the ABR annually.

These measures will make ABN holders more accountable for meeting their government obligations, while minimising the regulatory impact on businesses doing the right thing, and we have consulted with business in the design.

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Performance results

Our two performance criteria are set out on page 199 of the Australian Taxation Office Budget Statements (in the Treasury PBS), and pages 18 and 23 of the ATO corporate plan 2019-20.

TABLE 2.2 ABR results, 2017-18 to 2019-20

Results Target

Performance criterion Source 2017-18 2018-19 2019-20 2019-20

Increased use of the ABR as the national business dataset PBS 199 CP 18, 23

ƒ government agencies 312 agencies

using ABR Explorer

(34% increase)

368 agencies using ABR Explorer (18% increase)

405 agencies using ABR Explorer (10% increase)

370 agencies using ABR Explorer

11 agencies using ABR Connect

17 agencies using ABR Connect

27 agencies using ABR Connect (58% increase)

14 agencies using ABR Connect

ƒ community 1,031m

ABN Lookup searches

(32.5% increase)

1,445m

ABN Lookup searches (40% increase)

1,519m

ABN Lookup searches (5% increase)

1.3b

ABN Lookup searches

Reduction in the administrative cost to businesses and government in dealing with each other

PBS 199 CP 18, 23

$1.58b $1.55b $1.95b $1.95b

Target achieved Target substantially achieved Target not achieved Result or target not available

Results analysis

Increased use of the ABR as the national business dataset

In 2019-20, the number of agencies using ABR Explorer increased by 10% to 405, while the number using ABR Connect web services increased by 58% to 27, both exceeding their target.

However, the number of agencies using ABR Explorer decreased to 233 by the end of June 2020, due to the replacement of AUSkey in March 2020 by myGovID as the access service to ABR Explorer. We are working with those agencies that have not yet transitioned to myGovID to re-establish their access to ABR Explorer so they can continue to access ABR data.

We are continuing to develop products that promote self-service, including education materials that facilitate interactions with ABR Explorer. System enhancements have improved the quality of data queries available for use by agencies. The ABR Connect web service reduces costs for government agencies by reducing the need for multiple databases.

There were more than 1.5 billion searches using ABN Lookup, a 5% increase from the previous year and exceeding the target.

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Reduction in the administrative cost to businesses and government in dealing with each other

In 2019-20, the administrative cost reduced by $1.95 billion, an improvement of $400 million compared to the previous year, which met the performance target.

This increase can be attributed to an increased uptake of SBR services, particularly Single Touch Payroll and superannuation reporting.

The result indicates that ABR program initiatives continue to deliver savings to business and government through reducing the reporting burden, minimising cost to business and enhancing business interactions through natural-based systems.

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Program 1.4 Australian Charities and Not-for-profits Commission

The ACNC The Australian Charities and Not-for-profits Commission (ACNC) is the independent regulator of charities at the Commonwealth level. The ACNC Commissioner has a number of statutory functions and regulatory powers, as set out in the Australian Charities and Not-for-profits Commission Act 2012 and the Australian Charities and Not-for-profits Commission Regulation 2013.

The ACNC contributes to a charity sector that inspires confidence and respect by:

ƒ adopting best practice in regulation and delivering effective regulatory services ƒ collecting data that is securely stored, populates the register for public access and to share with authorised partners ƒ working collaboratively across government to reduce the administrative burden on charities

ƒ building systems and processes that support quality, efficient and effective interactions with customers ƒ sustaining an independent, transparent and well governed agency with a positive culture and strong customer-service ethos.

Due to its operational independence and statutory obligations, the ACNC has produced its own annual report, which is available at acnc.gov.au.

Purpose The ACNC’s purpose is to:

ƒ maintain, protect and enhance public trust and confidence in the Australian not-for-profit sector ƒ support and sustain a robust, vibrant, independent and innovative Australian not-for-profit sector ƒ promote the reduction of unnecessary regulatory obligations on the Australian not-for-profit sector.

Annual performance statement The annual performance statement for the ACNC is included as part of the Australian Charities and Not-for-profits Commission annual report 2019-20.

This year’s performance criteria for the ACNC are set out on pages 202-203 of the Australian Taxation Office Budget Statements (in the Treasury PBS) and pages 6-7 of the ACNC corporate plan 2019-20.

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Administered programs 1.5 to 1.19

Purpose The ATO contributes to the economic and social wellbeing of Australians through governing a range of programs that result in transfers and benefits back to the community.

Performance results overview All deliverables are achieved through making payments to eligible recipients in accordance with relevant laws.

We paid $47.1 billion in administered payments in 2019-20, $35.4 billion higher than 2018-19. The large increase was due to JobKeeper and Cash Flow Boost payments.

TABLE 2.3 Administered payments 2017-18 to 2019-20(a)

Payments

2017-18 $m

2018-19 $m

2019-20 $m

Fuel tax credits 6,814 7,179 7,383

Product stewardship for oil program 75 73 90

Exploration Development Incentive(b) 4 0 0

Junior Minerals Exploration Incentive 0 0 3

Private health insurance rebate 249 240 236

National rental affordability 188 170 160

Superannuation co-contribution scheme 126 126 121

Research and development refundable tax offsets(c) 2,463 2,311 2,333

Australian Screen Production Incentive(d) 282 328 349

Low income superannuation tax offset(e) 779 743 703

Interest payments on lost superannuation accounts 15 28 92

Seafarer tax offset 9 10 9

Economic response to the Coronavirus - JobKeeper 0 0 20,574

Economic response to the Coronavirus - Cash Flow Boost 0 0 14,454

Total administered payments 11,003 11,208 46,508

Distribution of super guarantee charge entitlements 402 532 611

TOTAL(f) 11,405 11,740 47,119

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Notes (a) Totals may differ from the sum of components due to rounding.

(b) The 2017-18 exploration development incentive amount of $4 million is an estimate, due to difficulties associated with tracing payments to the ultimate beneficiary. There were very small residual amounts in later years.

(c) Only refundable research and development tax offsets are administered payments.

(d) The 2017-18 Australian Screen Production Incentive of $282 million is an estimate due to difficulties with data matching.

(e) Low income superannuation tax offset replaced the low income super contribution from 1 July 2017.

(f) The 2019-20 total excludes $123 million of interest on overpayments of tax.

Performance results - programs 1.5 to 1.13 and 1.15 to 1.19

The way the ATO measures the performance of administered programs and the achievement of their purpose is set out on pages 204-212 of the Australian Taxation Office Budget Statements (in the Treasury PBS), and pages 24-25 of the ATO corporate plan 2019-20.

In addition to the administered programs announced in the PBS, the ATO has responsibility for Administered Program 1.19 Economic response to the coronavirus. This incorporates the JobKeeper and Cash Flow Boost, which are designed to support individuals, businesses and other entities during the economic downturn associated with COVID-19. These measures were announced by the government in March 2020.

TABLE 2.4 Programs 1.5 to 1.13 and 1.15 to 1.19 Administered programs performance

Results Target

Performance criterion Source 2017-18 2018-19 2019-20 2019-20

1.5 Australian Screen Production Incentive

ƒ Value of tax offsets processed PBS 204

CP 25

$281.8m $328.0m $349.4m Administer the program in accordance with the law

1.6 Junior Minerals Exploration Incentive

ƒ All applications received are processed and taxpayers notified of their exploration credit allocation within 28 calendar days of the application period closing

PBS 204 CP 24

Target met Target met Within 28 calendar

days of the application period closing

ƒ Public reporting data uploaded on data.gov.au (and linked to the ato.gov.au website) after determination letters are issued

PBS 204 CP 24

Target met Target met Within 56 calendar

days of the application period closing

1.7 Fuel Tax Credits Scheme

ƒ Value of claims PBS 205

CP 25

$6.8b $7.2b $7.4b Administer the program

in accordance with the law

1.8 National Rental Affordability Scheme

ƒ Value of tax offsets processed PBS 205

CP 25

$188.2m $170.3m $160.0m Administer the program in accordance with the law

1.9 Product Stewardship for Oil Program

ƒ Value of revenue collected PBS 206

CP 25

$33.6m $30.9m $31.4m Administer the program in accordance with the law ƒ Value of payments processed $74.9m $72.7m $90.4m

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TABLE 2.4 Programs 1.5 to 1.13 and 1.15 to 1.19 Administered programs performance continued

Results Target

Performance criterion Source 2017-18 2018-19 2019-20 2019-20

1.10 Research and Development Tax Incentive

ƒ Value of claims processed for Administer the program in

accordance with the law — 38.5% non-refundable research & development tax offset claimants PBS 207-208

CP 25

$2.9b tax offset paid $2.7b tax offset paid

$2.1b tax offset paid

— 43.5% refundable research & development tax offset claimants

$2.5b tax offset paid $2.3b tax offset paid

$2.3b tax offset paid

ƒ Number of claims processed for — 38.5% non-refundable research & development tax offset claimants

1,754 1,600 1,468

— 43.5% refundable research & development tax offset claimants

11,402 10,819 10,017

ƒ Proportion of offsets processed within service standard timeframes

76% 89.7% 85.6%

1.11 Low Income Superannuation Tax Offset

ƒ Value of entitlements paid PBS 208

CP 25

$779.3m $743.4m $703.2m Administer the program in accordance with the law

1.12 Private Health Insurance Rebate

ƒ Value of rebates processed PBS 209

CP 25

$248.8m $239.7m $235.5m Administer the program in accordance with the law

1.13 Superannuation Co-contribution Scheme

ƒ Value of entitlements paid PBS 209

CP 25

$125.8m $125.9m $120.8m Administer the program in accordance with the law

See Table 2.5 for Program 1.14 - Superannuation Guarantee Scheme

1.15 Targeted Assistance through the Taxation System

ƒ Value of interest payments processed PBS 211 CP 25

$14.9m $27.7m $92.0m Administer the program in accordance with the law

1.16 Interest on Overpayments and Early Payments of Tax

ƒ Value of credit interest applied to client accounts due to processing performance

PBS 212 CP 25

$13.0m $9.4m $121.0m(a) Administer the program in accordance with the law

1.17 Bad and Doubtful Debts

ƒ Provision for bad and doubtful debts as a proportion of total tax receivables

PBS 212 CP 24

35% 34% 35% Below 35%

1.18 Seafarer Tax Offset

ƒ All eligible taxpayers are aware of how to claim the offset PBS 212 CP 24

100% 100% 100% 100%

1.19 Economic response to the Coronavirus

ƒ Value of JobKeeper paid - $20.6b Administer the program in

accordance with the law ƒ Value of Cash Flow Boost paid - $14.5b

Measure not reported - = Measure not included in 2019-20 Portfolio Budget Statements or ATO corporate plan

Note (a) For 2019-20 the measure calculation has changed to increase the scope of the interest captured, to include interest on overpayment amounts applied for all legal entitlements.

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Results analysis

We use our systems, processes and controls to establish and maintain confidence that the correct level of payments and transfers delivered through the tax and superannuation systems are paid to eligible recipients in accordance with relevant laws, thus meeting our performance target for many of our administered program measures.

In many instances, small annual fluctuations in the value of benefits arise due to minor changes in economic conditions or the circumstances of our clients. However, there are some programs where a more substantial change in the value of benefits was observed in 2019-20. There is considerable interest in the Superannuation Guarantee scheme and changes in the number and value of liabilities raised by the ATO. Further discussion of these cases is provided below.

Administered program 1.15: Targeted Assistance through the Taxation System

The increase in the value of interest paid in 2019-20 can be attributed to:

ƒ the ‘Protecting Your Superannuation’ legislation which took effect on 1 July 2019, the ATO paid interest on ATO-held super amounts proactively reunified with a person’s active super account or proactively paid to clients - these proactive payments commenced on 1 November 2019

ƒ reuniting strategies conducted to support communities in areas impacted by bushfires ƒ increased media interest in the amount of lost and unclaimed super generated from our ‘postcode campaign’, in which we identify the top 10 postcodes for unclaimed super ƒ increased community engagement with ATO online services in relation to the government’s

stimulus measures during COVID-19.

Administered program 1.16: Interest on Overpayments and Early Payments of Tax

Adjustments to the methodology for calculating interest on overpayments were made in respect of the 2019-20 year. These changes were made to increase the scope of the interest captured, to include interest on overpayment (IOP) amounts applied for all legal entitlements. If the new methodology were applied for the 2018-19 year, the result would have been $88 million in IOP applied.

The increase from the 2018-19 adjusted result of $88 million to the 2019-20 result of $121 million was partly due to a greater number of overpayment cases. There were over 231,000 interest on overpayment activities generated in 2019-20, an increase of around 33,000 compared with 2018-19. There was also a temporary decline in the number of staff available for processing activity, as staff were redirected to answer critical COVID-19 related telephone calls.

Interest on early payment has not been included in this measure as the payment of this interest does not relate in any way to processing performance, that is, it is a statutory amount payable based on client behaviour (paying early).

Administered program 1.19: Economic Response to the Coronavirus

The total value of JobKeeper and Cash Flow Boost paid in 2019-20 is over $35 billion.

The JobKeeper Payment is a stimulus measure paid as a subsidy to business to keep more Australians in jobs through the course of the COVID-19 pandemic, and to maintain the connection between employers and their employees. From April 2020, employers received a payment of $1,500 per fortnight per eligible employee. The payments were also made to other entities, such as eligible sole traders.

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The Cash Flow Boost stimulus measure supports businesses during the economic downturn associated with COVID-19. Eligible small-to-medium businesses and not-for-profit organisations that employ staff receive between $20,000 and $100,000 in cash flow boost amounts by lodging their activity statements, commencing with the March 2020 monthly or quarterly period (amounts received from April 2020).

Payments under the JobKeeper and Cash Flow Boost stimulus measures are continuing into the 2020-21 year.

Performance results - program 1.14

TABLE 2.5 Program 1.14 Superannuation Guarantee Scheme

Results Target

Performance criterion Source 2017-18 2018-19 2019-20 2019-20

Superannuation guarantee gap as a proportion of superannuation guarantee contributions

PBS 210 CP 24

4.8% or $2,790m (2015-16)

3.9% or $2,298m (2016-17)

4.0% or $2,440m (2017-18)

Reduce the gap to a level as low as practicable given the nature and complexity of

the law and the resources available

Value of superannuation guarantee charge: PBS 210 CP 24 ƒ raised (including penalties and interest) $1,107.2m $1,069.2m $1,033.5m $985m

ƒ collected $440.9m $576.6m $674.0m $438m

Value of superannuation guarantee entitlements distributed to individuals or superannuation funds

PBS 210 CP 24

$401.6m $532.3m $611.2m $404m

Value of superannuation guarantee debt: PBS 210 CP 24 ƒ on hand $1.9b $2.2b $2.4b $2.6b

ƒ irrecoverable at law or uneconomical to pursue

$238.8m $191.7m $74.6m $223m

Results analysis

Administered program 1.14: Superannuation Guarantee Scheme

Positive trends observed in superannuation guarantee funds collected and distributed to individuals and super funds continued in 2019-20, driven by a higher collection rate of compliance-related debt.

The superannuation guarantee gap as a proportion of super guarantee contributions has remained broadly stable compared to the previous year. For 2017-18, we estimate a net gap of 4.0% or $2,440 million. Overall, we estimate that employers are paying around 95% of the super guarantee they are required to pay without intervention from the ATO.

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03 Revenue Performance Revenue collection

As Australia’s principal revenue agency, the ATO facilitates the collection of revenue to fund public goods and services for the community. We do this through a range of collection systems, including income tax, goods and services tax (GST) and excise duty.

Net tax collections in 2019-20 were $404.7 billion, down $21.2 billion (5.0%) over the previous year, and $33.9 billion (7.7%) below the amount expected at the time of the budget 2019-20.

Company tax collections decreased by $9.6 billion (10.3%) in 2019-20. The outcome was $14.9 billion below the budget forecast, largely reflecting the economic impacts of COVID-19.

Total individuals tax collections fell by $1.8 billion (0.8%) this year. The outcome was $6.9 billion below the budget forecast, largely reflecting the economic impacts of COVID-19.

Superannuation income tax collections decreased by $5.0 billion (44.4%). The outcome was $3.4 billion below the budget forecast, reflecting a significant increase in franking credit refunds and lower earnings due to COVID-19.

GST collections decreased by $5.0 billion (7.6%). The outcome was $7.0 billion below the budget forecast, reflecting the economic impact of COVID-19.

Excise collections were $0.1 billion (0.2%) higher than 2018-19 but $1.2 billion lower than the budget forecast, reflecting the effect of COVID-19 on fuel consumption.

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TABLE 3.1 ATO net tax cash collections, 2017-18 to 2019-20(a)

Tax

2017-18 $m

2018-19 $m

2019-20 $m

Gross PAYG withholding(b) 192,229 204,764 214,426

Gross other individuals 43,866 48,423 43,713

Individual refunds -29,102 -29,514 -36,219

Total individuals 206,993 223,673 221,920

Companies 84,549 93,590 83,971

Superannuation funds(c) 10,804 11,269 6,267

Resource rent taxes(d) 1,116 1,053 1,052

Fringe benefits tax(e) 3,911 3,794 3,850

Total income tax 307,373 333,379 317,060

Excise 22,703 23,300 23,352

Goods and services tax (GST)(f) 63,265 65,270 60,296

Other indirect taxes(g) 1,586 1,657 1,529

Total indirect taxes 87,554 90,227 85,178

Major bank levy 1,139 1,560 1,612

Superannuation guarantee charge 441 577 674

Foreign investment fees 114 94 94

Self-managed superannuation fund levy 129 144 127

Total net tax collections 396,749 425,980 404,745

Other revenue(h) 326 -59 -386

Total collections 397,075 425,921 404,358

HELP/SFSS(i) 2,462 2,915 3,416

Notes (a) The cash collections data presented in this table has been adjusted to exclude administered expenses and better align with the financial statements and the Final Budget Outcome. Totals may differ from the sum of components due to rounding.

(b) Includes amounts withheld from salaries and wages, TFN and ABN withholdings, dividend, interest, royalty, and mining withholding taxes.

(c) Includes income tax for superannuation funds and superannuation surcharge, and no TFN contributions tax.

(d) For 2018-19 and 2019-20, resource rent taxes include both petroleum resource rent tax and minerals resource rent tax.

(e) Includes Australian Government departments and authorities.

(f) Includes some collections by the Department of Home Affairs; in 2019-20, these were $4.2 billion. Also includes GST non-general interest charge penalties, which are not distributed to the state and territory governments under the intergovernmental agreement.

(g) Includes wine equalisation tax (WET) and luxury car tax (LCT), of which a small amount was collected by the Department of Home Affairs.

(h) The majority of ‘other revenue’ is net unclaimed superannuation monies. The ATO’s efforts to engage with and encourage fund members to reunite with their lost and unclaimed super has meant that transfers from ATO-held superannuation accounts to members exceeded receipts of unclaimed superannuation monies from 2018-19.

(i) Higher Education Loan Program (HELP) and Student Financial Supplement Scheme (SFSS) collections.

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TABLE 3.2 Expected revenue - variation between budget forecast and actual net collections in 2019-20

Collected from

Collections $m

Budget $m

Variance $m

Total individuals 221,920 228,800 −6,879

Companies 83,971 98,900 −14,929

GST 60,296 67,340 −7,044

Superannuation funds 6,267 9,710 −3,443

Other 32,291 33,873 −1,583

TOTAL 404,745 438,623 −33,878

In 2019-20, we issued income tax refunds with a total value of $55.3 billion. We also issued activity statement refunds with a total value of $76.9 billion. Total refunds were $132.3 billion, up 23.4% from 2018-19.

TABLE 3.3 Amount refunded, 2017-18 to 2019-20(a)

Type of refund

2017-18 $m

2018-19 $m

2019-20 $m

Income tax

ƒ Income tax - Total individuals(b) 29,102 29,514 36,219

ƒ Income tax - Companies 9,311 9,609 12,517

ƒ Income tax - Superannuation funds(c) 3,473 3,296 6,130

ƒ Income tax - Resource rent taxes(d) 42 167 32

ƒ Income tax - Fringe benefits tax(e) 565 546 436

Total income tax 42,493 43,131 55,334

Excise 30 27 48

Activity statements(f) 59,777 64,006 76,898

TOTAL 102,300 107,164 132,280

Notes (a) Refunds data presented in this table has been adjusted to exclude all administered expenses and better align with our financial statements and the Final Budget Outcome. Totals may differ from the sum of components due to rounding.

(b) Excludes administered payments, such as private health insurance rebate.

(c) Includes superannuation surcharge refunds.

(d) For 2018-19 and 2019-20, resource rent taxes include both petroleum resource rent tax and minerals resource rent tax.

(e) Includes Australian Government departments and authorities.

(f) Excludes fuel tax credit business activity statement (BAS) refunds.

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Tax performance

Our tax performance research program monitors the health of the system and our performance in managing it. We use a suite of measures that provide insights into the operation of the tax and superannuation systems, including tax gap estimates and tax assured, which estimates the amount of tax that we are highly confident has been reported correctly.

We engage with taxpayers to ensure they are complying with all of their tax obligations. While addressing non-compliance through audits and other correction activities will always be an important part of our compliance approach, our real success lies in ensuring taxpayers get things right from the start. It also means locking in future compliance after we have made a correction and maintaining confidence that the right amount of taxes continue to be paid.

Where we have influenced taxpayers to now voluntarily pay the right amount of tax, we describe those revenue gains as wider revenue effects, and these represent an essential part of our total revenue effects. Total revenue effects measures are important in understanding how and where we are sustainably reducing the tax gap.

Impact of COVID-19

Two of our performance measures (the tax gap and tax assured) are ‘lag indicators’ that tell us about tax performance in 2017-18. As such, the impacts of COVID-19 will not be observed until we can produce estimates for the 2019-20 year.

Total revenue effects, on the other hand, tells us about the impact of our work on tax revenue in 2019-20. The total revenue effects measure has been affected this year by a range of factors relating to COVID-19, including taxpayers’ ability to pay, our cautious approach to compliance, applying penalties and interest, debt recovery, and our focus on supporting the Australian community in delivering the government’s stimulus measures.

Tax gap estimates Tax gaps estimate the difference between what the ATO collects and the amount that would have been collected if every taxpayer was fully compliant with the law. For the first time, we are publishing tax gap estimates for all 15 income and transactional-based taxes. This allows us to report the total estimated tax gap for the Australian tax and superannuation system.

The tax gap prior to the impact of our engagement is referred to as the gross gap. More information about our engagement strategies and the gross gap is available on our website. The tax gap shown below is the net gap; this shows the final amount that remains uncollected after ATO action.

For 2017-18, we estimate the overall net tax gap to be 6.9%, or $31.2 billion, meaning the ATO received more than 93% of tax revenue it expected to collect, the bulk of which was collected voluntarily. We are also publishing the three-year trend as a part of our ongoing commitment to provide more transparency into the operation of the tax and superannuation systems. The three-year trend shows the net tax gap declining in each of the past two years, from 7.7% in 2015-16, to 7.2% in 2016-17 and 6.9% in 2017-18.

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TABLE 3.4 Net tax gap estimate - all federal taxes, 2014-15 to 2018-19(a)(b)(c)(d)

All taxes Reliability assessment Unit 2014-15 2015-16 2016-17 2017-18 2018-19

Tax gap n/a(e) % - 7.7 7.2 6.9 -

$m - 30,681 30,432 31,121 -

- = Results are not available for the given year.

Notes (a) All estimates are rounded to the nearest $1 million.

(b) Due to data lags, the estimate for 2018-19 is not available.

(c) Changes from previously published estimates occur for a variety of reasons, including improvements to methods, revisions to data and additional information becoming available.

(d) This estimate covers all transactional-based and income-based taxes estimated, as outlined in the tables below.

(e) Reliability is assessed separately for all estimates, as outlined below.

We separate our gap estimates into those relating to transactional-based taxes, income-based taxes and administered programs. The ATO aims to identify, manage and sustainably reduce tax gaps over time and maximise voluntary compliance. We engage with a range of stakeholders to understand the risks and drivers and how we can collaboratively address the issues.

Recognising the importance of having reliable and credible tax gap estimates, we continue to engage an independent expert panel to provide advice on the suitability of our tax gap methods and the reliability of our estimates.

An explanation of our methods and an analysis of each of the gaps are available at ato.gov.au/taxgap.

TABLE 3.5 Net tax gap estimates - Transaction-based taxes, 2014-15 to 2018-19(a)(b)(c)

Tax type

Reliability assessment   2014-15 2015-16 2016-17 2017-18 2018-19

Taxes on goods and services

GST Medium % 7.5 8.2 6.9 7.3 8.1

$m 4,453 5,146 4,527 4,978 5,776

Luxury car tax Medium % 3.4 10.1 5.8 7.8 -

$m 18 69 42 58 -

Wine equalisation tax Medium % 3.0 2.8 2.6 3.1 -

$m 24 23 22 27 -

Excise and customs duties

Alcohol excise Medium % - 9.5 9.6 9.6 -

$m - 565 568 596 -

Fuel excise Medium % 1.0 1.9 1.9 1.3 0.5

$m 170 325 330 240 90

Tobacco duty Medium % - 5.1 6.6 6.5 6.0

$m - 542 779 862 822

- = Results are not available for the given year.

Notes (a) All estimates are rounded to the nearest $1 million.

(b) Due to data lags, only limited estimates for 2018-19 are available.

(c) Changes from previously published estimates occur for a variety of reasons, including improvements to methods, revisions to data and additional information becoming available.

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TABLE 3.6 Net tax gap estimates - Income-based taxes, 2014-15 to 2018-19(a)(b)(c)

Tax on income Reliability assessment Unit 2014-15 2015-16 2016-17 2017-18 2018-19

Fringe benefits tax Medium % 25.2 26.8 22.0 21.2 -

$m 1,406 1,584 1,169 1,035 -

High wealth High % 8.2 6.9 7.1 7.4 -

$m 758 664 731 808 -

Individuals not in business High % 6.1 6.2 6.0 5.6 -

$m 7,759 8,330 8,181 8,332 -

Large corporate groups High % 4.9 3.8 3.5 3.7 -

$m 2,252 1,587 1,699 2,034 -

Large superannuation funds

High % 2.3 2.3 2.2 1.2 -

$m 170 204 247 149 -

Medium business Medium % 6.4 6.6 6.8 6.2 -

$m 704 784 883 860 -

Small superannuation funds

Low % 1.6 1.8 2.4 2.5 -

$m 24 24 36 41 -

Small business Medium % - 12.2 12.5 11.5 -

$m - 10,817 11,200 11,080 -

Petroleum resource rent tax High % 2.5 1.7 1.7 1.7 -

$m 32 17 18 21 -

- = Results are not available for the given year.

Notes (a) All estimates are rounded to the nearest $1 million.

(b) Due to data lags, estimates for 2018-19 are not available.

(c) Changes from previously published estimates occur for a variety of reasons, including improvements in methodology, revisions to data and additional information becoming available.

TABLE 3.7 Net gap estimates - Programs we administer, 2014-15 to 2018-19(a)(b)(c)

Administered programs Reliability assessment Unit 2014-15 2015-16 2016-17 2017-18 2018-19

Superannuation guarantee Medium % 5.2 4.8 4.0 4.0 -

$m 2,903 2,743 2,342 2,440 -

Pay as you go (PAYG) withholding Low % 2.7 2.3 1.7 1.8 -

$m 4,648 4,002 3,128 3,484 -

Product Stewardship for oil High % 1.5 1.3 1.1 1.3 1.0

$m 2 1 1 2 1

Fuel tax credits Medium % −0.1 −0.2 −0.1 −0.1 −0.1

$m −6 −10 −8 −9 −7

- = Results are not available for the given year.

Notes (a) All estimates are rounded to the nearest $1 million.

(b) Due to data lags, only limited estimates for 2018-19 are available.

(c) Changes from previously published estimates occur for a variety of reasons, including improvements in methodology, revisions to data and additional information becoming available.

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Tax assured Tax assured is an estimate of the proportion of tax that we are highly confident is correctly reported.

This measure is based on the concept of ‘justified trust’. We achieve justified trust and consider tax to be assured when we have high quality positive evidence that the reporting of taxable income, deductions and offsets is complete and accurate.

We collect evidence to assure tax from a range of sources - including from third parties to match against information reported to us, or directly from businesses we engage with to review and conclude they have paid the right amount of tax.

For individuals, our primary approach is to assure tax by matching information on taxpayers’ income tax returns with third-party data such as:

ƒ salary and wage information received from employers through the PAYG withholding system ƒ interest and dividend data from financial institutions and public companies ƒ pensions and allowances from government departments.

For businesses, particularly larger businesses, we primarily assure tax by reviewing objective evidence obtained through one-to-one engagements with them.

Under our justified trust program, we undertake specific tax assurance engagements with:

ƒ the top 100 and next 1,000 public and multinational businesses ƒ the top 500 private groups.

We also assure indirect tax through our ongoing relationships with large excise clients.

At 30 June 2020, we estimated that 47.6% of total tax reported for the 2017-18 tax year could be assured. During 2019-20, we also assured an additional 2.7% for the 2016-17 tax year, bringing the total tax assured estimate for that year to 48.3%.

In practice, we cannot gather third-party data or other evidence to compare against all tax returns. As such, our tax assured estimates will always be lower than the actual amount of tax that is correctly reported.

Where we cannot gather evidence to assure tax, we rely on our broader risk management approaches to provide us with confidence in tax reporting. Our risk management approaches help us identify and deal with non-compliance through real-time analytics, benchmarking and sophisticated risk-detection algorithms. This is supported by various administrative systems and tools, including the taxable payments reporting system.

When considered together with our total revenue effects measure and tax gap estimates, tax assured gives us confidence and valuable insight into the integrity of the revenue system.

For more information, refer to ato.gov.au/taxassured.

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Total revenue effects

Total revenue effects measures the impact our activities have on improving taxpayer compliance. These activities ultimately improve levels of willing participation in the tax and superannuation systems. Understanding and measuring the impact of our activities helps us to develop effective new strategies and improve existing ones.

Total revenue effects is an estimate of the additional tax revenue that comes from our client engagement activities and interventions. Our interventions are designed to obtain lodgment or correct a return after it has been lodged. This supports a level playing field and acts as a deterrent where needed.

It measures:

ƒ the estimated additional tax paid voluntarily by clients we influence where there is a clear causal connection with our engagements (wider revenue effects) ƒ the collection of liabilities, including penalties and interest, directly connected to adjustments we make as a result of our ‘downstream’ interventions (audit yield).

Figure 3.1 shows how the wider revenue effects and audit yield combine with our other activities to add to the total tax base.

FIGURE 3.1 Total revenue effects

The total revenue effects for 2019-20 from all our compliance activities totalled $13.7 billion, against our target of $15 billion.

Our results for the first six months to December 2019 indicated we were likely to exceed our target for the year. However, changes to our approaches to assist taxpayers impacted by natural disasters throughout January and February, and some early effects of COVID-19 meant that we were only just ‘above plan’ by the end of March 2020.

In the final quarter, COVID-19 led to the ATO implementing changes to our approach in order to support the community, including:

ƒ introducing deferrals for impacted clients and pausing our firmer action work, except for high risk clients, and stopping all outbound campaigns relating to debt and lodgment ƒ redeployment of our client engagement staff to support delivery of the government’s stimulus measures

ƒ pausing and slowing down of interventions and other compliance-related activities, other than those initiated by the client.

Penalties and interest

Total revenue effects

Wider revenue effects Audit yield

Tax base

Voluntary revenue

Voluntary payments

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These factors, combined with reduced capacity for many Australians and their businesses to pay compliance liabilities raised before the onset of COVID-19, led to a significantly lower-than-planned quarter four, resulting in the ATO not achieving the $15 billion target by the end of the year.

In 2019-20, we raised a total of $12.7 billion in tax liabilities and collected $9.5 billion in audit yield (some relating to liabilities raised in previous years) from 3.9 million compliance interventions. Additional tax paid voluntarily as wider revenue effects is estimated at $4.3 billion. This is compared to total liabilities of $16.9 billion and $15.3 billion, audit yield of $11.8 billion and $10.5 billion, and $4.2 billion and $4.8 billion in wider revenue effects, in 2017-18 and 2018-19 respectively.

Our results are categorised into two major components, lodgment and client engagement. Our lodgment results relate to where the ATO engages clients to obtain outstanding lodgments plus the revenue effects of sustained lodgment compliance for clients who we have re-engaged with the tax system. This year we undertook 3 million lodgment interventions. Our client engagement results relate to helping people get it right up front, correcting or addressing non-compliance where necessary and locking in future compliance. This year we undertook 0.9 million client engagement interventions.

As shown in figure 3.2, lodgment compliance resulted in total revenue effects of $6 billion or 44% of our overall result and client engagement resulted in total revenue effects of $7.7 billion or 56% of our overall result.

FIGURE 3.2 Total revenue effects, 2017-18 to 2019-20 by estimated source of total revenue effects

Notes ƒ Audit yield is a combination of actual cash collections and estimates of collections based on sampling. ƒ Collections also include collections on tax, penalties and interest raised in prior years. ƒ Results also include our activities to prevent incorrect refunds or payments being issued.

ƒ Cash collections include cash paid on disputed amended assessments raised. ƒ Client engagement includes all preventative and corrective interactions and excludes lodgment.

For more information on total revenue effects, see ato.gov.au/totalrevenueeffects.

$ billion

Lodgment - wider revenue

Lodgment - audit yield

Client engagement - wider revenue

Client engagement - audit yield

Target

0

2

4

6

8

10

12

14

16

18

2019-20 2018-19 2017-18

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Income tax We raised an additional $12.7 billion in liabilities (including wider revenue effects) for income tax in 2019-20 through our compliance activities, which resulted in cash collections of $10.1 billion (total revenue effects).

TABLE 3.8 Income tax liabilities raised (plans and results), 2017-18 to 2019-20

Liabilities / wider revenue effects plans and results

2017-18 $m

2018-19 $m

2019-20 $m

Plans 15,168 13,911 14,154

Liabilities raised 15,875 14,953 12,676(a)

Note (a) This included around $428 million in income tax liabilities, including $235 million from large businesses, as a result of voluntary disclosures in 2019-20.

TABLE 3.9 Income tax total revenue effects, 2017-18 to 2019-20

Results

2017-18 $m

2018-19 $m

2019-20 $m

Measures Audit yield 4,376 4,211 4,052

Wider revenue effects 222 589 779

Base Audit yield 4,304 3,335 2,628

Wider revenue effects 3,183 3,276 2,680

TOTAL 12,085 11,410 10,139

Goods and services tax We raised an additional $3.7 billion in liabilities (including wider revenue effects) for GST in 2019-20 through our compliance activities, which resulted in cash collected of $3.3 billion (total revenue effects).

TABLE 3.10 GST liabilities raised (plans and results), 2017-18 to 2019-20

Liabilities / wider revenue effects plans and results

2017-18 $m

2018-19 $m

2019-20 $m

Plans 3,711 3,563 3,705

Liabilities raised 4,371 4,346 3,675(a)

Note (a) This includes around $354 million in GST liabilities, including $182 million from large businesses, as a result of voluntary disclosures in 2019-20.

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TABLE 3.11 GST total revenue effects, 2017-18 to 2019-20

Results

2017-18 $m

2018-19 $m

2019-20 $m

Measures Audit yield 1,177 1,483 1,269

Wider revenue effects 142 146 248

Base Audit yield 1,645 1,169 1,156

Wider revenue effects 719 814 600

TOTAL 3,682 3,612 3,273

Excise and other indirect taxes In 2019-20, we raised excise liabilities of $26.5 million from compliance activities and collected $9.2 million in cash (including collections from liabilities raised in previous years).

For excise transfers (predominantly fuel tax credits), our compliance activities resulted in adjustments in favour of taxpayers of $69.1 million, and adjustments in favour of the revenue of $22.0 million. Of adjustments in favour of the revenue, we collected $14.2 million this year and a further $0.4 million from liabilities raised in previous years.

As a result of undertaking activities aimed at improving levels of willing participation within the tax and superannuation systems, it is estimated that an additional $40 million in fuel tax credits has been claimed by taxpayers.

Penalties and interest Interest is charged on unpaid tax liabilities to ensure fairness for taxpayers who do pay on time and the community as a whole. The penalty provisions encourage taxpayers to take reasonable care in complying with their tax obligations. We can generally remit (reduce or cancel) interest charges and penalties where this is fair and reasonable.

Table 3.12 shows the penalties and interest for 2017-18 to 2019-20.

TABLE 3.12 Penalties and interest, 2017-18 to 2019-20

Penalties and interest

2017-18 $m

2018-19 $m

2019-20 $m

Penalties Applicable 2,692 1,387 499

Remitted 473 375 220

Collected 685 562 311

Interest Applicable 4,728 3,871 2,325

Remitted 1,504 832 1,062

Collected 2,098 1,628 2,071

04

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Working holiday maker framework Working holiday makers are subject to a different rate of income tax, including amounts of income tax withholding, regardless of their residency status.

Employers are required to register with us to allow them to apply the different rates of pay as you go (PAYG) withholding to payments they make to working holiday makers. At 30 June 2020, there were almost 55,000 employers registered.

Table 3.13 shows updated figures for tax returns that were lodged by 30 June 2020 where an amount of net income for working holiday makers was declared.

TABLE 3.13 Working holiday maker tax returns processed, 2016-17 to 2019-20

Results

2016-17 tax returns(a)(b) 2017-18 tax returns(b)

2018-19 tax returns(c) 2019-20 tax returns(c)

Number of tax returns lodged by working holiday makers 76,497 96,872 96,298 1,876

Average taxable income $18,558 $21,000 $23,075 $17,262

Average income tax withheld $3,244 $3,623 $3,999 $2,892

Average income tax assessed as payable $2,789 $3,454 $3,920 $2,650

Notes (a) The scheme commenced from 1 January 2017. Average income tax calculations made using the whole 2016-17 income year.

(b) 2016-17 and 2017-18 results include processing up to 31 October 2019.

(c) 2018-19 and 2019-20 results include returns lodged by 30 June 2020, reflecting early lodged tax returns for 2019-20.

04 Management and accountability Corporate governance

Our governance arrangements support the Commissioner in leading the ATO, setting our strategic direction and ensuring we meet our commitments to government and the community. Arrangements we have in place to assist us in implementing the principles and objectives of corporate governance include:

ƒ sound governance structures ƒ integrated fraud and risk management ƒ open and transparent operations ƒ being accountable to our stakeholders.

We fulfil our corporate governance responsibilities by complying with accountability requirements in legislation and policy and meeting public expectations of good management. We regularly review our corporate governance arrangements and ensure our staff have training and information on how the ATO is governed and how we are all held to account.

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Our governance structures Our governance system leads and guides our organisation. It sets the direction required to achieve our outcomes and meet our commitments to government and the community. Our governance model helps us optimise performance, oversee progress against our purpose and strategic objectives, fulfil our accountabilities, and discharge our obligations. Our governance structure is shown in Figure 4.1.

The Commissioner is responsible for governing the ATO - from setting our strategic direction, through to ensuring we meet expected outcomes and obligations. The Commissioner is supported by the ATO Executive and the Audit and Risk Committee.

The ATO Executive is supported by an established structure of senior management committees, group executive committees, key corporate committees and consultation forums. These groups monitor various aspects of our performance, make decisions and recommendations, and help us to be responsive to emerging change. The members of the Executive team and their specific responsibilities are outlined on pages 5-9.

The Audit and Risk Committee provides independent assurance and advice on the appropriateness of the ATO’s annual financial statements, performance statements, performance reporting, system of risk oversight and management, and system of internal controls. For more information about committee members, see the Audit and Risk Committee on page 75.

We continue to review the roles of our committees and their membership to ensure our governance system remains purposeful, efficient and effective.

FIGURE 4.1  ATO governance structure, at 30 June 2020

The ATO organisational structure is shown in Figure 1.2 on page 10.

It is a requirement of the Public Governance, Performance and Accountability Act 2013 (PGPA Act) to list the details of the Accountable Authority during the current reporting period. This is provided in Table 4.1.

Audit and Risk Committee

Commissioner of Taxation

ATO Executive Committee

Strategy and Integration Committee

Resource Committee

Enterprise Risk Management Committee

Security and Business Continuity Management Committee

People Committee

COVID-19 Steering Committee

Group Executive committees

Corporate committees

Consultation forums

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TABLE 4.1 Details of the Accountable Authority, 2019-20

Period as the Accountable Authority

Name Position title

Date of commencement

Date of cessation

Chris Jordan AO Commissioner of Taxation 1 January 2013 29 February 2024

Fraud and risk management The minimum standards for the management of fraud are set out in the PGPA Act. They include conducting fraud risk assessments, developing and implementing a fraud control plan, and having mechanisms for dealing with fraud. The PGPA Act also requires that agencies establish and maintain appropriate systems and internal controls for risk oversight and management.

Fraud management

The Commonwealth fraud control framework 2017 outlines the Australian Government’s requirements for fraud control, including that government entities put in place a comprehensive fraud control program with appropriate prevention, detection, investigation and reporting strategies.

Fraud against the Commonwealth is a criminal offence that impacts directly on Australians. It undermines confidence in the government and reduces the funds available for delivering public goods and services. The ATO considers and addresses potentially fraudulent activity occurring within our organisation and fraud risks from external sources.

Internal fraud prevention and investigations

Throughout the year, we prevented, detected, disrupted and investigated potentially fraudulent activity in the ATO, in line with the Commonwealth fraud control framework.

Potential fraudulent behaviour is identified through a variety of means - including data integration, risk assessment and allegations - through both internal and external channels. All allegations are assessed and actioned appropriately, including collaborating with the Australian Federal Police if necessary.

Over the course of this year, we assessed 401 allegations or reports. Table 4.2 shows the number of internal fraud allegations or reports received, by outcome, for 2019-20.

TABLE 4.2 Internal fraud allegations or reports, by outcome, 2019-20

Outcome Number received

Substantiated(a) 144

Unsubstantiated 212

Unable to be determined 14

Ongoing as at 30 June 2020 31

TOTAL 401

Note (a) None of the 144 substantiated matters warranted referral for criminal prosecution and were dealt with administratively or procedurally under APS Code of Conduct determinations.

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Unauthorised access remains the largest category of substantiated allegations, and 90% of cases were identified through our proactive detection scanning and integrity monitoring. The majority involved an employee accessing their own records, those of family members or other people known to them. While such accesses usually do not indicate malicious fraudulent behaviour, the ATO treats breaches seriously and comprehensive investigations are conducted.

We continually monitor our systems to identify material shifts in risk exposure and conduct regular risk assessments to inform the ATO Fraud and Corruption Control Plan 2019-20. Particular attention was given to the internal fraud and corruption risks associated with working from home arrangements and higher risk staff populations during COVID-19.

We invest extensively in fraud prevention activities and provide support for staff to minimise the risk of internal fraud and corruption. We continually develop our range of self-help material and contemporary communication products. We also run education and awareness sessions, engaging staff in conversations about potential internal fraud and corruption risks within their business areas. These sessions complement the ATO’s mandatory security, privacy and fraud training package, which is to be completed annually by all ATO staff.

Crime in the tax and superannuation systems

It is the responsibility of the ATO to protect the tax and superannuation systems against fraud and related crimes. While most taxpayers do the right thing, we need to safeguard the system from those who don’t.

We continually improve our systems to prevent and detect fraud. Our new Tax Integrity Centre makes it easier for the community to report suspected phoenix activity, tax evasion, the black economy and suspected non-compliance with the government’s COVID-19 stimulus measures administered by the ATO.

This year, we investigated and prosecuted taxpayers who evaded their tax obligations, with a particular focus on work-related expenses, GST fraud, those participating in the black economy, and illicit tobacco.

We lead and participate in taskforces that provide a whole-of-government response to serious financial crime and related non-compliant behaviour.

The ATO is the lead agency for the Serious Financial Crime, Black Economy and Phoenix taskforces and contributes to the outcomes of the Illicit Tobacco Taskforce by targeting, disrupting and dismantling organised crime syndicates that deal in illicit tobacco.

Through our involvement with the Organisation for Economic Co-operation and Development (OECD), the Financial Action Task Force and the Joint Chiefs of Global Tax Enforcement (J5), we are developing a shared understanding and approach to addressing serious financial crime internationally.

Risk management

Whole-of-government requirements for risk management are set out in the Commonwealth risk management policy, and in section 16 of the PGPA Act - which specifies that agencies have a duty to establish and maintain an appropriate system of risk oversight, management and internal control.

The Commissioner and other members of the ATO Executive promote a positive and sensible approach to risk management, and continuous improvement of risk practice across the ATO.

The ATO Chief Risk Officer directs a corporate risk and assurance program, aligning with the strategic objectives in our corporate plan. The targeted risk advisory activities of the program support key ATO governance committees.

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The Chief Internal Auditor directs a comprehensive program of assurance, audit and advisory services. This work assists the Commissioner, the Audit and Risk Committee and the ATO Executive to achieve their business objectives. They work together to develop and maintain efficient and effective systems of internal control, risk management and corporate governance. The ATO’s Internal Audit branch works with internal and external scrutineers on matters of mutual interest, coordinating assurance activity and reducing duplication of audit effort.

In November 2019, the ATO Enterprise Risk Management Committee’s deep-dive program was shortlisted in the category of Excellence in Risk Management of the annual Comcover Awards. These awards recognise entities that exhibit excellence in risk management thinking and practice, and those with systems that support innovation and improved decision making.

The events and ongoing challenges of 2020 - in particular, the devastation caused by disasters across the country, and the continuing pervasive effects of a global pandemic - and the ATO’s response, have further reinforced the importance of a cohesive, adaptive, whole-of-ATO approach to risk management.

The ATO led the work undertaken by a cross-agency APS assurance working group, which was established by the Chief Operating Officers Committee in early 2020 to provide advice and support to departments and agencies in relation to governance and assurance arrangements that support the delivery of government measures relating to COVID-19. The working group developed reference papers that provide links to existing material relating to five key focus areas agreed by the Chief Operating Officers Committee - including citizen experience, decision making and governance arrangements, and fraud and integrity - to be shared across the APS to support departments and smaller portfolio agencies that may require additional support in this context.

Audit and Risk Committee

Our Audit and Risk Committee provides independent assurance and advice on the appropriateness of the ATO’s annual financial statements, performance statements, performance reporting, system of risk oversight and management, and system of internal controls. The committee’s charter outlining the functions of the committee is available on our website at ato.gov.au/auditandriskcommitteecharter.

Committee members bring a broad range of private and public sector experience and skills, including finance, accounting, audit, legal, compliance, risk management, due diligence, and information technology. In order to provide advice and assurance to the Commissioner about the appropriateness of the ATO’s financial and performance reporting, the committee is supported by specialised subcommittees for financial statements and performance statements. The committee complies with section 45 of the PGPA Act and section 17 of the PGPA Rule on audit committees for Commonwealth entities.

All members of the committee during 2019-20 are listed in Table 4.3. The committee comprises three independent members and two ATO senior executives.

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TABLE 4.3 Details of the Audit and Risk Committee, 2019-20(a)

Member name Qualifications, knowledge, skills and experience

Number of meetings attended / total meetings(b)

Total annual remuneration ($)

Peter Achterstraat, AM (Chair)

ƒ Bachelor of Commerce, Bachelor of Laws, Bachelor of Economics (Hons) ƒ Fellow of Chartered Accountants Australia and New Zealand, CPA Australia, the Governance Institute of Australia and the Australian

Institute of Management ƒ Chair of the ATO Audit and Risk Committee since March 2018 ƒ Currently Commissioner of the NSW Productivity Commission ƒ Auditor-General of NSW from 2006 to 2013

ƒ NSW Chief Commissioner of State Revenue from 1999 to 2006 ƒ President of the Australian Institute of Company Directors (NSW Division) since 2014 ƒ President of the Institute of Public Administration Australia (NSW

Division) from 2009 to 2014 ƒ More than 30 years experience in finance and governance

12/12 71,839

John Brown ƒ Bachelor of Commerce ƒ Fellow of the Institute of Chartered Accountants in Australia, Member of the Institute of Company Directors and former partner with KPMG

ƒ Member of the ATO Audit and Risk Committee since 2013 ƒ 36 years experience in a range of practice areas, including accounting, audit, IT audit, due diligence and risk management

12/12 48,189

Carole Ferguson ƒ Bachelor of Laws (Hons), Executive Graduate Diploma Business ƒ Member of the ATO Audit and Risk Committee from February 2018 to December 2019 ƒ Former Head of Legal Colonial First State Investments Ltd

ƒ Former director Compliance, ASIC ƒ A former director of Risk and Compliance, PwC ƒ Director and chair Audit and Risk Committee, Senior Rights Service Ltd

ƒ Director (Independent) Spark Financial Group ƒ Awarded the 2016 Governance Risk and Compliance Institute Risk and Compliance Professional of the Year ƒ Over 25 years experience in the financial services industry, with

legal, governance, risk and compliance expertise

8/12 25,973

Carol Holley ƒ Bachelor of Arts ƒ Fellow of the Australian Institute of Company Directors and the Institute of Chartered Accountants in Australia ƒ Member of the ATO Audit and Risk Committee since January 2020

ƒ A non-executive director and chair of Audit and Risk Committee of the Australian Nuclear and Science Organisation ƒ Current chair of the Audit and Risk Committee of the National Health Funding Body and several Audit and Risk Committees

of the NSW government ƒ Former non-executive director and chair of several other Audit and Risk Committees, including Australian Pharmaceutical Industries (from 2006 to 2016) and Defence Housing Australia (from 2009

to 2016)

4/12 18,112

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TABLE 4.3 Details of the Audit and Risk Committee, 2019-20(a) continued

Member name Qualifications, knowledge, skills and experience

Number of meetings attended / total meetings(b)

Total annual remuneration ($)

ATO Members(c)

Second Commissioner Andrew Mills

ƒ Bachelor of Business, Master of Laws, Graduate Diploma Tax Law ƒ Chartered Tax Advisor (Life), Graduate of the Australian Institute of Company Directors, Member of the International Fiscal Association, Member of the Economics Society of Australia

ƒ Member of the ATO Audit and Risk Committee from 2017 to 2019 and Chair from 2017 to 2018 ƒ Currently independent member of the Risk & Compliance Committee of the Independent Planning Association of NSW; and

Director, The Tax Institute ƒ Second Commissioner of Taxation from 2013 to 2019 ƒ Director, Greenwoods & Freehills from 2003 to 2013 ƒ Senior Executive, MLC Ltd from 1999 to 2002

ƒ President/chair of The Tax Institute from 2006 to 2007 and board member from 2001 to 2007 ƒ Former Director of various non-listed financial services companies, including superannuation trustee

ƒ More than 30 years experience in senior roles, including governance

6/12 -

A/g Second Commissioner Kirsten Fish

ƒ Bachelor of Commerce, Bachelor of Laws, Master of Laws ƒ Admitted to practice in the Supreme Court of NSW and the High Court of Australia, current NSW Legal Practicing Certificate ƒ Member of the Law Society, Chartered Tax Advisor and member

of The Tax Institute ƒ Member of the ATO Audit and Risk Committee from April to June 2020 ƒ Chief Tax Counsel, ATO since 2014

ƒ Partner, Clayton Utz from 2008 to 2014

2/12 -

A/g Second Commissioner Jeremy Geale

ƒ Master of Law, Bachelor of Law (Hon), Bachelor of Business ƒ Fellow of The Tax Institute ƒ Deputy Commissioner, ATO since 2016 ƒ Member of the Audit and Risk Committee from January

to March 2020 ƒ Partner, KPMG from 2011 to 2015 ƒ More than 20 years experience in law, dispute resolution and tax ƒ Experience in a variety of roles across the private sector,

professional services and public sector

1/12 -

Assistant Commissioner Rajitha Srikhanta (Deputy Chair)

ƒ Certified Practising Accountant ƒ Bachelor of Business (Accounting) ƒ Deputy Chair of the ATO Audit and Risk Committee since July 2019 ƒ Assistant Commissioner in the ATO since 2015

ƒ Over 20 years public service and tax administration experience

12/12 -

Notes (a) While the ATO Audit and Risk Committee financial year operates from 7 October to 2 October, the details in this table cover the period from 1 July 2019 to 30 June 2020.

(b) The number of meetings attended are in accordance with their term as a member of the Audit and Risk Committee, which may not be the full year.

(c) ATO personnel do not receive additional remuneration for their participation on the Committee.

The Australian Charities and Not-for-profits Commission (ACNC) and the Tax Practitioners Board (TPB) have their own Audit and Risk Committees, which are considered subcommittees of the ATO’s Audit and Risk Committee.

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Conformance with obligations

Our ‘Conformance with obligations’ program is a key component of our governance arrangements. The program is aligned with Australian Standards AS ISO 19600:2015 Compliance management systems - Guidelines. The program aims to:

ƒ reduce risks of non-conformance, while increasing the likelihood of early detection and correction ƒ improve employee awareness of legal and policy obligations at all levels of the organisation ƒ foster a culture that does not tolerate illegal or unethical behaviour, preventing corporate misconduct ƒ drive positive organisational change through monitoring, measurement and assessment

ƒ enhance community confidence in our activities.

Assurance that we are meeting our legislative and policy obligations is provided in quarterly conformance statements from responsible senior management and from our integrity indicator results. By asking our business areas how they are managing potential risks and instances of non-conformance, we drive continuous improvement in our systems and procedures. Findings are regularly reviewed by the Audit and Risk Committee.

Open and transparent operations Australia’s tax and superannuation systems are community assets. Appropriate access to information about these systems enhances transparency and leads to increased levels of trust and confidence.

External scrutiny

External scrutineers provide independent reviews of the ATO’s operation - either as the result of their own annual program of work, or in response to concerns raised by members of the public and the Australian Parliament. Reviews help us to identify options for improving services to our clients, address potential barriers to willing participation, and ensure the successful delivery of outcomes in our administration of the tax and superannuation systems.

The ACNC and TPB publish additional information about external scrutiny in their annual reports.

Judicial reviews and administrative tribunals

The courts may be called upon to determine the application of tax law. See Appendix 5 for a list of significant cases decided by the courts and the Administrative Appeals Tribunal (AAT).

Australian Information Commissioner

The Office of the Australian Information Commissioner (OAIC), established under the Australian Information Commissioner Act 2010, provides independent oversight of privacy protection and access under the Freedom of Information Act 1982 (FOI Act).

In 2019-20, we registered 18 cases where the OAIC notified the ATO of a review of our FOI Act decisions. In the same period, we finalised 22 cases where the OAIC notified the ATO of the decision. Of those 22, nine were discontinued by the OAIC, six were withdrawn by the applicant and, in the remaining seven, the OAIC affirmed four ATO decisions and varied three.

Details of OAIC investigations are available at oaic.gov.au.

Freedom of information We use our website to give people access to documents and policies that we use in making decisions. In addition, we provide information under the FOI Act. Past documents released under

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the FOI Act are publicly listed on our FOI Act disclosure log, other than documents exempt from this requirement. The disclosure log is available at ato.gov.au/foi.

As an agency covered by the FOI Act, the ATO is also required to publish information as part of the Information Publication Scheme (IPS), displaying on our website a plan showing what information we publish in accordance with the IPS requirements. The ATO IPS plan is available at ato.gov.au/ips.

The IPS is a requirement in Part II of the FOI Act, and has replaced the former requirement to publish a ‘Section 8’ statement in an annual report.

Auditor-General

The Auditor-General, operating under the Auditor-General Act 1997, is supported by the Australian National Audit Office (ANAO) to produce independent performance audits, financial statement audits, and assurance reviews.

The following performance audits concerning the ATO were tabled in 2019-20:

ƒ Management of the Tourist Refund Scheme (September 2019) ƒ Tax Avoidance Taskforce — Meeting Budget Commitments (December 2019) ƒ Regulation of Charities by the Australian Charities and Not-for-profits Commission (March 2020).

The reports on these performance audits are available at anao.gov.au. Details of the ANAO financial audit of our operations are provided in Part 5 of this report.

Parliamentary committees

Each year, the ATO appears before a number of parliamentary committees to answer questions about our administration of the tax and superannuation systems.

House Committees The House of Representatives Standing Committee on Tax and Revenue is tasked with reviewing the performance of the ATO as outlined in our annual reports. In 2019-20, we did not appear before any House Committees.

Senate Committees We appeared with Treasury at two Senate Estimates hearings in 2019-20, responding to approximately 90 questions on notice, as well as the following Senate Committee inquiries:

ƒ Economics Legislation Committee inquiry into the Treasury Laws Amendment (2019 Tax Integrity And Other Measures No. 1) Bill 2019 [Provisions] ƒ Economics Legislation Committee inquiry into the Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019 [Provisions]

ƒ Economics Legislation Committee inquiry into the provisions of the Currency (Restrictions on the Use of Cash) Bill 2019* ƒ Economics Legislation Committee inquiry into the performance of the Inspector-General of Taxation* ƒ Community Affairs Reference Committee inquiry into Centrelink’s compliance program

ƒ Standing Committee for the Scrutiny of Delegated Legislation inquiry into Taxation Administration (Private Ancillary Fund) Guidelines 2019 ƒ Select Committee on COVID-19 inquiry into the Australian Government’s response to the COVID-19 pandemic*.

Note For the inquiries marked with an asterisk (*) in the above list, we appeared twice in 2019-20.

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Joint Committees We appeared before the following five joint committee inquiries:

ƒ Joint Standing Committee on Treaties inquiry into Double Taxation - Israel ƒ Joint Committee on Public Accounts and Audit inquiry into the Auditor-General’s Reports 25, 29, 38, 42, 44, 45 and 51 (2018-19) ƒ Joint Committee on Law Enforcement inquiry into illicit tobacco

ƒ Joint Committee on Corporations and Financial Services inquiry into the regulation of auditing in Australia ƒ Parliamentary Standing Committee on Public Works inquiry into the ATO proposed fit-out of 152 Wharf Street Brisbane.

Inspector-General of Taxation and Taxation Ombudsman

The Inspector-General of Taxation and Taxation Ombudsman (IGTO), established under the Inspector-General of Taxation Act 2003, undertakes reviews and investigations to identify systemic issues in the administration of tax law. These may be at the request of the government or the ATO, through environmental scans or following complaints from the public.

The ATO received 1,382 complaints via the IGTO in 2019-20. Of these:

ƒ 902 complaints (65%) had not previously been lodged with us and were subsequently transferred back to our complaint-handling process ƒ 480 complaints (35%) were referred to us to provide a response to the IGTO for resolution with the client.

IGTO-reported complaints encompass assistance and assurance, and are more enquiry-like in nature.

The IGTO’s full reports are available at igt.gov.au. The IGTO released no reports relating to the ATO in 2019-20.

Commonwealth Ombudsman

While the IGTO investigates complaints from the public about administrative actions of the ATO and TPB, the Commonwealth Ombudsman provides oversight in the ATO’s management of allegations and complaints made under the Public Interest Disclosure Act 2013.

Public interest disclosures received by the ATO are managed in accordance with ATO procedures, which meet the requirements of the Act and Commonwealth Ombudsman guidelines.

During 2019-20:

ƒ 15 disclosures were made direct to the ATO ƒ 3 additional disclosures were referred to us from the Ombudsman ƒ 1 disclosure was referred by the ATO referred to the Australian Federal Police for investigation.

Disability reporting

The National disability strategy 2010-2020 is Australia’s overarching framework for disability reform. It acts to ensure the principles underpinning the United Nations Convention on the Rights of Persons with Disabilities are incorporated into Australia’s policies and programs that affect people with disability, their families and carers.

All levels of government will continue to be held accountable for the implementation of the strategy through biennial progress reporting to the Council of Australian Governments. Progress reports can be found at dss.gov.au.

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Disability reporting is included in the Australian Public Service Commission’s State of the service reports and the APS Statistical bulletin. These reports are available at apsc.gov.au.

Through the ATO’s Diversity and inclusion plan 2017-19, we continue to support individuals who identify with disability, through employment, retention and career development. The number of our employees who voluntarily identify as living with a disability has remained consistent this year, at 3% of our ongoing workforce.

We remain focused on building the ATO’s reputation as an employer of choice for people with disability by increasing awareness of what we can offer potential employees. We are also committed to doing more to encourage current employees to self-identify so we can ensure appropriate reasonable adjustment.

In 2019-20, the ATO enhanced support initiatives for employees with disability, including modification of technology and software to support staff while working from home. We enhanced our ‘My WorkAbility’ passport, empowering employees to take ownership of their workplace adjustment information captured in corporate systems. We also provisioned a series of educational videos to increase awareness of disability in the workplace, and we were acknowledged by the Australian Network on Disability for our consistent high performance in marketing, communication and digital experience.

The ATO continues to deliver support through reasonable adjustment options, local assistance through our People support teams, and through our active and valued employee network, the National disability and ally network.

Being accountable to our stakeholders We are accountable to our ministers, parliament and the community for how we administer the tax and superannuation systems. This includes being accountable for how we deal with people and the information they share with us.

ƒ The Taxpayers’ Charter outlines our commitment to dealing with taxpayers in a way that is professional, considers their circumstances, and provides them with relevant information.

ƒ We understand that people will sometimes be unsatisfied with their interactions with us. Our complaints process is designed to make it easy for them to raise an issue with us.

ƒ As required under Section 3B of the Taxation Administration Act 1953 (TAA), our annual report includes additional information on disclosures of taxpayer information that occurred during the year.

Taxpayers’ Charter

We work to build a relationship with the community that is based on mutual trust and respect. Our Taxpayers’ Charter sets out our commitment to act professionally, treat taxpayers fairly and reasonably, and help them meet their obligations by providing accurate, consistent and clear information. The charter explains:

ƒ taxpayers’ rights ƒ taxpayers’ taxation obligations ƒ what taxpayers can do if they are not satisfied with our decisions, actions or service ƒ the standard of service taxpayers can expect from us.

The eight documents that describe how the charter applies in different contexts - for example, in an audit - are available on our website at ato.gov.au/charter.

For more information about how we measure the effectiveness of the Taxpayers’ Charter, see Appendix 2.

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Complaints handling

The ATO continues to focus on improving client interactions. As with experiences around the world, 2019-20 was a unique year for the ATO. In particular, the implementation of the COVID-19 stimulus measures and the low and middle income tax offset saw an increase in community interest and interactions. That trend was also seen in complaints, with 24,778 received for the year (inclusive of those from the IGTO).

Although the year brought challenges, the flexibility of the ATO’s front-line resources enabled us to adjust our efforts and redirect resources where needed. This saw a complaint finalisation result of 83% resolved in 15 business days or within the date negotiated, slightly below our target of 85%.

The number of complaints continues to be only a small proportion of our interactions, representing 0.1% of total tax returns lodged. Complaints, feedback and compliments provide valuable insights to identify enhancements to our services. In 2019-20, the ATO received 3,430 items of feedback which most often related to enhancements to our online services, as well as our communication products and channels. In addition, 2,079 community compliments were received, which reinforced our efforts to deliver good client experiences, often relating to positive interactions delivered by our staff, as well as the usability of our services.

FIGURE 4.2 Complaint issues, 2019-20

Note The number of complaint issues is different to the total number of complaints, for the following reasons:

ƒ a single complaint may include multiple issues ƒ a complaint issue may not have been captured.

1,370 Debt

1,458 People

1,484

Account action

152

Reporting obligations

1,808 Client records

1,723

Audit and review

3,156 Services

4,459 Superannuation

4,734

Income tax

1,890 Activity statements

22,234

Total issues

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Reporting on tax administration

The Taxation Administration Act 1953 (TAA) provides the ATO with powers to administer the tax system. Under section 3B of the Act, we must report each year on whether the information we hold has been disclosed to other parties.

Disclosures to ministers

During 2019-20, there were 27 occasions on which information was disclosed to ministers under subsection 355-55(1) in Schedule 1 of the TAA:

ƒ 2 occasions to the Treasurer ƒ 24 occasions to the Minister for Housing and Assistant Treasurer ƒ 1 occasion to the Assistant Minister for Superannuation, Financial Services and Financial Technology.

Requests and disclosures made to law enforcement agencies

Subsection 355-70(1) in Schedule 1 of the TAA allows the ATO to disclose information to law enforcement agencies in certain circumstances. Details of the information requests made and subsequently provided under this section are reported in Appendix 11.

Disclosure of protected information

We are required to report on the number (if any) of taxation officers found guilty of disclosing protected information, which is a specific offence listed in section 355-25 in Schedule 1 of the TAA.

In 2019-20 there were no taxation officers found guilty of such an offence.

Exercise of the Commissioner’s remedial power

Subdivision 370-A in Schedule 1 of the TAA grants the Commissioner limited powers to modify the operation of the law where it is not working as intended or is creating disproportionate compliance costs. The Commissioner’s remedial power provides the ability to resolve smaller unforeseen or unintended outcomes in the tax and superannuation law in limited circumstances.

The Commissioner exercised this power once in 2019-20. The modification enables the ATO to provide a deceased person’s protected information directly to a registered tax agent or BAS agent, or legal practitioner of an executor or an administrator of the deceased estate.

The Commissioner published 12 additional issues to the list of when the Commissioner’s remedial power was considered but not exercised in 2019-20.

More information about the Commissioner’s remedial power and when it has, and has not, been used is available on our website at ato.gov.au/CRP.

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Workforce management

The ATO’s workforce capability requirements are diverse and varied, with roles that span entrylevel administration and customer service, through to professional specialist roles. We have invested in developing our employer brand to attract and retain the very best candidates with a mix of expertise. Our employee value proposition positions us to offer meaningful and rewarding work, competitive conditions, and a diverse and inclusive culture that appeals to people who will lead us into the future.

We have a highly engaged workforce supported by a robust performance and recognition framework and frontline human resource advisers who provide timely, tailored and tangible solutions to workforce challenges. We have drawn upon this framework and expertise as we faced many challenges this year, including bushfires, droughts, floods and the continuing situation with the COVID-19 pandemic, which caused significant disruption to the way we work. Staff were moved quickly to deliver new priority work, working together across the ATO to achieve significant outcomes, including the government’s COVID-19 economic stimulus measures and managing tax time peaks.

In response to COVID-19, the ATO has developed plans, through consultation with staff and unions, to ensure the health and safety of staff is prioritised, while continuing to deliver government stimulus measures and other essential services to the community. A wide array of technology, policy, health and other supporting solutions were rapidly and safely deployed to enable ATO staff to continue serving the community even when not working from an ATO office.

The ATO has invested in contemporary, flexible learning solutions that offer staff a variety of ways to learn, beyond traditional classroom learning. The conversion of learning products to online delivery has been accelerated this year. Webinars, short learning events and online learning platforms provide staff with access to anywhere, anytime learning. This supplements our focus of on-the-job learning, coaching, secondments to public and private sector organisations, tuition assistance and graduate development programs.

We continued our focus on developing talented leaders of the future and extended access to our programs to other APS agencies to foster whole of APS perspectives to leadership. Our capability framework is integrated across the people system and is also reflected in our recruitment and talent management strategies. The ability of the ATO workforce to respond and adapt so quickly to meet the challenges of 2019-20 is a testament to the capability, culture and commitment of ATO staff and the effectiveness of approaches to managing and developing our workforce.

Statistics on our employees Along with our legislative obligations, we need to understand the size and constitution of our workforce - including working patterns, employment types, diversity, skill sets, work distribution, accommodation requirements and employee retention rates. The following workforce statistics include staff working for the ATO, ACNC and TPB, unless noted otherwise.

Our workforce Table 4.4 is our 2019-20 staffing profile, showing the number of employees by substantive classification level, employment type and working pattern as at 30 June 2020. Table 4.5 shows the same information for the previous year.

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TABLE 4.4  Employees, by level and employment type, at 30 June 2020

Ongoing Non-ongoing Casual

Level Full time Part time Total ongoing Full time Part time Total non- ongoing Total CasualTotal

SES 3 2 0 2 0 0 0 0 2

SES 2 25 1 26 0 1 1 0 27

SES 1 184 10 194 0 0 0 0 194

EL 2 1,302 101 1,403 24 5 29 0 1,432

EL 1 2,994 343 3,337 29 5 34 0 3,371

APS 6 3,621 469 4,090 49 7 56 1 4,147

APS 5 1,605 232 1,837 25 0 25 0 1,862

APS 4 2,667 355 3,022 60 7 67 8 3,097

APS 3 2,378 493 2,871 60 7 67 52 2,990

APS 2 427 88 515 32 0 32 3,236 3,783

APS 1 13 6 19 2 0 2 254 275

Cadet 4 0 4 0 0 0 0 4

TOTAL 15,222 2,098 17,320 281 32 313 3,551 21,184

TABLE 4.5  Employees, by level and employment type, at 30 June 2019

Ongoing Non-ongoing Casual

Level Full time Part time Total ongoing Full time Part time Total non- ongoing Total CasualTotal

SES 3 2 0 2 0 0 0 0 2

SES 2 27 0 27 0 1 1 0 28

SES 1 175 10 185 1 0 1 0 186

EL 2 1,211 105 1,316 26 2 28 1 1,345

EL 1 2,705 352 3,057 20 9 29 0 3,086

APS 6 3,588 507 4,095 29 8 37 3 4,135

APS 5 1,662 258 1,920 11 0 11 1 1,932

APS 4 2,842 400 3,242 37 7 44 0 3,286

APS 3 2,250 546 2,796 100 26 126 21 2,943

APS 2 413 102 515 96 6 102 1,227 1,844

APS 1 17 6 23 8 0 8 326 357

Cadet 13 0 13 0 0 0 0 13

TOTAL 14,905 2,286 17,191 328 59 387 1,579 19,157

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Ongoing employees

Table 4.6 displays our ongoing workforce by substantive classification level, gender and working pattern as at 30 June 2020. Table 4.7 shows the same information for the previous year.

TABLE 4.6  Ongoing employees, by level and gender, at 30 June 2020(a)(b)

Male Female Indeterminate

Level Full time Part time Total maleFull time Part time Total female Full timeTotal indeterminate Total

SES 3 0 0 0 2 0 2 0 0 2

SES 2 16 0 16 9 1 10 0 0 26

SES 1 102 0 102 82 10 92 0 0 194

EL 2 734 11 745 568 90 658 0 0 1,403

EL 1 1,570 41 1,611 1,424 302 1,726 0 0 3,337

APS 6 1,777 48 1,825 1,844 421 2,265 0 0 4,090

APS 5 746 18 764 859 214 1,073 0 0 1,837

APS 4 1,196 55 1,251 1,469 300 1,769 2 2 3,022

APS 3 983 74 1,057 1,393 419 1,812 2 2 2,871

APS 2 152 13 165 275 75 350 0 0 515

APS 1 9 4 13 4 2 6 0 0 19

Cadet 2 0 2 2 0 2 0 0 4

TOTAL 7,287 264 7,551 7,931 1,834 9,765 4 4 17,320

Notes (a) Excludes casual employees.

(b) There were no part-time ongoing employees who identified as indeterminate gender as at 30 June 2020.

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TABLE 4.7  Ongoing employees, by level and gender, at 30 June 2019(a)(b)

Male Female Indeterminate

Level Full time Part time Total maleFull time Part time Total female Full timeTotal

indeterminate Total

SES 3 0 0 0 2 0 2 0 0 2

SES 2 17 0 17 10 0 10 0 0 27

SES 1 100 1 101 75 9 84 0 0 185

EL 2 698 10 708 513 95 608 0 0 1,316

EL 1 1,483 35 1,518 1,222 317 1,539 0 0 3,057

APS 6 1,747 50 1,797 1,841 457 2,298 0 0 4,095

APS 5 798 22 820 864 236 1,100 0 0 1,920

APS 4 1,345 53 1,398 1,497 347 1,844 0 0 3,242

APS 3 917 72 989 1,330 474 1,804 3 3 2,796

APS 2 140 10 150 273 92 365 0 0 515

APS 1 10 4 14 7 2 9 0 0 23

Cadet 5 0 5 8 0 8 0 0 13

TOTAL 7,260 257 7,517 7,642 2,029 9,671 3 3 17,191

Notes (a) Excludes casual employees.

(b) There were no part-time ongoing employees who identified as indeterminate gender as at 30 June 2019.

Non-ongoing employees

Non-going employees are engaged for a specified term or for the duration of a specified task in accordance with the Public Service Act 1999, whereas casual employees are engaged to perform duties that are irregular or intermittent.

Table 4.8 shows our non-ongoing workforce by substantive level, gender and working pattern as at 30 June 2020. Table 4.9 shows the same information for the previous year.

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TABLE 4.8  Non-ongoing employees, by level and gender, at 30 June 2020(a)(b)

Male Female Indeterminate

Level Full time Part time Total maleFull time Part time Total female Full timeTotal

indeterminate Total

SES 2 0 1 1 0 0 0 0 0 1

SES 1 0 0 0 0 0 0 0 0 0

EL 2 16 1 17 8 4 12 0 0 29

EL 1 17 1 18 12 4 16 0 0 34

APS 6 17 2 19 31 5 36 1 1 56

APS 5 5  0 5 20 0 20 0 0 25

APS 4 21 4 25 39 3 42 0 0 67

APS 3 23 0 23 37 7 44 0 0 67

APS 2 20 0 20 12 0 12 0 0 32

APS 1 2 0 2 0 0 0 0 0 2

TOTAL 121 9 130 159 23 182 1 1 313

Notes (a) Excludes contractors and others paid through a third party.

(b) There were no part-time non-ongoing employees who identified as indeterminate gender as at 30 June 2020.

TABLE 4.9  Non-ongoing employees, by level and gender, at 30 June 2019(a)(b)

Male Female

Level Full time Part time Total male Full time Part time Total female Total

SES 2 0 1 1 0 0 0 1

SES 1 0 0 0 1 0 1 1

EL 2 18 1 19 8 1 9 28

EL 1 11 0 11 9 9 18 29

APS 6 14 2 16 15 6 21 37

APS 5 3 0 3 8 0 8 11

APS 4 6 0 6 31 7 38 44

APS 3 38 6 44 62 20 82 126

APS 2 42 0 42 54 6 60 102

APS 1 5 0 5 3 0 3 8

TOTAL 137 10 147 191 49 240 387

Notes (a) Excludes contractors and others paid through a third party.

(b) There were no non-ongoing employees who identified as indeterminate gender as at 30 June 2019.

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Diversity

The ATO strives to have a workforce that reflects the diversity of Australia’s population. A diverse workforce provides a broader range of skills, experience and opportunities for innovation. In 2019-20, the ATO was awarded the ‘Michael Kirby LGBTIQ Inclusion Award’ in the 2019 Australian Human Resources Institute (AHRI) Awards, and placed second in the 2019-20 Australian Network on Disability’s Access and Inclusion Index. These achievements reflect our commitment to building an inclusive culture that embraces the diversity of our clients and staff.

In our Diversity and inclusion plan 2017-19, we recognise six diversity groups that face unique barriers to inclusion. The plan also outlines our four diversity and inclusion principles, for which all employees share responsibility. This is complemented by our Multicultural access and equity action plan 2018-20 and Reconciliation action plan 2018-20.

In 2019-20, we:

ƒ supported a pathway program to help people with autism secure meaningful employment in the ATO ƒ celebrated days of significance, including International Women’s Day 2020, with Mariam Mohammed of MoneySmart

ƒ continued our Opening Doors program, engaging established professionals with caring responsibilities, Australian citizens from refugee backgrounds and veterans transitioning to civilian roles, with the program announced as a finalist in the 2020 Prime Minister’s Veterans’ Employment Awards

ƒ partnered with SBS to launch a suite of new self-paced diversity and inclusion training modules for staff, to complement our existing offerings ƒ commenced the first external evaluation of our diversity and inclusion efforts to continue our growth as a leading employer in diversity and inclusion.

For more details about our diversity plans, see ato.gov.au/diversity.

Table 4.10 shows the proportion of our employees in diversity groups. Table 4.11 shows the numbers of Aboriginal and Torres Strait Islander employees by employment type.

TABLE 4.10  Ongoing employees belonging to diversity groups, at 30 June(a)(b)

Group

2019 %

2020 %

Change from 2019

Aboriginal and Torres Strait Islander people 2.5 2.3 −0.2

With disability 3.1 3.0 −0.1

Culturally and linguistically diverse 21.9 21.1 −0.8

Lesbian, gay, bisexual, trans/transgender and intersex (LGBTI+)(c)

3.8 n/a −

Mature age 36.9 36.6 −0.3

Notes (a) We provide staff with the opportunity to self-identify as Aboriginal and Torres Strait Islander people, having a disability, or being culturally and linguistically diverse.

(b) Information on the sixth diversity group, gender equality, is provided in Table 4.6 (c) Result for 2020 not available at time of publishing.

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TABLE 4.11  Indigenous employees, by employment type, at 30 June

At 30 June 2019 At 30 June 2020

Type Indigenous employees Total employeesIndigenous employees

% Indigenous employees Total employeesIndigenous employees

%

Ongoing 432 17,191 2.5 405 17,320 2.3

Non-ongoing 5 387 1.3 0 313 0.0

Casual 12 1,579 0.8 7 3,551 0.2

TOTAL 449 19,157 2.3 412 21,184 1.9

Job families

We use job families to categorise particular roles. While some roles lend themselves to particular work areas, others are found across the ATO.

TABLE 4.12  Employees, by job family, at 30 June(a)

Job family

2019 %

2020 %

Accounting/finance 1.3 1.2

Administration 5.4 4.0

Analytics/intelligence 5.8 5.9

Communication/marketing 1.7 1.6

Engagement, assurance and compliance 29.1 25.7

Entry level programs 1.6 2.1

Governance and performance 4.5 4.7

Human resources management 3.3 2.9

Information and organisation professionals 1.8 1.7

Information technology 8.4 7.4

Law 8.6 7.4

Other agencies 0.9 0.8

Project management 3.0 2.7

Senior executive 1.7 1.2

Service delivery 23.0 30.9

TOTAL 100 100

Note (a) Includes ongoing, non-ongoing and casual employees; excludes external contractors.

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TABLE 4.13  Employees, by business area, at 30 June 2020(a)

Business area Employees

Australian Charities and Not-for-profits Commission 100

ATO Corporate 526

ATO Executive 20

ATO Finance 560

ATO People(b) 1,222

Commonwealth Business Registry Services 206

Client Account Services 4,640

Client Engagement Group Strategy and Performance 171

Debt and Lodgment 1,868

Enterprise Strategy and Design 163

Enterprise Solutions and Technology 1,840

Individuals and Intermediaries 965

Integrated Compliance 887

Policy, Analysis and Legislation 186

Private Wealth 1,467

Public Groups and International 1,495

Review and Dispute Resolution 683

Strategy and Support 988

Smarter Data 558

Small Business 1,170

Superannuation and Employee Obligations 1,139

Tax Counsel Network 188

Tax Practitioners Board 142

TOTAL 21,184

Notes (a) Includes ongoing, non-ongoing and casual employees; excludes external contractors.

(b) Includes entry level program participants (graduates, cadets, apprentices, the Evergreen Indigenous Advancement Program and the Executive Assistant Advancement Program).

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Locations

The ATO is located in 22 buildings across Australia and 10 shopfront sites. We also have 11 self-service shopfronts. The ATO property portfolio is managed in accordance with the Commonwealth property management framework.

FIGURE 4.3  Our workforce by location, at 30 June 2020

Note Does not include overseas staff.

Table 4.14 shows our workforce by location and employment type, as at 30 June 2020, compared to the previous year. Some regions are made up of multiple locations - and in the following tables:

ƒ Brisbane includes Brisbane central business district (CBD), Chermside and Upper Mount Gravatt ƒ Melbourne includes Melbourne CBD, Dandenong, Box Hill and Moonee Ponds ƒ Sydney includes Sydney CBD, Penrith and Parramatta.

TABLE 4.14  Total employees, by location and employment type, at 30 June(a)

At 30 June 2019 At 30 June 2020

State / Territory Region Ongoing Non- ongoing Casual Total Ongoing Non- ongoing Casual Total

NSW Albury 546 15 368 929 590 5 409 1,004

Gosford 292 43 73 408 352 18 50 420

Newcastle 485 0 4 489 480 4 1 485

Sydney 3,042 75 277 3,394 3,039 60 592 3,691

Wollongong 281 4 127 412 294 5 263 562

Total 4,646 137 849 5,632 4,755 92 1,315 6,162

Qld Brisbane 2,838 40 199 3,077 2,859 54 523 3,436

Townsville 275 6 10 291 270 1 9 280

Total 3,113 46 209 3,368 3,129 55 532 3,716

N S W 6,162

Q ld 3,716

T as 762

A C T 2,064

V ic 5,323

NT 0

WA 1,153

SA 2,002

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TABLE 4.14  Total employees, by location and employment type, at 30 June(a) continued

At 30 June 2019 At 30 June 2020

State / Territory Region Ongoing Non- ongoing Casual Total Ongoing Non- ongoing Casual Total

SA Adelaide 1,529 23 142 1,694 1,569 28 405 2,002

Tas Burnie 52 0 1 53 60 0 30 90

Hobart 478 3 153 634 484 0 188 672

Total 530 3 154 687 544 0 218 762

Vic Geelong 109 0 2 111 100 0 0 100

Melbourne 4,310 117 206 4,633 4,328 88 807 5,223

Total 4,419 117 208 4,744 4,428 88 807 5,323

WA Perth 843 10 2 855 888 26 239 1,153

ACT Canberra 2,109 51 15 2,175 2,005 24 35 2,064

Overseas Various 2 0 0 2 2 0 0 2

TOTAL All locations 17,191 387 1,579 19,157 17,320 313 3,551 21,184

Note (a) There were no employees in the Northern Territory as at 30 June 2020.

Ongoing employees

Table 4.15 shows our ongoing workforce by location, gender, and working pattern, as at 30 June 2020. Table 4.16 shows the same information for the previous year.

TABLE 4.15  Ongoing employees, by location and gender, at 30 June 2020(a)(b)(c)

Male Female Indeterminate

State / Territory Region Full time Part timeTotal male Full time Part timeTotal female Full time Total

indeterminate Total

NSW Albury 171 12 183 339 68 407 0 0 590

Gosford 149 2 151 163 38 201 0 0 352

Newcastle 172 6 178 241 61 302 0 0 480

Sydney 1,166 35 1,201 1,505 332 1,837 1 1 3,039

Wollongong 126 3 129 137 28 165 0 0 294

Total 1,784 58 1,842 2,385 527 2,912 1 1 4,755

Qld Brisbane 1,254 43 1,297 1,318 243 1,561 1 1 2,859

Townsville 75 2 77 154 39 193 0 0 270

Total 1,329 45 1,374 1,472 282 1,754 1 1 3,129

SA Adelaide 688 31 719 676 173 849 1 1 1,569

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TABLE 4.15  Ongoing employees, by location and gender, at 30 June 2020(a)(b)(c) continued

Male Female Indeterminate

State / Territory Region Full time Part timeTotal male Full time Part timeTotal female Full time Total

indeterminate Total

Tas Burnie 12 2 14 35 11 46 0 0 60

Hobart 163 14 177 224 83 307 0 0 484

Total 175 16 191 259 94 353 0 0 544

Vic Geelong 38 1 39 48 13 61 0 0 100

Melbourne 1,987 74 2,061 1,810 456 2,266 1 1 4,328

Total 2,025 75 2,100 1,858 469 2,327 1 1 4,428

WA Perth 401 12 413 385 90 475 0 0 888

ACT Canberra 883 27 910 896 199 1,095 0 0 2,005

Overseas Various 2 0 0 0 0 0 0 0 2

TOTAL All locations 7,287 264 7,551 7,931 1,834 9,765 4 4 17,320

Notes (a) Excludes casual employees.

(b) There were no part-time ongoing employees who identified as indeterminate gender as at 30 June 2020.

(c) There were no ongoing employees in the Northern Territory as at 30 June 2020.

TABLE 4.16  Ongoing employees, by location and gender, at 30 June 2019(a)(b)(c)

Male Female Indeterminate

State / Territory Region Full time Part timeTotal male Full time Part timeTotal female Full time Total

indeterminate Total

NSW Albury 164 12 176 290 80 370 0 0 546

Gosford 127 1 128 132 32 164 0 0 292

Newcastle 173 6 179 234 72 306 0 0 485

Sydney 1,179 30 1,209 1,487 346 1,833 0 0 3,042

Wollongong 115 4 119 129 33 162 0 0 281

Total 1,758 53 1,811 2,272 563 2,835 0 0 4,646

Qld Brisbane 1,248 38 1,286 1,264 287 1,551 1 1 2,838

Townsville 77 1 78 157 40 197 0 0 275

Total 1,325 39 1,364 1,421 327 1,748 1 1 3,113

SA Adelaide 677 30 707 629 192 821 1 1 1,529

Tas Burnie 13 0 13 24 15 39 0 0 52

Hobart 160 15 175 212 91 303 0 0 478

Total 173 15 188 236 106 342 0 0 530

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TABLE 4.16  Ongoing employees, by location and gender, at 30 June 2019(a)(b)(c) continued

Male Female Indeterminate

State / Territory Region Full time Part timeTotal male Full time Part timeTotal female Full time Total

indeterminate Total

Vic Geelong 43 0 43 53 13 66 0 0 109

Melbourne 1,964 74 2,038 1,769 502 2,271 1 1 4,310

Total 2,007 74 2,081 1,822 515 2,337 1 1 4,419

WA Perth 378 13 391 357 95 452 0 0 843

ACT Canberra 940 33 973 905 231 1,136 0 0 2,109

Overseas Various 2 0 2 0 0 0 0 0 2

TOTAL All locations 7,260 257 7,517 7,642 2,029 9,671 3 3 17,191

Notes (a) Excludes casual employees.

(b) There were no part-time ongoing employees who identified as indeterminate gender as at 30 June 2019.

(c) There were no ongoing employees in the Northern Territory as at 30 June 2019.

Non-ongoing employees

Table 4.17 shows our non-ongoing employees by location and gender, at 30 June 2020, further broken down by working pattern. Table 4.18 shows the same information for the previous year.

Non-ongoing employees are engaged for a specified term or task. In some circumstances their engagement can be extended up to three years. The term ‘non-ongoing’ does not include casual (irregular/intermittent) employees, contractors or others paid through a third party.

TABLE 4.17  Non-ongoing employees, by location and gender, at 30 June 2020(a)(b)(c)

Male Female Indeterminate

State / Territory Region Full time Part timeTotal male Full time Part timeTotal female Full time Total

indeterminate Total

NSW Albury 2 0 2 2 1 3 0 0 5

Gosford 5 0 5 11 2 13 0 0 18

Newcastle 1 1 2 2 0 2 0 0 4

Sydney 19 1 20 37 3 40 0 0 0

Wollongong 1 1 2 3 0 3 0 0 5

Total 28 3 31 55 6 61 0 0 92

Qld Brisbane 22 4 26 24 3 27 1 1 54

Townsville 1 0 1 0 0 0 0 0 1

Total 23 4 27 24 3 27 1 1 55

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TABLE 4.17  Non-ongoing employees, by location and gender, at 30 June 2020(a)(b)(c) continued

Male Female Indeterminate

State / Territory Region Full time Part timeTotal male Full time Part timeTotal female Full time Total

indeterminate Total

SA Adelaide 6 0 6 20 2 22 0 0 28

Tas Hobart 0 0 0 0 0 0 0 0 0

Vic Melbourne 44 0 44 38 6 44 0 0 88

WA Perth 13 0 13 11 2 13 0 0 26

ACT Canberra 7 2 9 11 4 15 0 0 24

TOTAL 121 9 130 159 23 182 1 1 313

Notes (a) Excludes contractors and others paid through a third party.

(b) There were no part-time non-ongoing employees who identified as indeterminate gender as at 30 June 2020.

(c) There were no non-ongoing employees in the Northern Territory as at 30 June 2020.

TABLE 4.18  Non-ongoing employees, by location and gender, at 30 June 2019(a)(b)(c)

Male Female

State / Territory Region Full time

Part time

Total male Full time Part time

Total female Total

NSW Albury 4 0 4 11 0 11 15

Gosford 14 0 14 27 2 29 43

Newcastle 0 0 0 0 0 0 0

Sydney 25 2 27 34 14 48 75

Wollongong 1 1 2 1 1 2 4

Total 44 3 47 73 17 90 137

Qld Brisbane 20 0 20 18 2 20 40

Townsville 3 0 3 1 2 3 6

Total 23 0 23 19 4 23 46

SA Adelaide 9 0 9 13 1 14 23

Tas Hobart 2 0 2 1 0 1 3

Vic Melbourne 42 6 48 51 18 69 117

WA Perth 5 0 5 4 1 5 10

ACT Canberra 12 1 13 30 8 38 51

TOTAL 137 10 147 191 49 240 387

Notes (a) Excludes contractors and others paid through a third party.

(b) There were no non-ongoing employees who identified as indeterminate gender as at 30 June 2019.

(c) There were no non-ongoing employees in the Northern Territory as at 30 June 2019.

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Employee retention and separation

The following tables provide information on our ongoing employee retention rates and separations.

Table 4.19 shows the numbers of ongoing employees by years of service, at 30 June 2019 and 30 June 2020.

TABLE 4.19  Years of service for ongoing employees, at 30 June

Years of service

At 30 June 2019

At 30 June 2020

Change %

0-4 years 3,318 4,024 21.3

5-9 years 3,279 3,039 −7.3

10-14 years 3,671 2,958 −19.4

15-19 years 3,936 3,419 −13.1

20-24 years 922 1,919 108.1

25-29 years 540 359 −33.5

30-34 years 1,103 1,066 −3.4

35-39 years 365 470 28.8

40-44 years 51 58 13.7

45-49 years 6 8 33.3

50 years or more 0 0 −

TOTAL 17,191 17,320 0.8

Table 4.20 shows the numbers of ongoing employees that left the ATO during the year, grouped by reason for separation, for 2018-19 and 2019-20.

TABLE 4.20 Reasons for ongoing employee separations, 2018-19 and 2019-20

Employee separations 2018-19 2019-20

Change %

Resignation 432 332 −23.1

Age retirement 257 259 0.8

Redundancy 580 313 −46.0

Dismissal 36 26 −27.8

Movement to another agency 185 174 −5.9

Invalidity and death 32 36 12.5

TOTAL 1,522 1,140 −25.1

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Our employment arrangements The policy outlining remuneration and conditions for Australian Public Service (APS) agencies is set by Australian Government Workplace bargaining policy 2018. The guiding principles are:

ƒ enterprise agreements and other workplace arrangements need to support flexible, modern workplaces - they are not to contain restrictive work practices or unduly limit workplace flexibility ƒ remuneration increases are to be modest and remain within an agency’s existing budget ƒ terms and conditions of employment are to be reasonable and reflect community expectations

ƒ freedom of association is to be respected.

More information about remuneration in the APS is available in the APSC’s Remuneration report, available at apsc.gov.au.

The ATO’s remuneration policy is in accordance with the Workplace bargaining policy 2018.

Workplace agreements

The majority of our staff are employed under the ATO enterprise agreement 2017, which sets out employment conditions. This agreement has a notional expiry date of 3 August 2020.

During the year, the ATO recommended to staff that the agreement be retained and future pay increases be provided by a determination made under section 24(1) of the Public Service Act 1999. This proposal was put to a staff poll in November 2019 where 94% of respondents were supportive. The determination is now in place with the final pay rise scheduled for 4 August 2022.

Table 4.21 shows the numbers of staff covered by the enterprise agreement, and those employed under other arrangements.

TABLE 4.21  Employment arrangements of SES and non-SES employees, at 30 June 2020

Arrangement SES Non-SES Total

ATO Enterprise Agreement 2017 0 21,033 21,033

Individual flexibility arrangements 0 13 13

Determinations under subsection 24(1) of the Public Service Act 1999(a)

223 0 223

TOTAL 223 21,046 21,269

Note (a) Excludes a Band 2 SES who is a statutory position holder (Second Commissioner).

Remuneration

Base rates of pay and other remuneration arrangements are set, for the majority of non-SES staff, in the ATO enterprise agreement. The agreement includes provision for individual salary advancement subject to satisfactory performance, including some other assessment factors for EL 2 employees.

On 9 April 2020, the government announced an APS-wide deferral of non-SES pay increases by six months from the date they would have been due. As a result, pay rises for APS 1 to EL 2 employees have been deferred until 4 February 2021. Additionally, there will be no increases in remuneration, entitlements and allowances for all SES employees for the duration of the COVID-19 pandemic. The rates for ATO staff for 2019-20 are shown in Table 4.22.

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The APS executive remuneration management policy sets out arrangements for the management of executive remuneration, including an approval process for remuneration proposals above a notional amount. Total remuneration for staff in the senior executive service (SES) includes a notional component for provision of a motor vehicle and parking, and for superannuation calculated at 15.4% of 101% of base salary.

The Remuneration Tribunal sets the remuneration and conditions for the Commissioner. The tribunal issues the Guide to the Principal Executive Office (PEO) structure, which is used by the Commissioner to determine remuneration and conditions for Second Commissioners. Second Commissioners and those who have acted in a Second Commissioner role for three months or more are also eligible for performance pay under the guidelines. The remuneration of our key management personnel, including performance pay, is shown in Table 4.23.

TABLE 4.22 Salary ranges (excluding non-salary benefits) by classification level, at 30 June 2020

Level

Minimum $

Maximum $

SES 3 290,621 333,553

SES 2 223,349 256,491

SES 1 171,645 202,910

EL 2 127,787 152,214

EL 1 106,183 115,762

APS 6 and equivalent 82,898 95,181

APS 5 and equivalent 76,778 81,394

APS 4 and equivalent 68,871 74,748

APS 3 and equivalent 61,825 66,701

APS 2 and equivalent 54,321 60,202

APS 1 and equivalent 48,036 53,052

Cadets while undertaking practical training in the workplace 48,036 53,052

Cadets while undertaking study 16,518 26,705

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Key management personnel

The Commissioner and other members of the ATO Executive are considered key management personnel as they have responsibility and authority for planning, directing and controlling the activities of the ATO. Details about the responsibilities of the ATO Executive are outlined in Part 1 of this report.

TABLE 4.23 Remuneration for key management personnel, 2019-20(a)(b)(c)

Short-term benefits

Post-employment benefits

Other long-term benefits

Name Position title Base salary BonusesOther benefits and allowances Superannuation

contributions Long service leave Total remuneration

Chris Jordan AO Commissioner of Taxation $866,230 $0 $0 $21,168 $41,629 $929,027

Frances Cawthra(d)

Chief Finance Officer

$634 $0 $2,323 $2,762 $0 $5,720

Janine Bristow(d) Chief Finance Officer $242,487 $0 $29,117 $41,135 $39,530 $352,269

Jacqui Curtis(e) Chief Operating Officer $320,879 $0 $31,696 $63,335 $29,242 $445,153

Jeremy Hirschhorn

Second Commissioner $371,005 $58,695 $244 $38,987 $22,895 $491,825

Ramez Katf Second

Commissioner $396,657 $61,630 $0 $21,168 $13,381 $492,836

Andrew Mills(d) Second Commissioner $195,770 $0 $0 $10,343 $14,619 $220,732

Melinda Smith Chief Service Delivery Officer $425,325 $0 $2,689 $21,168 $12,124 $461,306

Jeremy Geale(d) Acting Second Commissioner/ COVID Response

$175,171 $0 $16,908 $22,096 $2,869 $217,043

Kirsten Fish(d) Acting Second Commissioner/ Direct Report

$87,162 $0 $8,186 $11,355 $1,489 $108,192

Michelle Crosby(d)

Acting Chief Service Delivery Officer

$79,543 $0 $7,718 $12,242 $2,524 $102,027

Notes (a) Totals may differ from the sum of the components due to rounding.

(b) Staff are not offered long-term benefits other than long service leave. Only Second Commissioners are eligible for bonuses. No termination benefits were paid to key management personnel in 2019-20.

(c) Base salary may be higher than the maximum salary range due to the inclusion of annual leave paid and the net movement in annual leave balances in the reporting period.

(d) Figures reflect period occupied in a key management personnel position.

(e) Figures include higher duties for Jacqui Curtis while acting Commissioner from 15 to 30 June 2020.

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Senior executives

Under the PGPA Act, we must provide summary information about the remuneration of senior executive officers who are not listed as key management personnel. For the ATO, this comprises our SES Band 1 and 2 officers. The information is provided in Table 4.24.

TABLE 4.24 Remuneration for senior executives, 2019-20(a)(b)

Short-term benefits

Post-employment benefits

Other long-term benefits

Termination benefits

Total

remuneration

Total remuneration bands No. of senior executives Average base salary Average other benefits and

allowances Average superannuation

contributions Average long service leave Average termination

benefits Average total remuneration

$0-$220,000 78 $74,676 $11,797 $17,060 $5,409 $534 $109,475

$220,001-$245,000 17 $164,666 $28,876 $29,083 $7,038 $5,760 $235,424

$245,001-$270,000 82 $182,404 $30,284 $33,462 $12,199 $0 $258,349

$270,001-$295,000 67 $200,808 $30,345 $36,713 $14,032 $0 $281,899

$295,001-$320,000 16 $204,718 $28,601 $36,589 $18,548 $15,625 $304,081

$320,001-$345,000 6 $241,444 $34,579 $41,305 $17,444 $0 $334,773

$345,001-$370,000 6 $274,062 $28,054 $39,537 $12,878 $0 $354,531

$370,001-$395,000 5 $265,115 $36,383 $48,133 $29,872 $0 $379,502

$595,001-$620,000 1 $209,890 $362,345 $29,353 $8,903 $0 $610,492

Notes (a) Totals may differ from the sum of the components due to rounding.

(b) Staff are not offered long-term benefits other than long service leave. Only Second Commissioners are eligible for bonuses.

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Other highly paid staff

Other highly paid staff are those officials who are not listed as key management personnel or senior executives, and whose total remuneration in 2019-20 exceeded $225,000.

The ATO has 13 staff in this category. Details are provided in Table 4.25.

TABLE 4.25 Remuneration for other highly paid staff, 2019-20(a)(b)

Short-term benefits

Post-employment benefits

Other long-term benefits

Termination benefits

Total

remuneration

Total remuneration bands No. of other highly paid staff Average base salaryAverage other benefits and

allowancesAverage superannuation

contributions Average long service leave Average termination

benefits Average total remuneration

$225,001-$245,000 6 $86,020 $0 $21,981 $912 $123,749 $232,662

$245,001-$270,000 5 $78,264 $1,740 $28,452 $1,038 $144,160 $253,654

$270,001-$295,000 1 $72,005 $0 $8,353 $888 $197,000 $278,246

$395,001-$420,000 1 $217,544 $147,742 $32,592 $9,763 $0 $407,641

Notes (a) Totals may differ from the sum of the components due to rounding.

(b) Staff are not offered long-term benefits other than long service leave. Only Second Commissioners are eligible for bonuses.

Non-salary benefits

The ATO provides its staff with a range of non-salary benefits.

SES officers are entitled to:

ƒ cash in lieu of a motor vehicle ƒ parking at work or cash in lieu of parking ƒ airline lounge memberships if eight or more return trips are planned for the year.

Executive Level 2 employees are entitled to:

ƒ a taxable annual allowance ($1,740 in 2019-20) to assist with the purchase of items and services that help maintain or increase their level of professionalism, such as membership of a professional association

ƒ airline lounge memberships if they are likely to undertake eight or more return flights in the following year.

We offer our staff non-salary benefits in some circumstances:

ƒ Our executive officers are offered an iPad or iPhone for work use, along with other employees who frequently travel, work remotely or manage a large number of staff.

ƒ Fees will be reimbursed for employees who must be a member of a professional body or require an annual licence or professional practising certificate in order to perform their duties.

ƒ We provide support for approved employees to undertake eligible part-time studies, which may include time off work and/or financial assistance.

ƒ All employees who are likely to undertake 12 or more return flights in the following year can apply for airline lounge memberships.

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We also offer salary packaging to all ongoing employees, and employees with an individual agreement. We outsource salary packaging administration and novated leasing arrangements to an external company called Smartsalary. Our employees have access to salary packaging of the following items:

ƒ cars and utility vehicles (novated lease), with fringe benefits tax (FBT) applicable ƒ car parking, with FBT applicable ƒ superannuation, self-only, exempt from FBT ƒ airline lounge membership, exempt from FBT

ƒ professional association membership fees and subscriptions, exempt from FBT.

Around 2,200 employees had salary packaging arrangements in place in 2019-20.

Work health and safety The ATO has a number of obligations under the Work Health and Safety Act 2011 (WHS Act) and our own enterprise agreement. We take these obligations seriously, as the health and wellbeing of our workforce is critical to supporting engagement, productivity and serving the community.

Our vision for health and safety is a healthy, engaged and productive workforce. We have a range of initiatives to support us in achieving this outcome and to eliminate or minimise work health and safety risks. Examples include:

ƒ a structured consultation program with our staff and their representatives about health and safety matters ƒ regular work health and safety inspections in all ATO sites ƒ a bespoke IT program on all ATO computers that enables staff to self-manage and monitor

keyboard use, encouraging regular recuperative breaks and stretches/exercise ƒ first aid services at all sites ƒ annual flu vaccinations.

The ATO responded to the disasters of bushfires and COVID-19 this year through our business continuity framework, implementing all recommended risk mitigations by authorities and ensuring COVID-safe plans were in place.

TABLE 4.26 Safety, Rehabilitation and Compensation Commission performance indicators, 2017-18 to 2019-20(a)

Indicator 2017-18 2018-19 2019-20

P1.1 Incidence of injuries with five or more days lost time per 1,000 full-time equivalent employees 1.6 1.4 0.7

P1.2 Incidence of injuries with 30 or more days lost time per 1,000 full-time equivalent employees 0.6 0.8 0.4

P1.3 Incidence of injuries with 60 or more days lost time per 1,000 full-time equivalent employees 0.6 0.5 0.3

P4 Lost time injury (claims) frequency rate 0.9 0.8 0.4

C1 Average time taken (in calendar days from date of injury to lodging claim with Comcare) 80 50 41

R1 Percentage of claims with incapacity for 10 or more days and a return to work plan (%) 33 52 45

R2 Quality of return to work (% achieving return to work on case closure) 39 44 60

Note (a) Figures for previous years in this table may vary from those reported in past annual reports as Comcare may continue to accept claims for past years.

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TABLE 4.27 Notifiable incidents, 2017-18 to 2019-20

Incident 2017-18 2018-19 2019-20

Dangerous occurrence 0 0 5

Serious personal injury 1 0 0

Death 1 0 0

TOTAL 2 0 5

Details of work health and safety investigations

The WHS Act requires that we provide information about any investigations conducted during the year that relate to us, including details of all notices given to us during the year under Part 10 of the Act.

During 2019-20, we:

ƒ investigated no incidents (Comcare was satisfied with ATO action on the dangerous occurrences reported as notifiable incidents, none of which resulted in any significant injury or illness) ƒ received no notices under Part 10 of the Act - enforcement measures.

Carer recognition The ATO is not responsible for the development, implementation, provision or evaluation of care supports and, therefore, section 8(3) of the Carer Recognition Act 2010 does not apply.

We do however support carers in the workplace through our employment policies, including flexible hours, access to carers leave, and our network of Carers, Helpers and Interested others in the ATO (CHIATO). Flexible working arrangements in the ATO have increased significantly over the past 12 months. The types of flexible working arrangements available to ATO staff to support carers include:

ƒ part-time work agreements ƒ breastfeeding/lactation breaks ƒ non-standard working hours ƒ work from home / remote work arrangements

ƒ job share arrangements ƒ individual flexibility arrangements ƒ purchased leave schemes ƒ career break or sabbatical schemes

ƒ flex leave.

These elements support us in fulfilling our responsibilities to our stakeholders - ministers, parliament and the community - whether they come from legislation or community expectations.

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Financial performance

The ATO is responsible for the management of substantial Commonwealth funds and must demonstrate effective and efficient management of resources in accordance with the Australian Government’s policies and the requirements of other agencies, such as the Australian National Audit Office (ANAO).

For our financial statements (as required by subsection 43(4) of the PGPA Act), see Part 5.

For details on how we have performed against our financial performance measures in our corporate plan, see strategic objective F1 in the annual performance statement on page 33.

Operating expense budget The ATO actively manages its budget through governance and assurance processes, including oversight by senior management committees. These committees provide an integrated approach to effective resource management and prioritisation of significant investment decisions.

The ATO’s operating expense budget for 2019-20 (excluding depreciation) was $3.6 billion.

The ATO’s 2019-20 financial result was an operating surplus of $8.2 million or 0.2% under budget. This result includes lease principal repayments under AASB 16 leasing standards and excludes non-cash financial accounting adjustments, such as write-off expenses, depreciation, amortisation, finance lease and revaluation adjustments made for our financial statements. For our financial statements, see Part 5.

FIGURE 4.4 Operating expenditure, 2019-20

Labour 51.7%

Technology 13.9%

Consultants and contractors 12.2% 10.4% Depreciation

3.6% Printing, postage and office operations

2.7% Other

1.7% Property and

operating lease rentals

1.7% Legal costs

1.3% Payment to the Department of Home Affairs for tax administration services

0.5% Travel

Bank fees and collection charges 0.4%

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Capital budget The ATO’s approach to capital management includes a capital management plan that contains information about our proposed capital expenditure from all funding sources.

The ATO commenced 2019-20 with a capital budget of $160.9 million, which comprised:

ƒ departmental capital budget of $117.7 million ƒ equity funding of $43.2 million.

During the year, the capital budget increased by $22.5 million as a result of both government and ATO decisions.

The ATO’s 2019-20 capital expenditure was $150.2 million. The ATO has carried forward $20.5 million to support building and infrastructure improvements and legislative projects in future years.

TABLE 4.28 Capital expenditure, 2017-18 to 2019-20(a)

Capital item

2017-18 $m

2018-19 $m

2019-20 $m

Building improvements 11.8 0.7 10.7

Internally developed software 160.9 134.1 123.1

IT infrastructure and hardware 13.9 7.4 9.0

Purchased software 12.8 0.6 7.3

TOTAL 199.4 142.7 150.2

Note (a) Totals may differ from the sum of components due to rounding.

Administering GST The ATO administers the goods and services tax (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 agreed estimate for administering GST in 2019-20 was $647 million. The final cost of GST administration is subject to a special purpose audit by the ANAO. Any adjustment to the agreed estimate is presented to the states and territories at the conclusion of the audit.

GST administration outcomes and performance are published annually in the GST administration annual performance report.

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Agency resource statement

TABLE 4.29 Agency resource statement, 2019-20

Agency resources

Actual available

appropriations for 2019-20 $’000

Payments made 2019-20 $’000

Balance remaining $’000

Ordinary annual services(a)

Departmental appropriation

Prior-year departmental appropriation 286,437 281,791 4,646

Departmental appropriation(b) 3,592,716 3,180,563 412,153

Appropriation reductions -13,718 - -13,718

Section 74 receipts 151,097 151,097 -

Total 4,016,532 3,613,451 403,081

Administered expenses

Current-year’s appropriation used for current-year’s payments 7,848 2,661 5,187

Current-year’s appropriation carried forward for next year’s payments - - -

Prior-year appropriation available for current-year payments 139 108 31

Total 7,987 2,769 5,218

TOTAL ORDINARY ANNUAL SERVICES 4,024,519 3,616,220 408,299

Other Services(c)

Departmental non-operating

Prior-year departmental appropriation 6,398 3,091 3,307

Equity injections 76,607 35,313 41,294

Appropriation reductions -3,145 - -3,145

Total 79,860 38,404 41,456

TOTAL OTHER SERVICES 79,860 38,404 41,456

Special appropriations

Special appropriations limited by criteria/entitlement

Product Grants and Benefits Administration Act 2000 - cleaner fuel grants scheme

-

Product Grants and Benefits Administration Act 2000 - product stewardship for oil program

90,832

Public Governance, Performance and Accountability Act 2013 - section 77 (Repayments by the Commonwealth)

100,355

Superannuation Guarantee (Administration) Act 1992 633,759

Small Superannuation Accounts Act 1995 - section 76(9) 176

Taxation Administration Act 1953 - section 16 (Cash flow boost payments for employers) 14,453,791

Taxation Administration Act 1953 - section 16 (JobKeeper) 20,574,198

Taxation Administration Act 1953 - section 16 (non-refund items) 11,512,224

Taxation Administration Act 1953 - section 16 (tax refunds) 113,974,839

TOTAL SPECIAL APPROPRIATIONS 161,340,174

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TABLE 4.29 Agency resource statement, 2019-20 continued

Agency resources

Actual available

appropriations for 2019-20 $’000

Payments made 2019-20 $’000

Balance remaining $’000

Special accounts

Opening balance 303,617

Receipts to special accounts 4,417,948

Payments made 4,423,450

Closing balance 298,115

TOTAL RESOURCING AND PAYMENTS 8,825,944 169,418,247

Notes (a) Supply Act (No.1) 2019-20 and Appropriation Act (No.1 and 3) 2019-20. This includes prior-year departmental appropriations, PGPA Act section 74 agency receipts and PGPA Act section 75 repayments.

(b) Includes $117.7 million in 2019-20 for the Departmental Capital Budget. For accounting purposes, this amount has been designated as ‘contributions by owners’.

(c) Supply Act (No.2) 2019-20 and Appropriation Act (No. 2 and 4) 2019-20.

TABLE 4.30  Budgeted expenses and resources for Outcome 1, 2019-20

Budgeted expenses and resources

Budget(a) 2019-20 $’000

Actual expenses 2019-20 $’000

Variation 2019-20 $’000

Program 1.1: Australian Taxation Office

Administered expenses

Ordinary Annual Services (Appropriation Bills No. 1) 7,848 2,595 5,253

Departmental expenses

Departmental items 3,687,623 3,639,484 48,139

Total for Program 1.1 3,695,471 3,642,079 53,392

Program 1.2: Tax Practitioners Board

Departmental expenses

Departmental items 20,622 20,116 506

Total for Program 1.2 20,622 20,116 506

Program 1.3: Australian Business Register

Departmental expenses

Departmental items 138,592 127,438 11,154

Total for Program 1.3 138,592 127,438 11,154

Program 1.4: Australian Charities and Not-for-profits

Departmental expenses

Special account 16,059 14,615 1,444

Total for Program 1.4 16,059 14,615 1,444

Program 1.5: Australian Screen Production Incentive

Administered expenses

Special appropriations 352,000 292,804 59,196

Total for Program 1.5 352,000 292,804 59,196

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TABLE 4.30  Budgeted expenses and resources for Outcome 1, 2019-20 continued

Budgeted expenses and resources

Budget(a) 2019-20 $’000

Actual expenses 2019-20 $’000

Variation 2019-20 $’000

Program 1.6: Junior Minerals Exploration Incentive

Administered expenses

Special appropriations 13,900 26,113 -12,213

Total for Program 1.6 13,900 26,113 -12,213

Program 1.7: Fuel Tax Credits Scheme

Administered expenses

Special appropriations 7,469,000 7,343,276 125,724

Total for Program 1.7 7,469,000 7,343,276 125,724

Program 1.8: National Rental Affordability Scheme

Administered expenses

Special appropriations 185,800 138,909 46,891

Total for Program 1.8 185,800 138,909 46,891

Program 1.9: Product Stewardship for Oil

Administered expenses

Special appropriations 71,000 99,464 -28,464

Total for Program 1.9 71,000 99,464 -28,464

Program 1.10: Research and Development Tax Incentive

Administered expenses

Special appropriations 2,355,000 2,232,270 122,730

Total for Program 1.10 2,355,000 2,232,270 122,730

Program 1.11: Low Income Superannuation Tax Offset

Administered expenses

Special appropriations 762,000 740,158 21,842

Total for Program 1.11 762,000 740,158 21,842

Program 1.12: Private Health Insurance Rebate

Administered expenses

Special appropriations 261,000 231,533 29,467

Total for Program 1.12 261,000 231,533 29,467

Program 1.13: Superannuation Co-contribution Scheme

Administered expenses

Special appropriations 127,000 102,994 24,006

Total for Program 1.13 127,000 102,994 24,006

Program 1.14: Superannuation Guarantee Scheme

Administered expenses

Special appropriations 461,000 746,483 -285,483

Total for Program 1.14 461,000 746,483 -285,483

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TABLE 4.30  Budgeted expenses and resources for Outcome 1, 2019-20 continued

Budgeted expenses and resources

Budget(a) 2019-20 $’000

Actual expenses 2019-20 $’000

Variation 2019-20 $’000

Program 1.15: Targeted Assistance Through the Taxation System

Administered expenses

Special appropriations 69,000 -30,549 99,549

Total for Program 1.15 69,000 -30,549 99,549

Program 1.16: Interest on Overpayment and Early Payments of Tax

Administered expenses

Special appropriations 130,000 106,869 23,131

Total for Program 1.16 130,000 106,869 23,131

Program 1.17: Bad and Doubtful Debts and Remissions

Administered expenses

Special appropriations 6,789,000 8,150,122 -1,361,122

Total for Program 1.17 6,789,000 8,150,122 -1,361,122

Program 1.18: Other Administered

Administered expenses

Special appropriations

Seafarer Tax Offset 9,000 9,204 204

Total for Program 1.18 9,000 9,204 204

Program 1.19: Economic Response to the Coronavirus

Administered expenses

Special appropriations - 55,179,756 -55,179,756

Total for Program 1.19 - 55,179,756 -55,179,756

Outcome 1 Totals by appropriation type

Administered expenses

Ordinary Annual Services (Appropriation Bill No. 1) 7,848 2,595 5,253

Special appropriations 12,265,700 67,219,284 -54,953,584

Expenses not requiring appropriation in budget year 6,789,000 8,150,122 -1,361,122

Departmental expenses

Departmental appropriation 3,608,554 3,588,556 19,998

Special accounts 16,059 14,615 1,444

Expenses not requiring appropriation in budget year(b) 238,283 198,482 39,801

TOTAL EXPENSES FOR OUTCOME 1 22,925,444 79,173,654 -56,248,210

Notes This table is prepared on the basis of accrued expense amounts, while the administered payments table on page 53 is prepared on a cash basis.

(a) Budget 2019-20 relates to Revised estimated expenses published in the 2019-20 Portfolio Additional Estimates Statements, and includes any subsequent adjustments made to the original 2019-20 Budget.

(b) Expenses not requiring appropriation in the Budget year includes depreciation, resources received free of charge and write-down and impairment of assets.

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Efficient administrative practices Along with agency budgets that provide funding to deliver specific programs, government expenditure is guided by legislation that provides direction and sets minimum requirements, including reporting obligations. The ATO complies with the PGPA Act, PGPA Rule, ANAO requirements, and the Environment Protection and Biodiversity Conservation Act 1999.

Asset management

The ATO has an asset management framework in place which outlines how we plan and maintain the optimal asset mix for effective delivery of our programs.

The ATO’s approach to asset management includes:

ƒ detailed procedures and guidance on asset management ƒ an asset register, which is subject to a regular stocktake.

Procurement

Procurement refers to the whole process of acquiring goods or services - from identifying a need, through to obtaining and paying for the goods or services. If relevant, it also includes the ongoing contract management and disposal of goods.

The ATO’s approach to procuring goods and services - including consultancies - is consistent with, and reflects the principles of, the Commonwealth procurement rules and various procurement-related legislation and government policies. To ensure this, the ATO has a range of system-based and other controls in place and conducts regular assurance processes.

Consultancies

The ATO uses consultancy services to obtain independent advice - for example, in developing specialised ‘intellectual output’ to assist with decision-making at the agency level.

Consultants are engaged through a procurement process, using open tender, limited tender or an established panel arrangement. All consultants who require unsupervised access to ATO premises or ATO information are required to complete mandatory training on security, as well as work, health and safety.

During 2019-20, the ATO entered into 126 new consultancy contracts, resulting in total actual expenditure of $5.6 million. In addition, 82 ongoing consultancy contracts were active during 2019-20, resulting in total actual expenditure of almost $5.7 million. Prior-year contracts accounted for 51% of total consultancy expenditure.

TABLE 4.31 Number of and expenditure on consultancy contracts, 2017-18 to 2019-20(a)

Consultancy contracts 2017-18 2018-19 2019-20

Number of new contracts engaging consultants entered into during the year

175 164 126

Total expenditure during the year on new contracts $7.4m $10.1m $5.6m

Number of ongoing contracts engaging consultants entered into during prior years 103 87 82

Total expenditure during the year on ongoing contracts $5.7m $5.8m $5.7m

Note (a) Amounts are GST inclusive.

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For new contracts awarded during 2019-20, the most significant expenditure related to:

ƒ consultancy services to enable ATO to achieve its ATO 2024 Strategy ƒ system integrator services to develop and implement an IT identity and access management (IAM) solution.

For ongoing contracts entered into during previous years, the most significant expenditure in 2019-20 related to:

ƒ independent assurance to provide additional program advice and assurance, covering the technology, design and delivery of myGovID ƒ provision of executive leadership advisory services.

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

Contracting

All ATO contracts of $100,000 or more provide for the Auditor-General to have access to the contractor’s premises.

The ATO had no contracts in excess of $10,000 that were exempted by the Accountable Authority from being published on AusTender because it would disclose exempt matters under the FOI Act.

Small and medium enterprises

The ATO supports small and medium business participation in the Commonwealth Government procurement market. Our support focuses on removing barriers to their participation and includes:

ƒ streamlined tender requirements for lower value and less complex contracts ƒ adhering to the principles of the Commonwealth Government’s Digital Sourcing Framework, which includes structuring procurements in a way that enables small and medium enterprises to compete fairly to provide components of large ICT projects

ƒ actively seeking opportunities to engage Aboriginal and Torres Strait Islander businesses.

Small-to-medium enterprises and small enterprise participation statistics are available on the Department of Finance website at finance.gov.au/procurement. The Australian Government has a target for 10% of contracts (by value) to be awarded to businesses with less than 200 employees. In 2018, the Australian Government set a target for Commonwealth entities to source at least 35% of contracts valued up to $20 million (by number) from small-to-medium enterprises. The ATO exceeded both targets in 2019-20.

The ATO recognises the importance of ensuring small businesses are paid on time. The ATO achieved 96% compliance in 2019-20. The results of the Survey of Australian Government Payments to Small Business are available on the Treasury’s website at treasury.gov.au.

Indigenous procurement policy

In 2019-20, we spent over $26.4 million with Aboriginal and Torres Strait Islander businesses. This expenditure relates to both new contracts entered into during 2019-20 (133 with a total value of almost $17.6 million) and contracts entered into during previous years.

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Grants

The ATO provides a small number of discretionary grants, including funding for legal institutes and to encourage community participation in the tax and superannuation systems through sponsorship and mentoring arrangements.

The ATO’s grant activities meet the requirements and principles of grants administration contained in the Commonwealth grants rules and guidelines 2017, including reporting and publishing of all grants provided throughout the year.

During 2019-20, the ATO awarded 11 grants. All grants awarded are published on grants.gov.au.

Compliance with finance law

The PGPA Act requires that agencies provide a statement of significant issues reported to the minister under paragraph 19(1)(e) of the Act, which relates to non-compliance with finance law and action taken to remedy non-compliance.

During 2019-20, the ATO had no instances of significant non-compliance with the finance law to report to the minister.

Ecologically sustainable development and environmental performance

Section 516A of the Environment Protection and Biodiversity Conservation Act 1999 requires all Commonwealth agencies to report on certain aspects of ecologically sustainable development and environmental performance.

Appropriations - Departmental funding

The ATO has no departmental funding for work that specifically contributes to ecologically sustainable development. However, in making decisions on expenditure, we apply the Commonwealth procurement rules and guidance from the Department of Finance on informed decision-making processes.

The Commonwealth procurement rules include the need to consider the environmental aspects of the purchase, including whole-of-life costs and, where the procurement is via tender, a tenderer’s practices regarding environmental impacts.

In July 2017, the ATO adopted a new environmental strategy that aims to reduce the ATO’s greenhouse gas emissions by 2020. As at 30 June 2020, we surpassed our 10% target and reduced our emissions by 15% compared to 2017 levels. The ATO is focused on sustainable environmental practices and continuing to reduce emissions.

In 2019-20, the ATO minimised our environmental impact by meeting the requirements of the Energy Efficiency in Government Operations (EEGO) policy for ‘Tenant light and power’ and ‘Central services’ performance ratings.

TABLE 4.32 Energy intensity ratings and EEGO targets, 2019-20

Category (and unit of measure) EEGO target ATO performance

Tenant light and power (MJ per person per annum) 7,500 4,572

Central services (MJ per m2 per annum) 400 98

Additionally, 76% of the ATO’s eligible tenancies that qualify for a rating have achieved or exceeded the minimum National Australian Built Environment Rating System (NABERS) rating of 4.5 stars.

05

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Appropriations - Administered funding

In 2019-20, the ATO administered appropriations for two energy and fuel schemes that provide credits and grants to reduce the costs of some fuels, or to provide a benefit to encourage recycling of waste oils. These were:

ƒ Program 1.7 Fuel Tax Credits Scheme (page 54) ƒ Program 1.9 Product Stewardship for Oil (page 54).

More information about fuel schemes is available at ato.gov.au/business/fuel-schemes.

05 Financial statements About the financial statements

The ATO’s financial statements are general purpose financial statements and are required by section 42 of the Public Governance, Performance and Accountability Act 2013 (PGPA Act). The financial statements have been prepared in accordance with:

ƒ the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015, and ƒ Australian Accounting Standards and Interpretations - Reduced Disclosure Requirements issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period.

The ATO’s financial statements have been prepared on an accrual basis and in accordance with the historical cost convention, except for certain assets and liabilities at fair value. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position.

These financial statements incorporate the financial transactions of the Tax Practitioners Board (TPB), the Australian Business Register (ABR), and the Australian Charities and Not-for-profits Commission (ACNC).

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GPO Box 707, Canberra ACT 2601 38 Sydney Avenue, Forrest ACT 2603 Phone: +61 2 6203 7500 Email: grant.hehir@anao.gov.au

INDEPENDENT AUDITOR’S REPORT

To the Minister for Housing and Assistant Treasurer

Opinion

In my opinion, the financial statements of the Australian Taxation Office (the Entity) for the year ended 30 June 2020:

(a) comply with Australian Accounting Standards - Reduced Disclosure Requirements and the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015; and

(b) present fairly the financial position of the Entity as at 30 June 2020 and its financial performance and cash flows for the year then ended.

The financial statements of the Entity, which I have audited, comprise the following statements as at 30 June 2020 and for the year then ended:

 Statement by the Commissioner of Taxation and Chief Finance Officer;  Statement of Comprehensive Income;  Statement of Financial Position;  Statement of Changes in Equity;  Cash Flow Statement;  Administered Schedule of Comprehensive Income;  Administered Schedule of Assets and Liabilities;  Administered Reconciliation Schedule;  Administered Cash Flow Statement; and  Notes to and forming part of the financial statements, comprising a Summary of Significant Accounting Policies and

other explanatory information.

Basis for Opinion

I conducted my audit in accordance with the Australian National Audit Office Auditing Standards, which incorporate the Australian Auditing Standards. My responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of my report. I am independent of the Entity in accordance with the relevant ethical requirements for financial statement audits conducted by me. These include the relevant independence requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) to the extent that they are not in conflict with the Auditor-General Act 1997. I have also fulfilled my other responsibilities in accordance with the Code. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Key Audit Matters

Key audit matters are those matters that, in my professional judgement, were of most significance in my audit of the financial statements of the current period. These matters were addressed in the context of my audit of the financial statements as a whole, and in forming my opinion thereon, and I do not provide a separate opinion on these matters.

05Management and accountability About the financial statements

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2

Key audit matter

Eligibility assessments and completeness of reported subsidy payments in connection with JobKeeper and Cash Flow Boost measures

Refer to Note 13A ‘Administered expenses - Subsidies’

I focused on the eligibility of JobKeeper and Cash F low Boost recipients and the completeness of the expenses reported in the 2019 -20 financial year. Given the

significant value of the expenses and the speed of implementation of these stimulus measures, th ere is a higher risk of material misstatement .

The eligibility requirements and the amounts to be paid to employers are set by the Coronavirus Economic Response Package (Jobkeeper Payments) Act 2020 and

the Boosting Cash Flow For Employers Act 2020 . The

legislation outlines the conditions to be met for payments to be made to eligible employers and, when read with the Income T ax Assessment Act 1997 ,

provides the Commissioner with considerable discretion to make judgements on eligibility.

For the JobKeeper s cheme, employers are required to self- assess their eligibility on - line and assert they meet the criteria specified in the legislation . For the Cash Flow B oost measure entities that meet the legislative requirements are identified by the Entity and

payments are then made without the need for an application or specific declaration.

The Entity has prepared an accrual estimate to provide for JobKeeper payments for employers and future cash flow boost claims which are attributable to the

2019 -20 f inancial year, but not paid by 30 June 2020.

The preparation of this accrual involves significant judgement including estimates of those employers who are eligible for the measures but are yet to apply or be assessed as eligible.

For the year ended 30 Ju ne 2020, the Entity reported JobKeeper subsidy payments of $31,559 million and Cash Flow Boost payments of $23,621 million.

How the audit addressed the matter

To audit the eligibility assessment and completeness of Jobkeeper subsidy expenses, I:

 tested whether the design specifications of the JobKeeper application form were consistent with the legislative eligibility requirements;

 assessed the reasonableness of the

Commissioner’s decisions in assessing eligibility for JobKeeper payments under the applica ble

legislation;

 performed a recalculation of a sample of manually processed JobKeeper payments and all system generated JobKeeper payments to assess whether they were accurate and consistent with the

legislated amount; and

 assessed the reasonableness of t he approach used by the Entity to estimate the Job Keeper payments made after 30 June 2020 that related to eligible business payments attributable to the 2019 -20

financial year. This included testing the

completeness of source data, the adequacy of support ing documentation, the effectiveness of quality assurances processes and the accuracy of manual adjustment journals entered into the general ledger as at 30 June 2020.

To audit the eligibility assessment and completeness of Cash Flow Boost subsidy expense s, I:

 assessed the design and operating effectiveness of controls over the extraction of data from the Entity’s systems to generate a population of businesses for assessment of eligibility;

 assessed the reasonableness of the

Commissioner’s decisions in assessing eligibility for Cash Flow Boost payments under the

applicable legislation;

 performed sample testing of payments with manual input and system generated payments to confirm the Entity’s application of the relevant legislation; and

 assessed the reasonableness of the approach used by the Entity to estimate the payments likely to be made to employers who are eligible for the Cash Flow Boost measure but are yet to meet the criteria or be assessed as eligible as at 30 June 2020. This included testing the reasonableness of key judgements, the completeness of source data, the adequacy of supporting documentation, the effectiveness of quality assurances processes and the accuracy of manual adjustment journals entered into the general ledger as at 30 June 2020.

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3

Key audit matter

Accuracy of taxation revenue

Refer to Note 14 ‘Administered - Income’

I focused on the estimation processes adopted by the Entity for financial reporting of taxation revenue given the value of the transactions and the complexity and judgement involved in the estimation processes and calculations. The reliable estimation of taxation revenue is complex due to uncertain timing of tax return assessments and payments and forecasting of likely taxation revenue outcomes. T he Entity applies significant judgement when selecting the appropriate base for revenue recognition.

The Entity uses two bases for revenue recognition - the Economic Transactions Method (ETM) and the Taxation Liability Method (TLM). Under the ETM the Entity recognises taxation revenue when it gains control over future economic benefits that arise from tax legislation. The ETM involves significant estimates based on available information. The TLM recognises revenue at the earlier of when an assessment of tax liability is or can be made or payment is received. Revenue recognised under the TLM is generally recognised at a later time than if it were measured under the ETM.

The methodologies used by the Entity to prepare taxation revenue for its financial statements involve data analysis and estimation processes with high inherent risk that elevate the risk of error . As part of

the estimation process, the Entity conducts data analysis of past taxpayer behaviours and records together with assumptions about economic factors such as future wage growth and gross domestic product.

For the year ended 30 June 2020 , the Entity reported total taxation revenue of $ 421,261 million.

How the audit addressed the matter

To audit the accuracy of taxation revenue , I assessed the:

 appropriateness of the base for revenue

recognition with reference to the accuracy of prior year results and historical trends;  effectiveness of the taxatio n estimation process controls and the associated validation

procedures together with the completeness, relevance and accuracy of data used in

developing taxation revenue estimates;  reasonableness of the interpretation and analysis of data used by the Entity for material estimates and recalculated these estimates as at

30 June 2020 ; and

 adequacy of documentation to support the Entity’s judgements made in relation to key estimates and allocations of revenue at year-end. This included an assessment of the quality assurance process over manual adjustments processed as at 30 June 2020.

Key audit matter

Completeness of taxation revenue

Refer to Note 14‘Administered - Income’

I focused on this area given the importance of the compliance risk management process in detecting and correcting non- compliant taxation returns .

The measurement and recognition of taxation revenue is dependent on information provided by taxpayers in a self- assessment regime. Ineffective design and implementation of the compliance taxation regime elevates the risk that incorrect taxation returns are not detected and adjusted by the Entity, resulting in an understatement of taxation revenue .

How the audit addressed the matter

To audit the completeness of taxation revenue , I performed the following procedures :

 conducted an evaluation of the Entity’s

compliance risk management processes . This involved benchmarking the Entity’s compliance framework against the Organisation for Economic Co- operation and Development best practice principles of what constitutes an effective taxation compliance program ; and

 assessed the Entity’s risk identification, risk assessment and risk prioritisation processes for a selection of risks. This included an assessement of the risk treatment strategies and implementation;

05Management and accountability About the financial statements

119

4

For the year ended 30 June 2020 , the Entity reported total taxation revenue of $ 421,261 million.

the process of monitoring performance and evaluation of compliance outcomes on a sample basis at an enterprise level.

Key audit matter

Valuation of taxation receivables and provision for refunds

Refer to Note 15 ‘Administered - Non - Financial Assets

& Note 16 ‘Administered - Provisions ’

I focused on the calculation s that support the valuation of the impairment of taxation receivables and estimates of amendments arising from disputed cases and allowances for taxati on receivables and the provision for income taxation refunds . The se four balances reduce the total comprehensive income reported by the Entity and involve significant judgement.

In each component there are complex methodologies and assumptions underpinning the calculation and assessment of the recoverability of taxation receivables, and the calculation of the provision for refunds. Estimate methodologies are based on assumptions including taxpayer compliance and lodgement history, the existence of dispute over a receivable and the taxpayer’s capacity to pay. Models use historical data to predict future taxpayer behavior.

For the year ended 30 June 2020, the Entity reported:

 total taxation receivables o f $ 59,856 million;

 impairment allowance of $ 20,831 million;

 allowance for cr edit amendments of

$ 4,256 million; and

 provision for refunds of $ 1,888 million.

How the audit addressed the matter

To audit the the valuation of taxation receivables and provision for refunds, I:

 evaluated the adequacy of the Entity’s oversight processes which included the documentation and quality assurance processes to support judgements made in relation to overdue and disputed debts;  assessed the reasonableness of the underlying

assumptions and methodology developed and adopted by the Entity;  assessed the completeness of the source data used in estimating the balances;  recalculated the impairment allowance at

balance date and assessed whether it was appropriately reflected in the Entity’s financial statements;  performed sample testing of individual taxation receivables, to assess the Entity’s application of taxation law and the revenue recognition for individual taxpayers ’ accounts; and  examined the provision balance and assessed the reasonableness of the impairment rate applied to large disputed taxation cases where an individual assessment has not been made.

Accountable Authority’s Responsibility for the Financial Statements

As the Accountable Authority of the Australian Taxation Office the Commissioner of Taxation is responsible under the Public Governance, Performance and Accountability Act 2013 for the preparation and fair presentation of annual

financial statements that comply with Australian Accounting Standards - Reduced Disclosure Requirements and the rules made under that Act. The Commissioner is also responsible for such internal control as the Commissioner determines is necessary to enable the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Commissioner of Taxation is responsible for assessing the Entity’s ability to continue as a going concern, taking into account whether the entity’s operations will cease as a result of an administrative restructure or for any other reason. The Commissioner of Taxation is also responsible for disclosing matters related to going concern as applicable and using the going concern basis of accounting unless the assessment indicated that it is not appropriate.

Auditor’s Responsibilities for the Audit of the Financial Statements

My objective is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian National Audit Office Audit ing Standards will always detect a material misstatement when it exists. Misstatements can

5

arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

As part of an audit in accordance with the Australian National Audit Office Auditing Standards, I exercise professional judgement and maintain professional scepticism throughout the audit.

I also:

 identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;

 obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness o f the entity’s internal control;

 evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Accountable Authority;

 conclude on the appropriateness of the Accountable Authority’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the E ntity’s ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor’s report. However, future events or conditions may cause the entity to cease to continue as a going concern; and

 evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

I communicate with the Accountable Authority regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.

From the matters commu nicated with the Accountable Authority , I determine those matters that were of most significance in the audit of the financial stat ements of the current period and are therefore the key audit matters. I describe these matters in my auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, I determine that a matter should not be communicated in my report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Australian National Audit Office

Grant Hehir

Auditor - General

Canberra

2 2 September 2020

05Commissioner of Taxation annual report 2019-20

120

05Management and accountability About the financial statements

121

AUSTRALIAN TAXATION OFFICE

STATEMENT BY THE COMMISSIONER OF TAXATION AND CHIEF FINANCE OFFICER

In our opinion, the attached financial statements for the year ended 30 June 2020 comply with subsection 42(2) of the Public Governance, Performance and Accountability Act 2013 (PGPA Act), and are based on properly maintained financial records as per subsection 41(2) of the PGPA Act.

In our opinion, at the date of this statement, there are reasonable grounds to believe that the Australian Taxation Office will be able to pay its debts as and when they fall due.

Chris Jordan AO Janine Bristow

COMMISSIONER OF TAXATION CHIEF FINANCE OFFICER AS THE ACCOUNTABLE AUTHORITY AUSTRALIAN TAXATION OFFICE AUSTRALIAN TAXATION OFFICE 21 September 2020 21 September 2020

05Commissioner of Taxation annual report 2019-20

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Australian Taxation Office STATEMENT OF COMPREHENSIVE INCOME for the year ended 30 June 2020

The above statement should be read in conjunction with the accompanying notes.

2020 2019

Original budget

Note $'000 $'000 $'000

NET COST OF SERVICES

Expenses

Employee benefits 1A 1,963,803 1,953,172 1,984,215

Suppliers 1B 1,424,259 1,461,926 1,552,453

Depreciation and amortisation 4A 394,537 198,008 193,454

Finance costs 1C 13,688 604 -

Impairment loss on financial instruments 1D - 2,186 -

Write-down and impairment of other assets 1E 4,753 11,374 -

Other expenses 1F 613 2,898 -

Total expenses 3,801,653 3,630,168 3,730,122

Own-source revenue

Rendering of services 2A 89,016 106,521 99,456

Rental income 2B 16,859 22,895 24,454

Other revenue and gains 2C 15,210 19,284 13,000

Impairment gain on financial instruments 1D 1,869 - -

Total own-source revenue 122,954 148,700 136,910

Net cost of services (3,678,699) (3,481,468) (3,593,212)

Revenue from the Australian Government 2D 3,461,261 3,237,902 3,449,758

Deficit on continuing operations (217,438) (243,566) (143,454)

OTHER COMPREHENSIVE INCOME

Items not subject to subsequent reclassification to net cost of services

Revaluation of restoration obligations provision (84) 391 -

Other changes in asset revaluation reserves - 7,428 -

Total other comprehensive income (84) 7,819 -

Total comprehensive loss (217,522) (235,747) (143,454)

.

05Management and accountability About the financial statements

123

Australian Taxation Office STATEMENT OF COMPREHENSIVE INCOME for the year ended 30 June 2020

The above statement should be read in conjunction with the accompanying notes.

Budget variances commentary: Statement of comprehensive income

Affected line items Explanation of major variances

Suppliers

The lower than expected actual is primarily driven by reduced rental expenses after the transition to new accounting standard AASB 16 Leases. The transition is effective 1 July 2019 and budget estimates were updated to reflect this standard in the subsequent budget rounds. Reduced rental expense is partially offset by higher than expected expenses for call centre costs and IT infrastructure to support the stimulus packages and ATO’s business continuity planning during the pandemic.

Depreciation and amortisation

The higher than expected actual is primarily due to the recognition of depreciation expenses for right-of-use assets after the transition to the new accounting standard AASB 16 Leases. It is partially offset by lower than expected amortisation expenses for computer software.

Rendering of services

The lower than expected actual is primarily due to the reduction in credit card merchant fees impacted by increased payment deferrals and reduced debt collection activities during the COVID-19 pandemic. Actual indemnity recoveries have been reclassified to other revenue.

Rental income

Lower than expected rental income is due to the transition to new accounting standard AASB 16 Leases.

Other revenue and gains

The variance is primarily due to the higher than expected revenue from other government agencies and resources received free of change.

05Commissioner of Taxation annual report 2019-20

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Australian Taxation Office STATEMENT OF FINANCIAL POSITION as at 30 June 2020

The above statement should be read in conjunction with the accompanying notes.

2020 2019

Original budget

Note $'000 $'000 $'000

ASSETS

Financial assets

Cash 3A 36,126 45,368 29,073

Trade and other receivables 3B 543,066 354,620 466,228

Total financial assets 579,192 399,988 495,301

Non-financial assets1

Buildings 4A 1,113,933 - -

Buildings - leasehold improvements 4A 154,094 173,318 197,758

Plant and equipment 4A 46,644 58,973 47,363

Intangibles - computer software 4A 501,449 502,278 437,778

Other non-financial assets 4B 53,324 98,482 87,296

Total non-financial assets 1,869,444 833,051 770,195

Total assets 2,448,636 1,233,039 1,265,496

LIABILITIES

Payables

Employees 5A 34,359 35,987 32,302

Suppliers 5B 284,870 325,516 394,983

Other payables 5C 3,453 69,598 55,487

Total payables 322,682 431,101 482,772

Interest bearing liabilities

Leases 6A 1,172,963 7,232 -

Total interest bearing liabilities 1,172,963 7,232 -

Provisions

Employee provisions 7A 752,319 697,370 710,627

Other provisions 7B 12,505 29,831 24,047

Total provisions 764,824 727,201 734,674

Total liabilities 2,260,469 1,165,534 1,217,446

Net assets 188,167 67,505 48,050

EQUITY

Contributed equity 1,897,779 1,706,580 1,869,012

Reserves 123,183 123,220 115,401

Accumulated deficit (1,832,795) (1,762,295) (1,936,363)

Total equity 188,167 67,505 48,050

1

Right-of-use assets are included in Note 4A - Buildings and plant and equipment.

05Management and accountability About the financial statements

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Australian Taxation Office STATEMENT OF FINANCIAL POSITION as at 30 June 2020

The above statement should be read in conjunction with the accompanying notes.

Budget variances commentary: Statement of financial position

Affected line items Explanation of major variances

Cash The higher than expected actuals is primarily due to timing

difference in cash receipts and payments.

Trade and other receivables The higher than budgeted actuals is due to higher than expected appropriation receivable which is impacted by the timing of payment for goods and service. It is also driven by the recognition of Investment in sublease due to the transition to new accounting standard AASB 16 Leases. The transition is effective 1 July 2019 and budget estimates were updated to reflect this standard in the subsequent budget rounds. Buildings The higher than expected actual primarily relates to the

recognition of right-of-use asset after the transition to new accounting standard AASB 16 Leases.

Intangibles - computer software The higher than expected actual primarily relates to higher than expected asset additions and lower than expected accumulated amortisation. Additionally, the original budget was created prior to the finalisation of the 2018-19 annual computer software reviews which results in opening balances difference between original budget and actuals.

Other non-financial assets

Lower than budgeted actual is mainly driven by lower than expected prepaid supplier costs, including lower prepaid rent after the transition to new accounting standard AASB 16 Leases.

Employees The higher than expected actual is primarily due to higher than

expected superannuation payable partially offset by lower than anticipated salaries and wages payable.

Suppliers The lower than expected actual is primarily driven by the

removal of operating lease straight lining balance at transition to new accounting standard AASB 16 Leases. The variance is further increased by lower than expected Trade/capital creditors and accruals.

Employee provisions The higher than expected actual is primarily due to higher than

expected provision for recreation and long service leave due to less leave taken during the COVID-19 pandemic.

Other provisions The lower than expected actual primarily relates to the

removal of surplus lease liability as part of the transition to AASB 16 Leases.

Equity The budgeted equity balances did not account for deficit or

underspend and does not include the substantial impact of the transition to AASB 16 Leases on accumulated results. In addition, the actual contributed equity includes funding received from MYEFO, which was not reflected in the original budget.

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Australian Taxation Office STATEMENT OF CHANGES IN EQUITY for the year ended 30 June 2020

The above statement should be read in conjunction with the accompanying notes.

Contributed equity

Asset revaluation surplus

Retained earnings

Total equity

2020

2019

Original budget

2020

2019

Original budget

2020

2019

Original budget

2020

2019

Original budget

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

Opening balance

Balance carried forward from previous period

1,706,580

1,550,110

1,710,487

123,220

115,401

115,401

(1,762,295)

(1,521,435)

(1,792,909)

67,505

144,076

32,979

Prior year adjustments

1

-

-

-

-

-

-

-

2,706

-

-

2,706

-

Adjustment on initial application of AASB 16 Leases

-

-

47

-

-

146,938

-

-

146,985

-

-

Adjusted opening balance

1,706,580

1,550,110

1,710,487

123,267

115,401

115,401

(1,615,357)

(1,518,729)

(1,792,909)

214,490

146,782

32,979

Comprehensive income

Other comprehensive income

-

-

(84)

7,819

-

-

-

(84)

7,819

-

(Deficit) for the period

-

-

-

-

-

(217,438)

(243,566)

(143,454)

(217,438)

(243,566)

(143,454)

Total comprehensive income

-

-

-

(84)

7,819

-

(217,438)

(243,566)

(143,454)

(217,522)

(235,747)

(143,454)

Transactions with owners

Distributions to owners

Returns of contributed equity

2

(3,145)

(3,907)

-

-

-

-

-

-

-

(3,145)

(3,907)

-

Contributions by owners

Equity injection - appropriations

76,607

28,055

40,187

-

-

-

-

-

-

76,607

28,055

40,187

Departmental capital budget

117,737

132,322

118,338

-

-

-

-

-

-

117,737

132,322

118,338

Total transactions with owners

191,199

156,470

158,525

-

-

-

-

-

-

191,199

156,470

158,525

Transfers between equity components

-

-

-

-

-

-

-

-

-

-

-

-

Closing balance as at 30 June

1,897,779

1,706,580

1,869,012

123,183

123,220

115,401

(1,832,795)

(1,762,295)

(1,936,363)

188,167

67,505

48,050

05Management and accountability About the financial statements

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Australian Taxation Office STATEMENT OF CHANGES IN EQUITY for the year ended 30 June 2020

The above statement should be read in conjunction with the accompanying notes.

Accounting policy

Amounts appropriated which are designated as ‘equity injections’ for a year (less any formal reductions) and departmental capital budgets (DCBs) are recognised directly in contributed equity in that year.

Budget variances commentary: Statement of changes in equity

Explanation of major variances Other variances are supported by the explanations provided above in the statement of comprehensive income and statement of financial position.

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Australian Taxation Office CASH FLOW STATEMENT for the year ended 30 June 2020

The above statement should be read in conjunction with the accompanying notes.

2020 2019

Original budget

Note $'000 $'000 $'000

OPERATING ACTIVITIES

Cash received

Appropriations 3,377,561 3,332,122 3,410,433

Rendering of services 117,039 123,442 133,915

Receipts transferred from the official public account 290,901 310,368 -

GST received 149,620 148,305 141,867

Other 11,105 28,436 -

Total cash received 3,946,226 3,942,673 3,686,215

Cash used

Employees 1,910,515 1,936,890 1,995,134

Suppliers 1,519,545 1,664,779 1,688,024

Borrowing costs (finance leases) 13,677 107 -

Receipts transferred to the official public account 300,202 318,201 -

Total cash used 3,743,939 3,919,977 3,683,158

Net cash from operating activities 202,287 22,696 3,057

INVESTING ACTIVITIES

Cash received

Proceeds from sales of property, plant and equipment - 2 -

Total cash received - 2 -

Cash used

Purchase of property, plant and equipment 16,437 16,775 161,525

Purchase of intangibles 123,061 153,306 -

Total cash used 139,498 170,081 161,525

Net cash used by investing activities (139,498) (170,079) (161,525)

FINANCING ACTIVITIES

Cash received

Appropriations - contributed equity 132,498 170,083 158,525

Total cash received 132,498 170,083 158,525

Cash used

Principal payments of lease liabilities 204,529 6,276 -

Total cash used 204,529 6,276 -

Net cash from financing activities (72,031) 163,807 158,525

Net increase in cash held (9,242) 16,424 57

Cash at the beginning of the reporting period 45,368 28,944 29,016

Cash at the end of the reporting period 3A 36,126 45,368 29,073

05Management and accountability About the financial statements

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Australian Taxation Office CASH FLOW STATEMENT for the year ended 30 June 2020

The above statement should be read in conjunction with the accompanying notes.

Budget variances commentary: Statement of cash flows

Explanation of major variances

The variances are supported by the explanations provided above in the statement of comprehensive income and statement of financial position.

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Australian Taxation Office ADMINISTERED SCHEDULE OF COMPREHENSIVE INCOME for the year ended 30 June 2020

The above schedule should be read in conjunction with the accompanying notes.

2020 2019

Original budget

Note $'m $'m $'m

NET COST OF SERVICES

Expenses

Subsidies 13A 65,321 9,815 10,424

Personal benefits 13B 1,075 1,035 1,150

Impairment of receivables1 6,868 5,449 6,115

Penalty and interest charge remission expenses 1,282 1,207 1,360

Interest on overpayments 120 113 155

Superannuation guarantee charge 746 322 390

Unclaimed superannuation monies interest (31) 109 219

Other expenses 3 1 5

Total expenses 75,384 18,051 19,818

Revenue

Income tax 14A 328,248 338,970 349,331

Indirect tax 14B 90,076 91,556 95,510

Other taxes 14C 2,937 2,912 2,852

Non-taxation 14D 1,182 (1,081) 241

Total revenue 422,443 432,357 447,934

Net contribution by services 347,059 414,306 428,116

Surplus on continuing operations 347,059 414,306 428,116

Total comprehensive income 347,059 414,306 428,116

1 Includes write-offs of $2,118 million (2019: $5,357 milliion) less re-raises of $598 million (2019: $1,139 million) and the movement in the impairment provision of $5,348 million (2019: $1,231 million).

05Management and accountability About the financial statements

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Australian Taxation Office ADMINISTERED SCHEDULE OF COMPREHENSIVE INCOME for the year ended 30 June 2020

The above schedule should be read in conjunction with the accompanying notes.

Budget variances commentary: Schedule of comprehensive income

Affected line items Explanation of major variances

Subsidies The actuals are higher than budget primarily due to the

temporary stimulus measures, Cashflow boost payments for employers and JobKeeper payment, which were announced after the release of the original budget. This is partially offset by:

 lower than expected fuel tax credits claims primarily due to decreased eligible diesel usage; and  lower than expected Australian screen production incentive expense due to lower than expected

number of films certified.

Impairment of receivables The actuals are higher than budget mainly due to higher provision for doubtful debt offset by lower than expected write-offs. This is consistent with an overall increase of collectable debt in 2019-20, partly as a result of payment deferrals from natural disasters and the COVID-19 pandemic.

Interest on overpayments The actuals are lower than budget due to a combination of low interest rates, improved work practices and increased automation.

Superannuation guarantee charge The higher than budgeted actuals are in line with higher superannuation guarantee charge revenue raised from actioning additional employee notification cases.

Unclaimed superannuation monies interest The actuals are lower than budget primarily due to lower than expected unclaimed superannuation monies payments.

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Australian Taxation Office ADMINISTERED SCHEDULE OF COMPREHENSIVE INCOME for the year ended 30 June 2020

The above schedule should be read in conjunction with the accompanying notes.

Budget variances commentary: Schedule of comprehensive income (continued)

Affected line items Explanation of major variances

Income tax The actuals are lower than budget primarily due to lower than

expected taxes from companies, individuals and superannuation funds tax. Company tax and individuals collections were lower than expected largely due to the impact of the COVID-19 pandemic. Superannuation funds were lower than expected largely due to an increase in refunds as a result of off-market share buybacks in prior income years and lower earnings due to COVID-19.

Indirect tax The actuals are lower than budget primarily due to lower than

expected goods and services tax revenue. This reflects weaker than expected growth in consumption due to the impacts of COVID-19 as well as weaker than expected dwelling investment growth. Excise revenue was also lower than expected reflecting the decline in fuel consumption caused by COVID-19.

Other taxes The actuals are higher than budget primarily reflecting higher

than expected superannuation guarantee charge revenue.

Non-taxation The actuals are higher than budget primarily reflecting higher

net unclaimed superannuation monies (USM) revenue than expected. A significantly lower than expected USM provision for outflows in future years is contributing to the higher net

USM revenue.

05Management and accountability About the financial statements

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Australian Taxation Office ADMINISTERED SCHEDULE OF ASSETS AND LIABILITIES as at 30 June 2020

The above schedule should be read in conjunction with the accompanying notes.

2020 2019

Original budget

Note $'m $'m $'m

ASSETS

Financial assets

Cash 470 381 406

Cash held in special accounts1 76 84 -

Total financial assets 546 465 406

Non-financial assets

Receivables 15A 35,010 24,980 27,116

Accrued revenues 15B 12,302 13,750 14,702

Total non-financial assets 47,312 38,730 41,818

Total assets administered on behalf of the Australian Government 47,858 39,195 42,224

LIABILITIES

Payables

Subsidies 447 28 20

Personal benefits 9 4 15

Superannuation guarantee charge 43 35 33

Taxation refunds due 1,216 1,165 1,007

Superannuation holding account 76 84 80

Other payables 2 1 5

Total payables 1,793 1,317 1,160

Provisions

Subsidies 16 23,231 3,644 3,660

Personal benefits 16 1,167 1,160 1,236

Other accrued expenses 16 37 159 272

Income taxation refunds 16 1,610 2,478 2,165

Indirect taxation refunds 16 278 260 295

Superannuation guarantee payments 16 778 644 828

Unclaimed superannuation payments 16 506 1,695 2,518

Other refunds 16 23 10 -

Interest on overpayment of taxes 16 19 22 -

Total provisions 27,649 10,072 10,974

Total liabilities administered on behalf of the Australian Government 29,442 11,389 12,134

Net assets 18,416 27,806 30,090

1

Cash held in special accounts does not include amounts held in trust for special accounts of $217 million (2019: $215 million).

See Note 20 special accounts for more information.

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Australian Taxation Office ADMINISTERED SCHEDULE OF ASSETS AND LIABILITIES as at 30 June 2020

The above schedule should be read in conjunction with the accompanying notes.

Accounting policy

Administered liabilities

Administered liabilities include payables and provisions. Payables are recognised for claims on hand and provisions are raised for accrued expenses in accordance with the accounting policy in the administered expenses in Note 13. The majority of the ATO’s administered liabilities are not categorised as financial liabilities as they are statutory in nature.

Budget variances commentary: Schedule of assets and liabilities

Affected line items Explanation of major variances

Receivables The actuals are higher than budget due to higher gross receivables in

goods and services tax, individuals, and company reflecting the number of payment deferrals that have been granted to taxpayers experiencing financial hardship as a result of the COVID-19 pandemic and increased

unpaid debt.

Accrued revenues The actuals are lower than budget primarily due to lower accrued revenue for goods and services tax (GST). Lower GST accrued revenue is consistent with lower than expected GST revenue largely reflecting the significant impact of the COVID-19 pandemic on consumption. Subsidies payable The actuals are higher than budget primarily due to the temporary

stimulus measures, Cashflow boost payments for employers and JobKeeper payment, which were announced after the release of the original budget.

Taxation refunds due Actuals are higher than budget as taxation refunds due can be volatile as a result of the timing of lodgments, payments and compliance activity from year to year. Subsidies provision The actuals are higher than budget primarily due to the temporary

stimulus measures, Cashflow boost payments for employers and JobKeeper payment, which were announced after the release of the original budget.

Other accrued expenses The actuals are lower than budget primarily due to lower than expected accrued unclaimed superannuation monies (USM) interest expense. This is in line with a lower consumer price index and lower than expected number of inactive USM accounts being transferred to the ATO under the Protecting Your Super Package. Income taxation refunds provision The actuals are lower than budget primarily due to a lower provision for

refunds for company and superannuation income tax. Provisions for refunds can be volatile due to the timing of lodgments, payments and compliance activity from year to year.

Indirect taxation refunds provided for The actuals are lower than budget primarily due to a lower provision for refunds for goods and services tax. Provisions for refunds can be volatile due to the timing of lodgments, payments and compliance activity from year to year.

Unclaimed superannuation payments The actuals are lower than budget reflecting a large portion of USM payments reunited that were provisioned for in the prior years.

Recognition of additional future outflows is also lower than expected as superannuation funds have been granted a lodgment deferral (from 30 April 2020 to 31 October 2020, which is the next financial year).

05Management and accountability About the financial statements

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Australian Taxation Office ADMINISTERED RECONCILIATION SCHEDULE for the year ended 30 June 2020

The above schedule should be read in conjunction with the accompanying notes.

2020 2019

$'m $'m

Opening assets less liabilities as at 1 July 27,806 26,812

Adjustments to equity

FTB equity transfer 126 109

HELP equity transfer 590 614

TSL equity transfer 30 40

SFSS equity transfer 21 (1)

Net (cost of)/contribution by services

Income 422,443 432,357

Expenses (75,384) (18,051)

Transfers (to)/from Australian Government

Appropriation transfers from the official public account

Annual appropriations 3 2

Special appropriations (unlimited) 161,349 113,445

Appropriation transfers to the official public account

Transfers to the official public account (518,568) (527,521)

Closing assets less liabilities as at 30 June 18,416 27,806

Accounting Policy

Administered cash transfers to and from the official public account

Revenue collected by the ATO for use by the Australian Government rather than the ATO is administered revenue. Collections are transferred to the official public account (OPA) maintained by the Department of Finance. Conversely, cash is drawn from the OPA to make payments under Parliamentary appropriations. Transfers to and from the OPA are adjustments to the administered cash held by the ATO on behalf of the Australian Government and are reported in the schedule of administered cash flows and in the administered reconciliation schedule.

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Australian Taxation Office ADMINISTERED CASH FLOW STATEMENT for the year ended 30 June 2020

The above statement should be read in conjunction with the accompanying notes.

2020 2019

$'m $'m

OPERATING ACTIVITIES

Income tax 317,561 333,312

Indirect tax 84,786 90,311

Other revenue 2,155 2,363

Superannuation holding account (9) (22)

Subsidies paid (45,308) (10,071)

Personal benefits (1,060) (1,109)

Interest (123) (91)

Other (705) (560)

Net cash from operating activities 357,297 414,133

Cash at the beginning of the reporting period 465 406

Cash from the official public account

Appropriations 161,344 113,446

Special accounts 8 1

Total cash used from the official public account 161,352 113,447

Cash to the official public account

Administered receipts (518,560) (527,520)

Special accounts (8) (1)

Total cash to the official public account (518,568) (527,521)

Cash at the end of the reporting period 546 465

Accounting policy

The administered cash flow statement represents the total cash received or paid through primary operating activities of the ATO, and accordingly categories disclosed above are treated on a net basis. For example, a refund relating to income tax is defined as an overpayment of tax and treated as a reduction to the income tax category. Positive amounts represent an inflow and negative amounts represent an outflow for the relevant category. More detailed information in relation to refunds can be found in Note 19C special appropriations.

05Management and accountability About the financial statements

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Australian Taxation Office Notes to and forming part of the financial statements for the year ended 30 June 2020

Table of contents

Financial Statements

Table of contents

Overview

1: Expenses

2: Own-source revenue

3: Financial assets

4: Non-financial assets

5: Payables

6: Interest bearing liabilities

7: Provisions

8: Financial instruments

9: Contingent assets and liabilities

10: Key management personnel remuneration

11: Related party disclosures

12: Aggregate assets and liabilities

13: Administered - expenses

14: Administered - income

15: Administered - non-financial assets

16: Administered - provisions

17: Administered - contingent liabilities

18: Administered - aggregate assets and liabilities

19: Appropriations

20: Special accounts

21: Regulatory charging summary

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Australian Taxation Office Notes to and forming part of the financial statements

Overview

Basis of preparation of the financial statements

The financial statements are required by section 42 of the Public Governance, Performance and Accountability Act 2013 (PGPA Act) and are general purpose financial statements. The financial statements have been prepared in accordance with:

 Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR); and

 Australian Accounting Standards and Interpretations - Reduced Disclosure Requirements issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period.

The financial statements have been prepared on an accrual basis and in accordance with the historical cost convention, except for certain assets and liabilities at fair value. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position.

The financial statements have been prepared on a going concern basis. The ATO’s departmental activities are dependent on government policy and continued funding by the Parliament.

The financial statements are presented in Australian dollars and values are rounded to the nearest thousand (departmental) or the nearest million (administered), unless disclosure of the full amount is required.

Unless an alternate treatment is required by an accounting standard or the FRRs, assets and liabilities are recognised in the Statement of Financial Position when, and only when, it is probable that economic benefits will flow to the ATO or a future sacrifice of economic benefits will be required and the amount can be reliably measured. However, assets and liabilities arising under executory contracts are not recognised unless required by an accounting standard. Unrecognised liabilities are reported in Note 9 Contingent Assets and Liabilities.

Unless an alternate treatment is required by an accounting standard, income and expenses are recognised in the Statement of Comprehensive Income when, and only when, the flow, consumption or loss of economic benefits has occurred and can be reliably measured.

The ATO reporting entity

Included in the ATO’s financial statements are the operations of the Australian Charities and Not-for-profit (ACNC) through the ACNC Special Account, and the operations of the Australian Business Register (ABR) and Tax Practitioners Board (TPB).

Reporting of administered activities

The Administered Schedules of Comprehensive Income, Assets and Liabilities, Administered Reconciliation Schedule and Administered Cash Flow Statement reflect the Government’s transactions, through the ATO, with parties outside the Government.

A commitment note is not required for administered financial statements due to the nature of the items reported being legislated and not contractual arrangements.

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Australian Taxation Office Notes to and forming part of the financial statements

Significant accounting judgements and estimates for departmental items

Item Note The fair value of leasehold improvements is determined by estimating the depreciated replacement cost after taking the useful life and remaining useful life of the asset into consideration.

4

The fair value of plant and equipment is determined based on the market value for items of similar type and age or, where there is no active or comparable market, by estimating the depreciated replacement cost.

4

No accounting assumptions or estimates have been identified that could have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next reporting period.

Significant accounting judgements and estimates for administered items

Item Note

Taxation revenue items reported under the economic transaction method 14 General interest charge revenue and remission expense that have not as yet been posted to taxpayers’ accounts 14

Penalties and interest charges and settlements 14

Allowance for impairment losses 15

Allowance for credit amendments and provision for refunds - key assumptions and methodologies used 15

During the 2019-20 financial year, the effects of the bushfires and COVID-19 pandemic have increased the uncertainty surrounding the expected value and timing of repayments of administered receivables. The increase in debts arising from changed repayment behaviour may also increase the risk of collectability. Structural shifts in repayment behaviour could cause material future changes to the impairment allowance. Refer to the accounting policy in Note 15. The ATO has taken a conservative and consistent approach in estimating the impairment of receivables.

No other accounting assumptions or estimates have been identified that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next reporting period.

New accounting standards

No accounting standard has been adopted earlier than the application date as stated in the standard. The ATO has applied the following standards and amendments for the first time for their annual reporting period commencing 1 July 2019.

Standard / Interpretation Nature of change

AASB 15 Revenue from Contracts with Customers (AASB 15) / AASB 2016-8 Amendments to Australian Accounting Standards - Australian Implementation Guidance for NotforProfit Entities and AASB 1058 Income of NotForProfit Entities (AASB 1058)

AASB 15, AASB 2016-8 and AASB 1058 became effective 1 July 2019.

AASB 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including AASB 118 Revenue, AASB 111 Construction Contracts and Interpretation 13 Customer Loyalty Programmes. The core principle of AASB 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

AASB 1058 is relevant in circumstances where AASB 15 does not apply. AASB 1058 replaces most of the not-for-profit (NFP) provisions of AASB 1004 Contributions and applies to transactions where the consideration to acquire an asset is significantly less than fair value principally to enable the entity to further its objectives, and where volunteer services are received.

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Australian Taxation Office Notes to and forming part of the financial statements

Standard / Interpretation Nature of change

AASB 16 Leases AASB 16 became effective on 1 July 2019.

This new standard has replaced AASB 117 Leases (AASB 117), Interpretation 4 Determining whether an Arrangement contains a Lease, Interpretation 115 Operating Leases—Incentives and Interpretation 127 Evaluating the Substance of Transactions Involving the Legal Form of a Lease.

AASB 16 provides a single lessee accounting model, requiring the recognition of assets and liabilities for all leases, together with options to exclude leases where the lease term is 12 months or less, or where the underlying asset is of low value. AASB 16 substantially carries forward the lessor accounting in AASB 117, with the distinction between operating leases and finance leases being retained. The details of the changes in accounting policies, transitional provisions and adjustments are disclosed below and in the relevant notes to the financial statements.

Adjustment to financial statements

Adoption of standard AASB 15 Revenue from Contracts with Customers, AASB 2016-8 Amendments to Australian Accounting Standards - Australian Implementation Guidance for Not-for-Profit Entities and AASB 1058 Income of Not-For-Profit Entities did not have a material impact on the transactions and balances recognised in the financial statements.

Application of AASB 16 Leases

AASB 16 provides for certain optional practical expedients, including those related to the initial adoption of the standard. The ATO adopted AASB 16 using the modified retrospective approach, under which the cumulative effect of initial application is recognised in retained earnings at 1 July 2019. Accordingly, the comparative information presented for 2019 is not restated and it is presented as previously reported under AASB 117 and related interpretations. The ATO elected to apply the practical expedient to not reassess whether a contract is, or contains a lease at the date of initial application. At the transition date, contracts that were not identified as leases under AASB 117 were not reassessed. The definition of a lease under AASB 16 was applied only to contracts entered into or changed on or after 1 July 2019.

The ATO also applied the following practical expedients available under AASB 16 to leases previously classified as operating leases under AASB 117:  applying a single discount rate to a portfolio of leases with reasonably similar characteristics;  excluding initial direct costs from the measurement of right-of-use assets at the date of initial application for

leases where the right-of-use asset was determined as if AASB 16 had been applied since the commencement date;  relying on previous assessments on whether leases were onerous as opposed to preparing an impairment review under AASB 136 Impairment of assets as at the date of initial application; and  applying the exemption not to recognise right-of-use assets and liabilities for leases with less than 12 months of

lease term remaining as of the date of initial application.

As a lessee, the ATO previously classified leases as operating or finance leases based on its assessment of whether the lease transferred substantially all of the risks and rewards of ownership. Under AASB 16, the ATO recognises right-of-use assets and lease liabilities for most leases.

On adoption of AASB 16, the ATO recognised right-of-use assets and lease liabilities in relation to leases of office space which had previously been classified as operating leases. The lease liabilities were measured at the present value of the remaining lease payments, discounted using the ATO’s incremental borrowing rate as at 1 July 2019. The ATO’s incremental borrowing rate is the rate at which a similar borrowing could be obtained from an independent creditor under comparable terms and conditions.

The right-of-use assets were measured as follows: a) office space: measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments. b) all other leases: the carrying value that would have resulted from AASB 16 being applied from the

commencement date of the leases, subject to the practical expedients noted above.

05Management and accountability About the financial statements

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Australian Taxation Office Notes to and forming part of the financial statements

Impact on transition of AASB 16 1 July 2019

Departmental $'000

Right-of-use assets - property, plant and equipment 1,307,940

Lease liabilities 1,350,677

Retained earnings 146,985

The following table reconciles the departmental minimum lease commitments disclosed in the entity's 30 June 2019 annual financial statements to the amount of lease liabilities recognised on 1 July 2019:

Minimum operating lease commitment at 30 June 2019 1,359

Undiscounted lease payments 1,359

Less: effect of discounting using the incremental borrowing rate as at the date of initial application (15)

Lease liabilities recognised at 1 July 2019 1,344

Changes in accounting estimates

There have been no material changes in accounting estimates applied to the 2019-20 departmental and administered financial statements.

Taxation

The ATO is exempt from all forms of taxation except fringe benefits tax and the goods and services tax (GST).

Revenues, expenses, assets and liabilities are recognised net of GST except:  where the amount of GST incurred is not recoverable under the applicable legislation; and  for receivables and payables.

Events after the reporting date

There was no subsequent event that had the potential to significantly affect the ongoing structure and financial activities of the ATO.

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Australian Taxation Office Notes to and forming part of the financial statements

1: Expenses

2020 2019

$'000 $'000

Note 1A: Employee Benefits

Wages and salaries 1,368,186 1,321,366

Superannuation:

Defined contribution plans 127,067 117,174

Defined benefit plans 170,657 175,424

Leave and other entitlements 283,341 297,174

Separation and redundancies 10,867 38,156

Other employee expenses 3,685 3,878

Total employee benefits 1,963,803 1,953,172

Accounting policy

Accounting policies for employee related expenses is contained in Note 7A Employee provisions.

Note 1B: Suppliers

Goods and services supplied or rendered

Contractors and consultants 465,304 362,476

IT and communications 529,283 465,956

Legal 63,721 68,201

Office operations 136,577 157,129

Property 63,333 61,484

Tax administration services provided by the Department of Home Affairs 50,465 50,734 Travel 18,257 27,445

Other 93,315 67,636

Total goods and services supplied or rendered 1,420,255 1,261,061

Other suppliers

Operating lease rentals1 27 198,765

Workers compensation expenses 3,977 2,100

Total other suppliers 4,004 200,865

Total suppliers 1,424,259 1,461,926

1. The ATO has applied AASB 16 using the modified retrospective approach and therefore the comparative information has not been

restated and continues to be reported under AASB 117. The ATO has no short-term lease commitments as at 30 June 2020. The above

lease disclosures should be read in conjunction with the accompanying notes 1C, 2B, 4A and 6A.

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Australian Taxation Office Notes to and forming part of the financial statements

2020 2019

$'000 $'000

Note 1C: Finance Costs

Finance leases1 - 107

Interest on lease liabilities 13,677

Unwinding of discount 11 497

Total finance costs 13,688 604

1 The ATO has applied AASB 16 using the modified retrospective approach and therefore the comparative information has not been

restated and continues to be reported under AASB 117. The above lease disclosures should be read in conjunction with the

accompanying notes 1C, 2B, 4A and 6A.

Accounting policy

All finance charges are expensed as incurred.

Note 1D: Impairment of Financial Instruments

Impairment (gain)/loss on financial instruments (1,869) 2,186

Total impairment loss on financial instruments (1,869) 2,186

Note 1E: Write-down and impairment of other assets

Impairment and write-offs of non-financial assets

Plant and equipment 147 35

Intangibles 2,550 7,372

Revaluation of plant and equipment - 1,725

Other 2,056 2,242

Total write-down and impairment of other assets 4,753 11,374

Note 1F: Other Expenses

Compensation 608 2,282

Act of grace payments 2 613

Losses from asset sales 3 3

Total other expenses 613 2,898

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Australian Taxation Office Notes to and forming part of the financial statements

2: Own-source revenue 2020 2019

$'000 $'000

Note 2A: Revenue from contracts with customers

Rendering of services 89,016 106,521

Total revenue from rendering of services 89,016 106,521

Disaggregation of rendering of services

Type of customer:

Australian Government entities (related parties) 87,207 104,850

State and Territory Governments 285 119

Non-government entities 1,524 1,552

89,016 106,521

Accounting policy

Revenue from rendering of services is recognised when the ATO satisfies a performance obligation by performing a promised service to a customer. Revenue is recognised either as:

- the performance obligation is satisfied over time when the customer simultaneously receives and consumes the benefits provided by the ATO or

- the performance obligation is satisfied at a point in time when the customer obtains control of the asset.

Receivables for goods and services, which have 30 day terms, are recognised at the nominal amounts due less any impairment allowance. Collectability of debts is reviewed at end of the reporting period. Allowances are made when collectability of the debt is no longer probable.

2020 2019

$'000 $'000

Note 2B: Rental Income

Lease income 16,859 22,895

Total rental income 16,859 22,895

1 The ATO has applied AASB 16 using the modified retrospective approach and therefore the comparative information has not been

restated and continues to be reported under AASB 117.

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Australian Taxation Office Notes to and forming part of the financial statements

Finance Leases The ATO in its capacity as lessor has two subleases that are recognised as a finance sublease. A sublease is classified as a finance sublease when the right-of-use asset transferred comprises of 75% or more of the underlying head lease right -of-use asset.

Maturity analysis of finance lease receivables

2020

$'000

Within 1 year 7,441

One to two years 7,577

Two to three years 7,856

Three to four years 8,146

Four to five years 4,232

More than 5 years 843

Total undiscounted lease payments receivable 36,095

Unearned finance income 872

Net investment in leases 36,967

Operating leases The ATO in its capacity as lessor has a range of long and short-term leases with fixed dates for expiry. A number of subleases are due to end over the next five years.

Maturity analysis of operating lease income receivables:

2020

$'000

Within 1 year 9,598

One to two years 7,730

Two to three years 3,974

Three to four years 1,154

Four to five years 1,154

More than 5 years 2,037

Total undiscounted lease payments receivable 25,647

The above lease disclosures should be read in conjunction with the accompanying notes 1C, 2B, 4A and 6A.

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Australian Taxation Office Notes to and forming part of the financial statements

2020 2019

$'000 $'000

Note 2C: Other Revenue and Gains

Recovery of legal costs1 10,094 15,985

Resources received free of charge 3,721 3,378

Other revenue and gains/(reversals)2 1,395 (79)

Total other revenue and gains 15,210 19,284

1

Recovery of legal costs has been separately disclosed in the current year. Other revenue has been reclassified to other revenue and

gains. 2

Includes amounts related to refunds/(reversals) and overpayments/(underpayments) of $1,392 (2019: (82)).

Accounting policy

Resources received free of charge are recognised as revenue when the fair value can be reliably measured at the time the services would have been purchased if they had not been donated. Use of those resources is recognised as an expense. Resources received free of charge are recorded as either revenue or gains depending on their nature.

Note 2D: Revenue from the Australian Government

Departmental appropriations 3,461,261 3,237,902

Total revenue from the Australian Government 3,461,261 3,237,902

Accounting policy

Departmental appropriations for the year (adjusted for any formal additions and reductions) are recognised as Revenue from the Australian Government when the ATO gains control of the appropriation.

Appropriation receivables are recognised at their nominal amounts.

3: Financial assets Note 3A: Cash

Special account - ACNC 5,441 4,246

Cash on hand or on deposit 30,685 41,122

Total cash 36,126 45,368

Accounting policy

Cash is recognised at its nominal amount. Cash includes cash on hand or on deposit, and cash held in bank and the official public account for special accounts.

05Management and accountability About the financial statements

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Australian Taxation Office Notes to and forming part of the financial statements

2020 2019

$'000 $'000

Note 3B: Trade and Other Receivables

Service receivables 16,935 22,671

Total service receivables 16,935 22,671

Appropriations receivables

Existing programs

Cash held in the official public account: ATO 444,537 292,834

Total appropriations receivables 444,537 292,834

Other receivables

GST receivable from the ATO (as Tax Administrator) 37,897 27,947

Lease receivables 38,548 -

Other receivables 22,621 30,510

Total other receivables 99,066 58,457

Total trade and other receivables (gross) 560,538 373,962

Less impairment loss allowance

Services - (251)

Other receivables (17,472) (19,091)

Total impairment loss allowance (17,472) (19,342)

Total trade and other receivables (net) 543,066 354,620

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Australian Taxation Office Notes to and forming part of the financial statements

4: Non-financial assets Note 4A: Current year - Reconciliation of the opening and closing balances of property, plant, equipment, intangibles and assets held under finance lease 2020

Buildings

Buildings - leasehold

improvements

Total plant and

equipment

Computer software purchased

Computer software

-

internally developed

Total intangibles computer software

Total

$'000

$'000

$'000

$'000

$'000

$'000

$'000

As at 1 July 2019

Gross book value

-

181,356

56,556

149,821

1,568,622

1,718,443

1,956,355

Accumulated depreciation, amortisation and impairment

-

(8,038)

(4,729)

(120,945)

(1,095,220)

(1,216,165)

(1,228,932)

Total as at 1 July 2019

-

173,318

51,827

28,876

473,402

502,278

727,423

Recognition of right of use asset on initial application of AASB 16 Leases

1,299,445

-

8,495

-

-

-

1,307,940

Adjusted total as at 1 July 2019

1,299,445

173,318

60,322

28,876

473,402

502,278

2,035,363

Additions:

Purchase

-

10,723

8,984

7,346

-

7,346

27,053

Right-of-use assets

32,535

-

172

-

-

-

32,707

Internally developed

-

-

-

-

123,107

123,107

123,107

Change in billing rates by the lessor

-

-

(4,760)

-

-

-

(4,760)

Impairment write-offs recognised in net cost of services

-

-

(147)

(50)

(2,500)

(2,550)

(2,697)

Disposals

-

-

(116)

-

-

-

(116)

Other movements

-

-

-

-

-

-

-

Depreciation / amortisation expense

(29,947)

(15,771)

(9,691)

(119,041)

(128,732)

(174,450)

Depreciation on right-of-use assets

(218,047)

-

(2,040)

-

-

-

(220,087)

Total as at 30 June 2020

1,113,933

154,094

46,644

26,481

474,968

501,449

1,816,120

Total as at 30 June 2020 represented by

Gross book value

1,331,980

186,674

70,202

156,017

1,618,498

1,774,515

3,363,371

Work in progress

-

5,404

416

-

64,596

64,596

70,416

Accumulated amortisation and impairment

(218,047)

(37,984)

(23,974)

(129,536)

(1,208,126)

(1,337,662)

(1,617,667)

Total as at 30 June 2020

1,113,933

154,094

46,644

26,481

474,968

501,449

1,816,120

Carrying amount of right-of-use assets

1,113,933

-

6,627

-

-

-

1,120,560

Buildings and buildings - leasehold improvements assets were assessed for impairment in accordance with the impairment policy stated below. No indicators of impairment were found at 30 June 2020 (2019: nil).

Plant and equipment assets were assessed for impairment in accordance with the impairment policy stated below. No indicators of impairment were found at 30 June 2020 (2019: nil).

Intangibles were assessed for impairment in accordance with the impairment policy stated below. No indicators of impairment were found at 30 June 2020 (2019: nil).

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Australian Taxation Office Notes to and forming part of the financial statements

Revaluations of tangible assets

Buildings - leasehold improvements and plant and equipment are recognised at fair value. All revaluations are conducted in accordance with the ATO revaluation policy stated below. The ATO engaged the service of accredited valuer, Jones Lang LaSalle (JLL), to conduct a comprehensive review of carrying amounts for all tangible assets as at 30 June 2020.

Accounting policy

Assets are recorded at cost on acquisition except as stated below. Assets are initially measured at their fair value plus transaction costs where appropriate.

Assets acquired at no cost, or for nominal consideration, are initially recognised as assets and income at their fair value at the date of acquisition.

Tangible assets

Asset recognition thresholds

Purchases of leasehold improvements and plant and equipment are recognised initially at cost in the statement of financial position, except for assets costing less than the relevant asset recognition threshold. Asset recognition thresholds can be found in the table below, except for ACNC and TPB assets, which have an asset recognition threshold of $3,000.

Lease right of use (ROU) assets

Leased ROU assets are capitalised at the commencement date of the lease and comprise of the initial lease liability amount, initial direct costs incurred when entering into the lease less any lease incentives received. These assets are accounted for by ATO as separate asset classes to corresponding assets owned outright, but included in the same column as where the corresponding underlying assets would be presented if they were owned.

On initial adoption of AASB 16 Leases, the ATO has adjusted the ROU assets at the date of initial application by the amount of any provision for onerous leases recognised immediately before the date of initial application. Following initial application, an impairment review s undertaken for any right of use lease asset that shows indicators of impairment and an impairment loss is recognised against any right of use lease asset that is impaired. Lease ROU assets continue to be measured at cost after initial recognition.

Revaluations

Following initial recognition at cost, leasehold improvements and plant and equipment assets are carried at fair value (or an amount not materially different from fair value) less accumulated depreciation and accumulated impairment losses. The ATO conducts a comprehensive valuation every three years for all tangible assets. Valuation reviews ensure that the carrying amounts of assets do not materially differ from the fair value as at the reporting date. Any accumulated depreciation and accumulated impairment as at the revaluation date are eliminated against the gross carrying amount of the asset and the asset is restated to the revalued amount.

Depreciation

Depreciation methods and rates (useful lives) are reviewed at each reporting date and necessary adjustments are recognised in the current or future reporting periods, as appropriate.

If an asset is not fully constructed at the reporting date, its cost to date is reported as an asset under construction. Depreciation does not commence until the asset is available for use.

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Australian Taxation Office Notes to and forming part of the financial statements

Depreciation rates applying to each class of depreciable asset are based on the following useful lives and methods:

The depreciation rates for ROU assets are based on the commencement date to the earlier of the end of the useful life of the ROU asset or the end of the lease term.

Impairment

Impairment testing is conducted during the annual review of leasehold improvements and bulk furniture and fittings, as well as during the annual stocktake.

All leasehold improvements, plant and equipment and computer assets were assessed for indicators of impairment as at 30 June 2020.

Derecognition

Leasehold improvement and plant and equipment assets are derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.

Intangible assets

Asset recognition thresholds

The ATO’s intangible assets comprise internally developed and purchased software. All intangible assets are carried at cost less accumulated amortisation and accumulated impairment and are not subject to revaluation.

Asset recognition thresholds can be found in the table below, except for ACNC and TPB assets. ACNC and TPB have an asset recognition threshold of $100,000 for new internally developed software and $50,000 for enhancements. ACNC and TPB purchased software have an asset recognition threshold of $3,000.

Amortisation

Amortisation rates (useful lives) are reviewed at each reporting date and necessary adjustments are recognised in the current reporting period, or current and future reporting periods, as appropriate. In determining useful life, all known legislative changes are taken into account.

If an asset is not fully constructed at the reporting date, its cost to date is reported as an asset under construction. Amortisation does not commence until the asset is available for use.

Asset type Threshold 2020 2019

Leasehold improvements

$1,000,000 Lesser of lease

term or a maximum 20 year useful life (Straight-line method)

Lesser of lease term or a maximum 20 year useful life (Straight-line method)

Plant and equipment

Other than desktop computers, laptops, monitors and printers

Bulk purchases furniture and fittings $200,000

Individual purchases plant and equipment $3,000

5 - 25 years (Straight-line method)

5 - 25 years (Straight-line method)

Desktop computers, laptops, monitors and printers

Bulk purchases $200,000

Individual purchases $3,000

4 - 5 years (Reducing balance method)

4 - 5 years (Reducing balance method)

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Australian Taxation Office Notes to and forming part of the financial statements

Computer software assets are amortised based on the following useful lives.

Asset type Threshold 2020 2019

Purchased software $200,000 3 - 20 years

(Straight-line method) 3 - 20 years (Straight-line method)

Internally developed software

$2,500,000 Enhancements to previously capitalised software $1,000,000

5 - 26 years (Straight-line method) 5 - 26 years (Straight-line

method)

Impairment

Impairment testing is conducted through annual reviews of internally developed and purchased software. Where indicators of impairment are evident, the recoverable amount of the intangible asset is estimated and an impairment loss is recognised where the recoverable amount is less than the carrying amount.

The recoverable amount for purchased software and internally developed software in use is taken to be the depreciated replacement cost.

The recoverable amount for internally developed software assets under construction is the current replacement cost. In circumstances where the asset would be replaced if the ATO were deprived of it, the recoverable amount is taken to be the original budgeted cost as amended for additional functionality requirements. In circumstances where the asset would not be replaced if the ATO were deprived of the asset, the recoverable amount is assessed to be nil.

All computer software assets were assessed for indicators of impairment as at 30 June 2020.

2020 2019

$'000 $'000

Note 4B: Other Non-Financial Assets

Prepayments 47,039 88,939

Sub lease incentives provided 6,285 9,543

Total other non-financial assets 53,324 98,482

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Australian Taxation Office Notes to and forming part of the financial statements

5: Payables

2020 2019

$'000 $'000

Note 5A: Employees

Salaries and wages 28,616 13,394

Superannuation 4,852 2,272

Separations and redundancies 891 20,321

Total employees 34,359 35,987

Note 5B: Suppliers

Trade creditors and accruals 284,870 241,737

Operating lease rentals - 83,779

Total suppliers 284,870 325,516

Note 5C: Other Payables

Prepayments received/unearned income 81 394

Lease incentives received1 - 66,305

Other 3,372 2,899

Total other payables 3,453 69,598

1 The ATO has applied AASB 16 using the modified retrospective approach and therefore the comparative information has not been

restated and continues to be reported in accordance with AASB 117. The above lease disclosures should be read in conjunction with

the accompanying notes 1C, 2B, 4A and 6A.

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Australian Taxation Office Notes to and forming part of the financial statements

6: Interest bearing liabilities

2020 2019

$'000 $'000

Note 6A: Leases

Finance leases1 - 7,232

Lease liabilities

Buildings 1,171,216 -

Plant and equipment 1,747 -

Total leases 1,172,963 7,232

1 The ATO has applied AASB 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported in accordance with AASB 117.The above lease disclosures should be read in conjunction with the accompanying notes 1C, 2B, 4A and 6A.

Embedded finance leases in 2019 have been recognised in respect of IT equipment provided under agreements with external information and communications technology suppliers. The finance lease liability relates to equipment under the agreements. The useful lives of the assets are for fixed terms of between 3 and 6 years. The average interest rate implicit in the leases was 0.99%. Cancellation penalties apply on early termination of the leases. There are no significant contingent rentals.

Accounting policy

Refer Overview section for accounting policy on leases.

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Australian Taxation Office Notes to and forming part of the financial statements

7: Provisions 2020 2019

$'000 $'000

Note 7A: Employee Provisions

Leave 752,004 696,997

Performance bonus payments 120 178

Other 195 195

Total employee provisions 752,319 697,370

Accounting policy

Liabilities for ‘short-term employee benefits’ (as defined in AASB 119 Employee Benefits) and termination benefits which are expected to be settled within twelve months of the end of the reporting period are measured at the amount expected to be paid on settlement.

All other employee benefit liabilities are measured at the present value of the estimated future cash outflows to be made in respect of services provided by employees up to the reporting date.

Leave

The liability for employee benefits includes provision for annual leave and long service leave.

Leave liabilities are calculated based on the employees’ remuneration at the estimated salary rates that will apply at the time the leave is taken. This includes an allowance for the ATO’s employer superannuation contribution rates, annual leave and long service leave accrued when the leave is taken, to the extent that the leave is likely to be taken during service rather than paid out on termination.

The liability for long service leave has been determined by reference to the work undertaken by the Australian Government Actuary in 2017-18. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation.

Separation and redundancy

The ATO recognises a provision for redundancy when it has developed a plan for the redundancy and has informed those employees affected that it will carry out the redundancy. Provision is made for separation and redundancy employee benefit payments.

Superannuation

Employees of the ATO are members of the Commonwealth Superannuation Scheme (CSS) or the Public Sector Superannuation Scheme (PPS), which are defined benefit schemes for the Government, or a defined contribution scheme. The defined contribution scheme can be the PSS accumulation plan (PSSap), a fund of the employee’s choice or Australian Super (as the default fund for employees who are covered under the Superannuation (Productivity Benefits) Act 1988).

The liability for defined benefits is recognised in the financial statements of the Government and is settled by the Government in due course. This liability is reported in the Department of Finance’s administered schedules and notes.

The ATO makes employer contributions to the employees' superannuation schemes at rates determined by an actuary to be sufficient to meet the current cost to the Government. The ATO accounts for the contributions as if they were contributions to defined contribution plans.

The liability for superannuation recognised at the end of the reporting period represents employer contribution accruals for the period from the last pay to 30 June 2020.

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Australian Taxation Office Notes to and forming part of the financial statements

Note 7B: Other Provisions

Legal costs and

indemnities

Onerous leases Restoration obligations

Total

$’000 $’000 $’000 $’000

As at 1 July 2019 8,076 19,081 2,674 29,831

Additional provisions made 13,496 - 84 13,580

Amounts used (10,644) - - (10,644)

Amounts reversed (1,148) (19,081) (44) (20,273)

Unwinding of discount or change in discount rate - - 11 11

Total as at 30 June 2020 9,781 - 2,725 12,505

Accounting policy

Restoration obligations - accommodation

A small number of ATO property leases are subject to restoration costs upon vacating the site.

An asset and provision are recognised at the commencement of a lease at the present value of the restoration obligations. Movements in the liability are recognised as finance expenses as the payment of restoration costs advances. Any difference between the provision and the amount paid at final settlement is recognised as a restoration obligation expense or gain.

The restoration obligations provision on all new leasehold improvement assets is determined in accordance with a valuation supplied by Jones Lang LaSalle.

Revaluation increments and decrements in relation to the provision of the restoration obligations and the associated assets are recognised in Other Comprehensive Income as a change in the asset revaluation reserve.

The restoration obligations asset and provision are reviewed and adjusted annually to assess whether the ATO is likely to make payments under a restoration obligation.

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Australian Taxation Office Notes to and forming part of the financial statements

8: Financial instruments

Note 8A: Categories of Financial Instruments

2020 2019

$'000 $'000

Financial assets at amortised cost

Cash 36,126 45,368

Service receivables 16,935 22,420

Other receivables 4,891 4,991

Total financial assets at amortised cost 57,952 72,779

Financial liabilities

Financial liabilities measured at amortised cost

Supplier payables 284,870 325,516

Finance leases - 7,232

Lease liabilities 1,172,963 -

Total financial liabilities measured at amortised cost 1,457,833 332,748

Accounting policy

Financial assets

The ATO classifies its departmental financial assets depending on their nature and purpose. The departmental financial assets are recognised and derecognised upon trade date.

All departmental financial assets are classified as loans and receivables as they have fixed or determinable payments that are not quoted in an active market.

Departmental receivables are measured at amortised cost using the effective interest method less impairment. Interest is recognised by applying the effective interest rate. Future cash flows for departmental receivables, which are almost all short-term in nature, are recognised at their nominal amounts.

Impairment of financial assets

Financial assets are assessed for impairment at the end of each reporting period based on expected credit losses, using the general approach which measures the loss allowance based on an amount equal to lifetime expected credit losses.

A write-off constitutes a derecognition event where the write-off directly reduces the gross carrying amount of the financial assets.

Financial liabilities

Financial liabilities are initially measured at fair value, net of transaction costs. These liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. Financial liabilities are recognised and derecognised upon ‘trade date’.

Suppliers and other payables are recognised at amortised cost. Liabilities are recognised to the extent that the goods or services have been received (irrespective of having been invoiced).

Note 8A: Net Income and Expense from Financial Assets

Financial assets at amortised cost

Impairment gain/(loss) on loans and receivables 1,869 (2,186)

Net gains/(loss) on financial assets at amortised cost 1,869 (2,186)

Note 8B: Net Income and Expense from Financial Liabilities

Financial liabilities measured at amortised cost

Interest expense on financial liabilities measured at amortised cost 13,677 107

Net gains on financial liabilities measured at amortised cost 13,677 107

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Australian Taxation Office Notes to and forming part of the financial statements

9: Contingent assets and liabilities

Indemnities

Claims for compensation/ damages or costs Total

2020 2019 2020 2019 2020 2019

$'000 $'000 $'000 $'000 $'000 $'000

Contingent liabilities

Balance from previous period 12,058 11,480 3,760 5,264 15,818 16,744

New contingent liabilities recognised 1,461 5,032 1,388 2,384 2,849 7,416

Re-measurement - (1,135) (1,146) (456) (1,146) (1,591)

Liabilities realised (155) (141) (524) (796) (679) (937)

Obligations expired (1,481) (3,178) (1,484) (2,636) (2,965) (5,814)

Total contingent liabilities 11,883 12,058 1,994 3,760 13,877 15,818

Net contingent liabilities 11,883 12,058 1,994 3,760 13,877 15,818

Quantifiable contingencies

Indemnities

An indemnity may be granted to a trustee/liquidator to help fund recovery action where the ATO is a creditor in an insolvency administration. Adverse costs may form part of an indemnity where it is possible that litigation may occur as a result of the indemnified recovery action.

Claims for compensation / damages or costs

At any point in time, the ATO has claims associated with actions brought against the ATO for unfair dismissal, unlawful termination, alleged breach of general protections provisions of the Fair Work Act 2009, unlawful discrimination and claims for compensation unrelated to the employment. This also includes claims under the 'Scheme for Compensation for Detriment Caused by Defective Administration' (CDDA) which provide for compensation to individuals and other bodies adversely affected by the maladministration by a Government body, but who have no legal means to seek redress, such as a legal claim.

Unquantifiable contingencies

Claims and legal actions

At any point in time, the ATO is subject to claims and legal actions. It is not possible to estimate the amounts and in some cases, the timing of any potential payments that may be required in relation to these claims.

Court awarded legal costs

A party successful in a legal action may be compensated for their expenses through a court award of legal costs against the opposing party. Due to the uncertainty over the outcome of outstanding and pending court cases, duration of court cases and the legal costs of the opposing party, the ATO is unable to reliably estimate either its potential payments to, or potential cost recoveries from, opposing litigants. The recoverability of certain costs awarded to the ATO remains improbable and a corresponding contingent asset is unquantifiable.

Contingent gain - indemnities

If the indemnity is paid and the action is successful, the ATO may recover the indemnity. The ATO is not able to reliably estimate potential recoveries from outstanding indemnities because of the duration and uncertainty of cases and the fluctuation in the number of indemnities granted each year.

Accounting policy

Contingent assets and liabilities arise from uncertainty as to the existence of a liability or asset, or represent an obligation in respect of which the settlement is not probable or where the amount cannot be reliably measured and accordingly are not recognised in the statement of financial position. Significant remote contingencies form part of this disclosure.

Disclosure of amounts in the note is neither an admission nor acceptance of responsibility by the ATO in advance of any court decisions or other relevant determinations.

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Australian Taxation Office Notes to and forming part of the financial statements

10: Key management personnel remuneration

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the ATO, directly or indirectly. In 2019-20, the ATO had determined the key management personnel to be the Commissioner and members of the ATO Executive.

2020 2019

$'000 $'000

Short-term employee benefits 3,470 3,339

Post-employment benefits 266 258

Other long-term employee benefits 156 128

Total key management personnel remuneration expenses1 3,892 3,725

The total number of key management personnel that are included in the above table is 11 (2019: 8).

1 The above key management personnel remuneration excludes the remuneration and other benefits of the Portfolio Minister. The Portfolio Minister's remuneration and other benefits are set by the Remuneration Tribunal and are not paid by the ATO.

11: Related party disclosures

Related party relationships

The ATO is an Australian Government controlled entity. Related parties to the ATO are key management personnel including the ATO Executive, Cabinet Ministers, and other Australian Government entities.

Transactions with related parties

Given the breadth of government activities, related parties may transact with the government sector in the same capacity as ordinary citizens. Such transactions include the payment or refund of taxes, receipt of a Medicare rebate or higher education loans. These transactions have not been separately disclosed in this note.

Significant transactions with related parties can include:

 the payments of grants or loans;  purchases of goods and services incurred on non-market terms and/or not part of normal business operations;  asset purchases, sales transfers or leases;  debts forgiven; and  guarantees.

No related party transactions require disclosure in 2020.

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Australian Taxation Office Notes to and forming part of the financial statements

12: Aggregate assets and liabilities

2020 2019

$'000 $'000

Assets expected to be recovered in:

No more than 12 months 569,841 463,112

More than 12 months 1,878,795 769,927

Total assets 2,448,636 1,233,039

Liabilities expected to be settled in:

No more than 12 months 742,158 496,101

More than 12 months 1,518,313 669,433

Total liabilities 2,260,470 1,165,534

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Australian Taxation Office Notes to and forming part of the financial statements

13: Administered - expenses 2020 2019

$'m $'m

Note 13A: Subsidies

Subsidies in connection with

JobKeeper 31,559 -

Cashflow boost payments for employers 23,621 -

Fuel tax credits scheme 7,343 7,247

Research and development tax incentive 2,232 2,002

Australian screen production incentive 293 358

National rental affordability scheme 139 120

Product stewardship for oil 99 71

Junior minerals exploration incentive 26 9

Seafarer tax offset 9 9

Exploration development incentive - (1)

Total subsidies 65,321 9,815

Note 13B: Personal Benefits

Direct

Low income superannuation tax offset 740 692

Private health insurance rebate 232 229

Superannuation co-contribution scheme 103 114

Total personal benefits 1,075 1,035

Accounting policy

Administered expenses include subsidies, personal benefits, impairment on taxation receivables, penalty and interest charge remission expenses, interest on overpayments, superannuation guarantee charge and unclaimed superannuation monies interest.

Subsidies, personal benefits and superannuation guarantee charge expenses are recognised when they can be reliably measured. This recognition point relies on estimation methodologies and techniques to determine taxpayer liabilities that have not yet been reported to the ATO. Estimation techniques have inherent risks of error and rely on assumptions such as wage growth, gross domestic product (GDP) and recent historical information. At the reporting date, the amounts disclosed represent a reliable estimate of expenses incurred in the period.

The expense recognition point for each material subsidy and personal benefit expense is noted in the table below.

The impairment of taxation receivables and penalty and interest charge remission expenses include both actual and accrued amounts in accordance with ATO operational policies. See Note 15.

Interest on overpayments represents estimates and actual payments of interest in accordance with the Taxation (Interest on Overpayments and Early Payments) Act 1983, and, an estimate of future interest charges, where the ATO considers that the probable outcome of tax in dispute at year-end will result in a refund being issued to the taxpayer.

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Australian Taxation Office Notes to and forming part of the financial statements

Administered expense product Expense recognition point JobKeeper JobKeeper expense is a temporary subsidy for eligible

employers and business participants that have been significantly affected by coronavirus (COVID-19). The expense is recognised when an entity is eligible to make a claim in arrears for the previous month. This includes amounts processed after year end but in respect of the reporting period.

Cashflow boost payments for employers Cashflow boost payment expense is a temporary subsidy for businesses and not-for-profit organisations who employ staff

during the economic downturn associated with coronavirus (COVID-19). The expense is recognised when entities make eligible payments potentially subject to withholding tax in the reporting period. It also includes an estimate for amounts where the activity statement has not been lodged for the reporting period.

Fuel tax credits scheme Fuel tax credits scheme expense is a subsidy for the fuel tax component of the price of fuel. The expense includes an estimate of claims not yet received relating to transactions that occurred in the reporting period.

Research and development tax incentive

Research and development (R&D) tax incentive expense is a subsidy for eligible companies incurring research and development expenditure during the reporting period. Companies claim the R&D tax incentive in their tax return as refundable tax offsets which are generally paid in the subsequent reporting periods.

Australian screen production incentive

Australian screen production incentive expense is recognised when film and television production companies receive certificates of eligibility from either Screen Australia or the Ministry for the Arts on qualifying Australian production expenditure during the reporting period.

National rental affordability scheme (ATO expense only)

National rental affordability scheme expense is recognised when participants are eligible to receive incentives from the Secretary of the Department of Social Services (DSS) for the reporting period. Claims paid through the tax system are made on income tax returns.

Product stewardship for oil Product stewardship for oil (PSO) expense is recognised when a registered client recycles used oil or consumes eligible oil.

Claims for PSO are lodged at any time within three years after the start of the claim period.

Junior minerals exploration incentive

Junior minerals exploration incentive expense (JMEI) is recognised when shareholders of mineral exploration companies are provided exploration credits, which is paid as a refundable tax offset.

Exploration development incentive Exploration development incentive (EDI) expense is recognised when shareholders of mineral exploration

companies are provided exploration credits, which is paid as a refundable tax offset. EDI expense was replaced by JMEI in the 2017-18 year. The expense is still recognised for amounts processed in the comparative reporting period.

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Australian Taxation Office Notes to and forming part of the financial statements

Administered expense product Expense recognition point Low income superannuation tax offset

Low income superannuation tax offset expense is recognised when eligible concessional superannuation contributions are made to superannuation fund accounts of eligible individuals during the reporting period.

Private health insurance rebate (ATO expense only)

Private health insurance rebate expense is recognised when eligible claimants have paid private health insurance premiums during the reporting period and receive a rebate through the tax system on assessment of their individual tax return.

Superannuation co-contribution scheme Superannuation co-contribution expense is recognised when individuals make eligible personal superannuation

contributions during the reporting period.

14: Administered - income 2020 2019

$'m $'m

Note 14A: Income Tax

Individuals and others withholding tax 229,731 228,322

Companies 87,036 94,642

Superannuation funds 6,621 10,911

Fringe benefits tax 3,939 3,893

Resources rent tax 921 1,202

Total income tax 328,248 338,970

Note 14B: Indirect Tax

Goods and services tax 65,288 66,385

Excise duty 23,116 23,488

Wine equalisation tax 1,040 995

Luxury car tax 632 688

Total indirect tax 90,076 91,556

Note 14C: Other Taxes

Major bank levy 1,639 1,566

Superannuation guarantee charge 1,034 1,069

Self managed superannuation fund levy 141 146

Other 123 131

Total other taxes 2,937 2,912

Note 14D: Non-taxation revenue

Unclaimed superannuation monies1 1,120 (1,170)

Fines 48 73

Other 14 16

Total non-taxation revenue 1,182 (1,081)

1

The unclaimed superannuation monies (USM) revenue line item had a large negative balance in 2018-19 as a result of the

Treasury Laws Amendment (Protecting Your Superannuation Package) Act 2019 which substantially increased the ATO’s

powers to proactively reunite USM with members. As a result, large amounts recognised as revenue in prior years were

recognised as reductions to revenue in 2018-19.

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Australian Taxation Office Notes to and forming part of the financial statements

Accounting policy

The ATO recognises revenue when, and only when, the following three conditions have been satisfied:

1. there is a basis establishing the ATO’s right to receive the revenue;

2. it is probable that future economic benefits will be received by the ATO; and

3. the amount of revenue to be received can be reliably measured.

Estimating some revenues can be difficult due to impacts of economic conditions and timing of final taxable income, hence the ATO uses two bases of recognition:

1. Economic transaction method (ETM)

Revenue is recognised when the ATO, through the application of legislation to taxation and other relevant activities, gains control over the future economic benefits that arise from taxes and other statutory charges.

Where a taxation revenue type is able to be measured reliably, including transactions that are yet to occur but are likely to be reported, the ETM is applied.

Estimation techniques have inherent risks of error and rely on assumptions such as wage growth, gross domestic product (GDP) and recent historical information. Based on the information and evidence available at the date of these financial statements, the amounts disclosed represent a reliable estimate of revenue.

2. Taxation liability method (TLM)

Revenue is recognised at the earlier of when an assessment of a tax or superannuation liability is made, or payment is received by the ATO. Further, revenue is recognised when there is sufficient information to raise an assessment but an event has occurred which delays the issue of the assessment. This method is permitted under AASB 1058 Income of Not-for-Profit Entities in circumstances when there is an inability to reliably measure taxes when the underlying transactions or events occur. Revenue recognised under the TLM basis is generally measured at a later time than would be the case if it were measured under ETM.

In accordance with the revenue recognition approach adopted by the Australian Government, the ATO applies the ETM and TLM approaches as set out in the following tables.

Revenue types recognised on an ETM basis

Type of taxation and superannuation revenue

Nature of revenue type

Fringe benefits tax Fringe benefits tax (FBT) is recognised on fringe benefits provided by employers to employees during the reporting period and includes an estimate of outstanding instalments and balancing payments for the annual FBT return.

Petroleum resource rent tax Petroleum resource rent tax is recognised based on actual taxable profits for the year in respect of offshore petroleum projects excluding some of the North-West Shelf production and associated exploration areas, which are subject to excise and royalties.

Goods and services tax The goods and services tax (GST) is a broad-based tax of 10 per cent on most goods and services supplied or sold during the reporting period. GST revenue includes actual liabilities raised during the year and an estimate of amounts outstanding that relate to transactions occurring in the reporting period.

Excise duty Excise duty is recognised based on the actual and estimated duty

payable to the Government. Excise duty becomes payable when certain goods are distributed for home consumption during the reporting period.

Wine equalisation tax The wine equalisation tax revenue is recognised when an assessable dealing occurs within the reporting period giving rise to a tax liability and an estimate of amounts outstanding that related to transactions occurring in the reporting period.

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Australian Taxation Office Notes to and forming part of the financial statements

Type of taxation and superannuation revenue

Nature of revenue type

Luxury car tax The luxury car tax revenue is recognised at the time the sale (or

private import) of a luxury vehicle occurs within the reporting period and an estimate of amounts outstanding that relate to transactions occurring in the reporting period.

Unclaimed superannuation monies Revenue is recognised based on the annual amount of unclaimed superannuation received by the ATO less an estimate of future outflows relating to the annual amount received when account owners initiate a claim or the account owner is identified. Revenue in relation to inactive low balance accounts will be recognised on a TLM basis as the amount of the payments cannot be reliably measured.

Major bank levy Major bank levy is a levy calculated within the reporting period on

authorised deposit-taking institutions with a total liability threshold of greater than $100 billion.

Self managed superannuation fund levy A self managed superannuation fund (SMSF) is obligated to pay the SMSF levy when the SMSF (registered and active) exists at any time

through the income year.

Revenue types recognised on a TLM basis

Type of taxation and superannuation revenue

Nature of revenue type

Income tax - individuals Individuals income tax includes income tax withholding, other individuals, Medicare levy, and income tax refunds.

Income tax withholding represents amounts withheld from remuneration paid during the year. Other individuals includes income tax instalments for the year and prior year final tax returns received by the ATO during the year. Income tax refunds are made where tax credits exceed the final liability on assessment. Refunds include prior year refunds made or assessed during the year.

Individuals income tax does not include estimates of revenue or refunds related to the current taxation year that will be recognised in tax returns lodged after the end of the current financial year.

Income tax - companies Company income tax includes company tax payable that relates to income tax instalments and final payments received/raised for the current and prior reporting periods.

It does not include estimates of revenue related to the current taxation year that will be recognised in tax returns lodged after the end of the current financial year.

Income tax - superannuation funds Superannuation income tax includes amounts payable by superannuation funds that relate to income tax instalments and final

payments for the current and prior reporting periods. Superannuation funds income tax is levied on earnings and taxable contributions.

It does not include estimates of revenue related to the current taxation year that will be recognised in tax returns lodged after the end of the current financial year.

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Australian Taxation Office Notes to and forming part of the financial statements

Revenue types recognised on a TLM basis

Type of taxation and superannuation revenue

Nature of revenue type

Minerals resource rent tax

Minerals resource rent tax was a project based tax on the extraction of iron ore and coal and was abolished in 2015-16. Revenue is still recognised for amended assessments that are processed in the current reporting period.

Superannuation surcharge This tax was abolished from 1 July 2005. However, assessments and amendments continue to be issued for 2004-05 and previous financial years.

Different arrangements exist for unfunded defined benefit funds (UDBs). Superannuation surcharge revenue relating to UDBs is recognised at the time it can be assessed, even though it may not be collected for some years, until which time an annual interest charge accrues.

Superannuation guarantee charge Superannuation guarantee charge is a charge on employers that have not paid the compulsory superannuation guarantee for their employees. The ATO assesses and collects the guarantee, interest owing and an administrative fee.

Accounting policy

Allowance for credit amendments and provisions for refunds

Taxpayers are entitled to dispute taxation amounts assessed by the ATO. Where the ATO considers that the probable outcome will be a reduction in the amount of tax owed by a taxpayer, an allowance for credit amendment (if the disputed debt is unpaid) or a provision for refund (if the disputed debt has been paid) will be recognised.

The allowance for credit amendments and provisions for refunds are recognised as a reduction in revenue.

For disputes less than $10 million, these estimates are calculated using an automated model. The model uses historical trends to calculate probable reductions.

Disputes greater than $10 million are manually assessed. Where there is insufficient certainty to make a manual assessment a statistical model is used to estimate the value.

Penalties and interest charges

Penalties and interest arising under taxation legislation are recognised as revenue at the time the penalty or interest is imposed on the taxpayer. Generally, subsequent remissions and write-offs of such penalties and interest are treated as an expense of the period. Penalties and interest that are imposed by law and immediately remitted by the Commissioner are not recognised as revenue or as an expense. Additional interest is raised for the period between the last imposition and the end of the financial year to recognise amounts not yet recorded on taxpayer accounts.

Settlements

A settlement involves an agreement between the ATO and the taxpayer to resolve matters in dispute where one or more parties make concessions on what they consider is the legally correct position. Where this results in a reduction of the amounts payable by the taxpayer, the reductions for the assessment and any associated penalties and interest charges, excluding failure to lodge penalty, are recognised as a reduction in revenue. This is consistent with AASB 1004 Contributions as the ATO never obtained control to impose the original assessment.

Pay as you go (PAYG) system

The ATO collects compulsory repayment amounts of accumulated HELP and other income contingent loan (ICL) debts through the PAYG tax system. The repayment of ICL debts reduces the loan that a person owes to the Commonwealth.

An adjustment is made to Individuals income tax revenue for the compulsory repayment of ICL debts as the collection of these amounts through the PAYG tax system does not represent revenue for the ATO and the compulsory repayments figure can be reliably estimated.

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Australian Taxation Office Notes to and forming part of the financial statements

15: Administered - non-financial assets 2020 2019

$'m $'m

Note 15A: Receivables

Direct tax

Individuals 29,854 22,973

Company 12,829 11,366

Superannuation 537 425

Fringe benefits tax 197 414

Resources rent tax 211 164

Total direct tax 43,628 35,342

Indirect tax

Goods and services tax 13,314 7,495

Excise duty 182 122

Wine equalisation tax 100 93

Luxury car tax 81 24

Total indirect tax 13,677 7,734

Other tax

Superannuation guarantee charge 2,453 2,192

Self managed superannuation fund levy 59 44

Other 39 28

Total other tax 2,551 2,264

Non-taxation

Fines 236 214

Foreign investment review board infringements 4 3

Unclaimed superannuation monies 1 2

Total non-taxation 241 219

Total receivables (gross) 60,097 45,559

Less: Impairment allowance (20,831) (15,484)

Allowance for credit amendments (4,256) (5,095)

Total receivables (net) 35,010 24,980

Note 15B: Accrued Revenues

Direct tax

Fringe benefit tax 956 851

Resources rent tax 154 296

Total direct tax 1,110 1,147

Indirect tax

Goods and services tax 9,780 11,283

Excise duty 252 569

Wine equalisation tax 93 90

Luxury car tax 71 75

Total indirect tax 10,196 12,017

Other revenue

Major bank levy 421 394

Unclaimed superannuation monies 525 141

Self managed superannuation fund levy 50 51

Total other revenue 996 586

Total accrued revenue 12,302 13,750

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Australian Taxation Office Notes to and forming part of the financial statements

Accounting policy

Cash

Cash is carried at net fair value and is a financial instrument.

Receivables

ATO receivables are non-financial assets recoverable under law.

Collectability of receivables is reviewed on an ongoing basis. Where estimation is used, it represents the best estimate as at the reporting date, however inherent risks and uncertainties exist in the estimation process.

Debts which are irrecoverable at law or uneconomic to pursue are written off. However this does not preclude the Commissioner from re-raising these debts if information subsequently becomes available which indicates that recoverability action may be viable.

Parallel liabilities

Where a company fails to remit withholding tax or superannuation guarantee amounts, the Commissioner is authorised to serve notices requiring payment of estimated and outstanding amounts on the company and all associated Directors. These are called parallel liabilities and are not included in receivables or revenue. Similarly, duplications arising from debts raised under alternative provisions of the law are excluded.

Impairment on taxation receivables

An impairment allowance is created when there is evidence that the ATO will not be able to collect all of the amounts due.

A threshold is applied to determine whether the impairment allowance is calculated manually or using a statistical model.

Assessment of the collectability of receivables includes compliance and lodgment history, the existence of a dispute over a receivable, the taxpayer’s capacity to pay, and judgement.

Impairment losses are recognised as an administered expense.

Administered receivables are not financial instruments as they arise from statutory charges. The impairment of statutory receivables is made under AASB 136 Impairment of Assets.

An impairment allowance is estimated using historical data and does not incorporate forecast information including predicted economic activity. In 2019-20 the effects of the bushfires and COVID-19 pandemic have increased the uncertainty surrounding the expected value and timing of repayments of administered receivables. The increase in debts arising from changed repayment behaviour, including deferrals, may also increase the risk of collectability.

At the time of estimating the 2019-20 impairment allowance, there is limited data available to inform whether, and to what extent, the overall collectability of ATO debts are impacted by these factors. In response to this increased uncertainty, the ATO has taken a conservative and consistent approach in estimating the impairment of receivables.

Structural shifts in repayment behaviour, could cause material future changes to the impairment allowance and will continue to be monitored as supporting data becomes available.

Allowance for credit amendments

Recognised in relation to disputed assessments in accordance with Note 14.

Accrued revenues

Accrued revenues include revenue estimates made on an ETM basis and interest charges in accordance with Note 14.

Other securities

In some instances the ATO will enter into an agreement with a taxpayer to hold a security over a tax debt. These securities are not recorded in the financial statements as assets because the primary cash generating asset is the debt rather than the security over the debt.

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Australian Taxation Office Notes to and forming part of the financial statements

16: Administered - provisions Note 16: Reconciliation of movement in other provisions

Subsidies

Personal benefits

Other accrued expenses

Income taxation refunds

Indirect taxation refunds

Super-annuation guarantee payments

Unclaimed

super-annuation payments

Other refunds

Interest on

over-payment of taxes

Total

$'m

$'m

$'m

$'m

$'m

$'m

$'m

$'m

$'m

$'m

As at 1 July 2019

3,644

1,160

159

2,478

260

644

1,695

10

22

10,072

Additional provisions made

23,177

1,050

1

1,421

184

910

33

23

19

26,818

Amounts used

(3,617)

(1,061)

(92)

(2,352)

(209)

(611)

(1,715)

(10)

(22)

(9,689)

Amounts reversed or remeasured

27

18

(32)

63

43

(165)

493

-

-

448

Total as at 30 June 2020

23,231

1,167

37

1,610

278

778

506

23

19

27,649

05Management and accountability About the financial statements

169

Australian Taxation Office Notes to and forming part of the financial statements

17: Administered - contingent liabilities Tax in dispute

2020 2019

$'m $'m

Contingent liabilities

Balance from previous period 5,438 5,544

New contingent liabilities recognised 1,191 584

Re-measurement (52) 254

Obligations expired (1,622) (944)

Total contingent liabilities 4,955 5,438

Quantifiable administered contingencies At any point in time, the ATO is involved in a range of dispute resolution processes, including litigation, relating to tax disputes. Details of the outcome of dispute resolution processes are uncertain until a court ruling is made and/or an agreement is reached with the taxpayer at some future date. In most cases it is not possible to estimate with any reliability the likely financial impact of current disputes.

Unquantifiable administered contingencies In some cases, the decision in relation to the cases above will be precedential. No estimate is able to be made as to whether contingent liabilities exist with respect to other taxpayers who may be impacted as a result of the decision. The ATO acknowledges that the incidence of tax evasion and other breaches of the taxation laws, unavoidably affect its fiduciary responsibilities to the Australian Government. As a result, in most cases it is not possible to estimate with any reliability the likely financial impact of current disputes.

Accounting policy

The amount disclosed as a contingent liability represents the total tax in dispute for cases assessed on an individual basis where an allowance or provision has not been made.

These amounts represent the disputes for which the ATO has assessed that there is a possible, but not probable, reduction to the amount of tax payable. The future financial impact will likely be lower than the total disclosed as a proportion of these cases will be decided in favour of the Commissioner.

Refer to Note 14 for the accounting policy on allowance for credit amendments and provisions for refunds.

18: Administered - aggregate assets and liabilities

2020 2019

$'m $'m

Note 18: Administered Aggregate Assets and Liabilities

Assets expected to be recovered in:

No more than 12 months 34,833 31,594

More than 12 months 13,025 7,601

Total assets 47,858 39,195

Liabilities expected to be settled in:

No more than 12 months 28,602 10,727

More than 12 months 840 662

Total liabilities 29,442 11,389

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Australian Taxation Office Notes to and forming part of the financial statements

19: Appropriations Note 19A: Annual Appropriations

Annual appropriations for 2020

Annual appropriation

Adjustments to appropriation

2,3

Total appropriation

Appropriation applied in 2020 (current and prior

years)

Variance

4

$'000

$'000

$'000

$'000

$'000

Departmental

Ordinary annual services

1

3,474,979

151,097

3,626,076

(3,671,619)

(45,543)

Capital budget

5

117,737

-

117,737

(95,305)

22,432

Other services

Equity

76,607

-

76,607

(37,193)

39,414

Total departmental

3,669,323

151,097

3,820,420

(3,804,117)

16,303

Administered

Ordinary annual services

Administered items

7,848

-

7,848

(2,769)

5,079

Total administered

7,848

-

7,848

(2,769)

5,079

1

Ordinary annual services annual appropriation consists of $13,718,000 withheld from the Annual Appropriation Act (No.1) 2019-20 through a section 51 withholding of the PGPA Act & $16,059,000

transferred to ACNC special account.

Annual Appropriation for Administered consists of $7,848,000 for 2019-20.

2 Adjustments represent PGPA Act section 74 receipts. 3 The variance in the departmental expenses is due to accrued expenses from prior year being drawn down in the current year from operating and unspent appropriation from departmental capital budget and equity funding.

Administered variance is due to:

- unspent annual appropriation for the year of $5,186,665.86

- less accrued campaign expenses of $107,625.51 from the prior year drawn down in the current year.

4

Departmental capital budgets are appropriated under Appropriation Acts (No.1, 3, 5). They form part of ordinary annual services, and are not separately identified in the Appropriation Acts. 5

Equity annual appropriation consists of $1,989,000 withheld from the Annual Appropriation Act (No.2) 2019-20 through a section 51 withholding of the PGPA Act.

05Management and accountability About the financial statements

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Australian Taxation Office Notes to and forming part of the financial statements

Annual appropriations for 2019

Annual appropriation

Adjustments to appropriation

2

Total appropriation

Appropriation applied in 2019 (current and

prior years)

1

Variance

3

$'000

$'000

$'000

$'000

$'000

Departmental

Ordinary annual services

3,240,202

170,677

3,410,879

(3,627,181)

(216,302)

Capital budget

4, 5

132,222

-

132,222

(144,952)

(12,730)

Other services

Equity

28,055

-

28,055

(25,131)

2,924

Total departmental

3,400,479

170,677

3,571,156

(3,797,264)

(226,108)

Administered

Ordinary annual services

Administered items

6,181

-

6,181

(1,540)

4,641

Total administered

6,181

-

6,181

(1,540)

4,641

1

$2,300,000 from Annual Appropriation Act (No.3) 2018-19 has been withheld under section 51 of the PGPA Act. $20,000,000 from Annual Appropriation Act (No.1) 2018-19 has been withheld under

section 51 of the PGPA Act and transferred to Annual Appropriation Act (No.3) 2018-19 - Departmental Capital Budget (DCB). Annual Appropriation for Administered consists of $6,181,000 for 2018-19. $4,278,000 has been withheld under section 51 of the PGPA Act.

2 Annual Appropriation ordinary annual services consists of $16,205,000 transferred to ACNC special account. 3 Adjustments represent PGPA Act section 74 receipts. 4 Departmental variance is due to accrued expenses from prior year being drawn down in the current year from operating, DCB and equity funding. Administered variance is due to:

- unspent annual appropriation for the year of $623,409.56;

- plus quarantined amount of $4,278,000 which has been moved to 2019-20; and

- less accrued campaign expenses of $259,917.59 from the prior year drawn down in the current year.

5

Departmental and Administered Capital Budgets are appropriated under Appropriation Acts (No.1, 3, 5). They form part of ordinary annual services, and are not separately identified in the Appropriation

Acts.

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Australian Taxation Office Notes to and forming part of the financial statements

Note 19B: Unspent Annual Appropriations

2020 2019

$'000 $'000

Departmental

Supply Act (No.2) 2016-17 - 3,557

Appropriation Act (No.2) 2016-17 - 351

Appropriation Act (No.2) 2017-181 1,156 1,336

Appropriation Act (No.1) 2018-19 - 242,333

Appropriation Act (No.1) 2018-19 - DCB - 19,458

Appropriation Act (No.2) 2018-19 2,151 5,061

Appropriation Act (No.3) 2018-19 4,646 6,946

Appropriation Act (No.3) 2018-19 - DCB - 20,000

Appropriation Act (No.1) 2018-19 - Cash - 41,122

Supply Act (No.1) 2019-20 - -

Supply Act (No.1) 2019-20-DCB 350 -

Supply Act (No.2) 2019-20 2,228 -

Appropriation Act (No.1) 2019-202 292,602 -

Appropriation Act (No.1) 2019-20 - DCB 62,751 -

Appropriation Act (No.2) 2019-203 9,632 -

Appropriation Act (No.3) 2019-20 42,732 -

Appropriation Act (No.3) 2019-20 - DCB - -

Appropriation Act (No.4) 2019-20 29,434 -

Appropriation Act (No.1) 2019-20 - Cash 30,685 -

Total departmental 478,367 340,164

Administered

Appropriation Act (No.1) 2016-174 - 2,843

Supply Act (No.1) 2016-175 - 2,210

Appropriation Act (No.1) 2017-186 5,046 5,046

Appropriation Act (No.1) 2018-197 4,794 4,864

Appropriation Act (No.1) 2019-20 2,622 -

Appropriation Act (No.3) 2019-20 2,469 -

Supply Act (No.1) 2019-20 96 -

Total administered 15,026 14,963

Appropriation amounts in this note differ from those reported in the financial statements by the following:

1 $1,155,544 that will automatically lapse from 1 July 2020.

2 $13,718,000 reduced through a section 51 determination.

3 $1,989,000 reduced through a section 51 determination.

4 $2,842,773.95 removed through 2016-17 annual Appropriation Acts repeal at the start of 1 July 2019.

5 $2,210,000 removed through 2016-17 annual Appropriation Acts repeal at the start of 1 July 2019.

6 $4,838,000 reduced through a section 51 determination.

7 $4,278,000 reduced through a section 51 determination. Comparatives have been adjusted by $260,000 in relation to

campaign expenses drawn against prior year appropriation.

05Management and accountability About the financial statements

173

Australian Taxation Office Notes to and forming part of the financial statements

Note 19C: Special Appropriations

Appropriation applied Appropriation applied

Authority

2020 2019

$'000 $'000

Taxation Administration Act 1953 - section 16 1 160,515,052 112,711,591

Product Grants and Benefits Administration Act 2000 - section 55 90,832 72,325

Superannuation Guarantee (Administration) Act 1992 - section 71 633,759 551,822

Small Superannuation Accounts Act 1995 - section 76(9) 176 66

Public Governance, Performance and Accountability Act 2013 - section 77 100,355 109,209

Total 161,340,174 113,445,013

1 The Department of Home Affairs made payments of $197,642,621 (2019: $255,573,168) from the Consolidated Revenue Fund on behalf of the ATO.

Accounting policy

Appropriations provide a legislative basis to issue refunds. The amounts disclosed above represent the actual refunds paid by appropriation source for the financial year.

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Australian Taxation Office Notes to and forming part of the financial statements

Note 19D: Compliance with statutory conditions for payments from the Consolidated Revenue Fund

For amounts to be paid out of the consolidated revenue fund under section 83 of the Constitution there must be an appropriation made by law. There have been circumstances where amounts have been paid out to taxpayers without any legislative basis and are considered a technical breach of section 83. While there are a number of controls in place to mitigate against section 83 breaches, due to the manual nature of some transactions, there continues to remain a low risk of breaches occurring.

Appropriations identified as subject to conditions

Payments in 2019-20 Review complete?

# Breaches identified

Amount recovered $

Amount to be recovered

Remedial action taken

$ $

Small Business Superannuation Clearing House (SBSCH) Special Account

76,632.20 Yes 50 76,062.37 569.83 Control

The ATO continues to perform an annual review of the risk assessment for breaches of appropriations with statutory conditions as well as annual appropriations.

Australian Taxation Office Notes to and forming part of the financial statements

20: Special accounts

Australian Charities and Not-for-profits Commission Special

Account1

Services for Other Entities and

Trust Moneys Special Account -

Australian Taxation Office

(Comcare receipts)2

2020 2019 2020 2019

$'000 $'000 $'000 $'000

Balance brought forward from previous period 4,246 3,044 - -

Increases 16,338 16,291 42 90

Decreases (15,143) (15,089) (42) (90)

Total balance carried to the next period 5,441 4,246 - -

Balance represented by:

Cash held in entity bank accounts 1,679 1,043 - -

Cash held in the official public account 3,762 3,203 - -

Total balance carried to the next period 5,441 4,246 - -

1 The Australian Charities and Not-for-profits Commission Special Account

Establishing authority: Public Governance, Performance and Accountability Act 2013 - section 80.

Establishing instrument: Australian Charities and Not-for-profits Commission Act 2012 - section 125-5.

Purpose:

(a) paying or discharging the costs, expenses and other obligations incurred by the Commonwealth in the performance of the

Commissioner’s functions;

(b) paying any remuneration and allowances payable to any person under this Act (including staff mentioned in section 120-5); and

(c) meeting the expenses of administering the Account.

The ACNC Commissioner's functions:

(a) the general administration of this Act;

(b) carry out activities that assist registered entities in complying with and understanding this Act, by providing them with guidance and

education; and

(c) assisting the public in understanding the work of the not-for-profit sector, in order to improve the transparency and accountability of

the sector, by giving the public relevant information on the ACNC website.

2 Services for Other Entities and Trust Moneys Special Account - Australian Taxation Office (Comcare receipts)

Establishing authority: Public Governance, Performance and Accountability Act 2013 - section 78.

Establishing instrument: Financial Management and Accountability Determination 2012/15 - SOETM Special Account - ATO.

Purpose: for the receipt of moneys temporarily held in trust for other persons.

Increases represent receipts from Comcare in respect of Workers' Compensation payments for ATO employees with injuries prior to 1

July 2006. Decreases represent reimbursements to ATO of payments made in advance by ATO to employees.

Accounting policy

Workers’ compensation is insured through the Government’s Comcare scheme, an integrated safety, rehabilitation and compensation system. The ATO continues to pay incapacitated employees and then receives reimbursement from Comcare.

Amendments to the Safety, Rehabilitation and Compensation Act 1988 commencing 1 July 2006 provides for reimbursements directly to employers. Receipts from Comcare for payments made to the employee for injuries occurring after 1 July 2006 are treated as receipts under section 74 of the PGPA Act.

Receipts from Comcare for injuries prior to 1 July 2006 are credited to the Service for Other Entities Trust Moneys (SOETM) Special Account and held in the ATO’s official bank account until the employee gives written consent for the ATO to offset these amounts against payments made to the employee.

05Management and accountability About the financial statements

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Australian Taxation Office Notes to and forming part of the financial statements

Superannuation Holding

Accounts Special Account1

Services for Other Entities

and Trust Moneys Special

Account - Australian

Taxation Office2

Superannuation Clearing

House Special Account 3

2020 2019 2020 2019 2020 2019

$'000 $'000 $'000 $'000 $'000 $'000

Balance brought forward from

previous period 84,430 106,218 2,291 2,290 212,650 188,527

Increases 17,410 17,654 1,330 7,715 4,382,828 4,366,869

Decreases (26,183) (39,442) (1,275) (7,714) (4,380,807) (4,342,746)

Total balance carried to the next

period 75,657 84,430 2,346 2,291 214,671 212,650

Balance represented by:

Cash held in entity bank accounts 4 10 - - 37,664 105,341

Cash held in the Official Public

Account 75,653 84,420 2,346 2,291 177,007 107,309

Total balance carried to the next

period 75,657 84,430 2,346 2,291 214,671 212,650

1 Superannuation Holding Accounts Special Account

Establishing instrument: Small Superannuation Accounts Act 1995 - section 8.

Establishing authority: Public Governance, Performance and Accountability Act 2013 - section 80.

Purpose: for the receipt of small superannuation contributions from depositors and distribution to individuals.

2 Services for Other Entities and Trust Moneys Special Account - Australian Taxation Office

Establishing instrument: Financial Management and Accountability Determination 2012/15 - SOETM Special Account - ATO.

Establishing authority: Public Governance, Performance and Accountability Act 2013 - section 78.

Purpose: for the receipt of moneys temporarily held in trust for other persons.

The full closing balance of the Special Account is held in trust for both the current and comparative years.

3 Superannuation Clearing House Special Account

Establishing instrument: Financial Management and Accountability 2010/05 - Superannuation Clearing House Special Account.

Establishing authority: Public Governance, Performance and Accountability Act 2013 - section 78.

Purpose:

(a) make payments to superannuation funds on behalf of small business employers in performance of the functions of the

Superannuation Clearing House;

(b) repay to an original payer amounts credited to the Special Account, including the residual after any necessary payments are made for

the purpose mentioned in paragraph (a);

(c) reduce the balance of the Special Account (therefore, the available appropriation for the Special Account) without making a real or

notional payment; and

(d) repay amounts where an Act or other law requires or permits the repayment of an amount received.

The full closing balance of the Special Account is held in trust for both the current and comparative years.

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05Management and accountability About the financial statements

177

Australian Taxation Office Notes to and forming part of the financial statements

21: Regulatory charging summary Note 21A: Receipts Subject to Cost Recovery Policy 2020 2019

$m $m

Amounts applied

Departmental

Annual appropriations 53 52

Total amounts applied 53 52

Expenses

Departmental 53 52

Total expenses 53 52

Revenue

Administered 13 13

Total revenue 13 13

The cost recovery information included in this note is in relation to financial industry supervisory levies (FISL), excise equivalent goods (EEG) warehouse licences and Tax Practitioners’ Board (TPB) application fees.

Revenue collected by the FISL by the Australian Prudential and Regulation Authority from the superannuation industry includes a component to cover the expenses of the ATO in administering the superannuation lost member register, unclaimed superannuation frameworks and compassionate release of super.

The EEG information relates to warehouse licence applications and renewals issued by the ATO under delegation with the Department of Home Affairs. It also covers the compliance activities associated with the granting of warehouse licences. This is in accordance with the Customs Act 1901.

The TPB applications fees are for processing tax practitioner registration and renewal applications.

A copy of the Cost Recovery Implementation Statement for FISL is available at https://www.apra.gov.au/sites/default/files/cost_recovery_implementation_statement_prudential_regulation_of_fin ancial_institutions_2019-2020.pdf

A copy of the Cost Recovery Implementation Statement for Cargo and Trade related activities is available from the Department of Home Affairs.

The Cost Recovery Implementation Statement for TPB application fees is available at https://www.tpb.gov.au/sites/default/files/tpb_cost_recovery_implementation_statement.pdf.

06

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06 Appendixes

180 Appendix 1: Laws conferring powers on the Commissioner

181 Appendix 2: Taxpayers’ Charter - our performance

183 Appendix 3: Public advice and dispute management

187 Appendix 4: Legal services expenditure

189 Appendix 5: Strategic litigation

194 Appendix 6: Debt management

196 Appendix 7: Compensation statistics

197 Appendix 8: Service commitments and activities

203 Appendix 9: Advertising, direct mail, media placement and market research

206 Appendix 10: Use of access powers

207 Appendix 11: Information provided to law enforcement agencies

212 Appendix 12: Corrections

214 Reference material

06Commissioner of Taxation annual report 2019-20

180

Appendix 1: Laws conferring powers on the Commissioner

The Commissioner of Taxation has responsibilities under a wide range of laws. The main tax and superannuation laws conferring powers or functions on the Commissioner in 2019-20 are:

ƒ A New Tax System (Australian Business Number) Act 1999 ƒ A New Tax System (Goods and Services Tax) Act 1999 ƒ A New Tax System (Luxury Car Tax) Act 1999 ƒ A New Tax System (Wine Equalisation Tax) Act 1999

ƒ Boosting Cash Flow for Employers (Coronavirus Economic Response Package) Act 2020 ƒ Commonwealth Places Windfall Tax (Collection) Act 1998 ƒ Coronavirus Economic Response Package (Payments and Benefits) Act 2020 ƒ Excise Act 1901

ƒ Excise Tariff Act 1921 ƒ Foreign Acquisitions and Takeovers Act 1975 ƒ Fringe Benefits Tax Assessment Act 1986 ƒ Fuel Tax Act 2006

ƒ Higher Education Support Act 2003 ƒ Income Tax Assessment Act 1936 ƒ Income Tax Assessment Act 1997 ƒ International Tax Agreements Act 1953

ƒ Petroleum Resource Rent Tax Assessment Act 1987 ƒ Product Grants and Benefits Administration Act 2000 ƒ Product Stewardship (Oil) Act 2000 ƒ Register of Foreign Ownership of Water or Agricultural Land Act 2015

ƒ Small Superannuation Accounts Act 1995 ƒ Superannuation Contributions Tax (Assessment and Collection) Act 1997 ƒ Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997

ƒ Superannuation (Government Co-contribution for Low Income Earners) Act 2003 ƒ Superannuation Guarantee (Administration) Act 1992 ƒ Superannuation Industry (Supervision) Act 1993 ƒ Superannuation (Self-managed Superannuation Funds) Taxation Act 1987

ƒ Superannuation (Unclaimed Money and Lost Members) Act 1999 ƒ Taxation Administration Act 1953 ƒ Taxation (Interest on Overpayments and Early Payments) Act 1983 ƒ Trust Recoupment Tax Assessment Act 1985

06Appendixes

Appendix 2: Taxpayers’ Charter - our performance

181

Appendix 2: Taxpayers’ Charter - our performance

The Taxpayers’ Charter outlines clients’ rights and obligations. It explains what clients can expect from us in administering the tax and superannuation systems. We are committed to following it in all our dealings. The following table shows how we performed against the commitments we make in our Taxpayers’ Charter, as measured by our Client and Community Confidence survey results and other data we hold.

Our performance against the Taxpayers’ Charter in 2019-20 can be considered satisfactory, with a slight improvement in client and community perceptions when compared to 2018-19. The results below are components of the ATO’s client and community confidence index, which was 66/100 for 2019-20. For more information see page 38.

TABLE 6.1 Our performance against the Taxpayers’ Charter, 2019-20

Charter element How we measure this element(a) 2019-20 result(b)

Fair and reasonable: We treat you fairly and reasonably Trustworthy: The ATO makes unbiased decisions. 67/100

Honest: We treat you as being honest unless you act otherwise The ATO administers a self-assessment tax and superannuation system, adopting a risk-based approach

to undertaking compliance activities. We treat taxpayers as being honest by default, and look more deeply where risk indicators are flagged. We look at the balance between self-assessment and compliance.

97% of total net tax collections arose through voluntary compliance

3% of total net tax collections arose through our compliance activities

Professional service and assistance: We offer you professional service and assistance

Timely: Any ATO services you want to use would be available at a convenient time that suits you. 65/100

Conscientious: The ATO takes care to think through your circumstances. 64/100

Representation: We accept you can be represented by a person of your choice and get advice

We support taxpayers to self-prepare or use the services of tax professionals. The proportion of income tax returns lodged during 2019-20 by both tax agents and self-preparers demonstrates the importance of intermediaries in the system.

71% lodged by tax agents

29% lodged by self-preparers

Privacy: We respect your privacy

Confidentiality: We keep the information we hold about you confidential

Secure: The ATO keeps your / your clients’ personal information secure. 74/100

Information access: We give you access to information we hold about you

The ATO is committed to providing taxpayers with transparency and visibility of the data we hold about them - for example by:

ƒ pre-filling individuals’ salary, interest and dividend data in their income tax returns ƒ allowing tax and BAS practices to access their clients’ records through their software or via Online services

for agents.

Almost 11 million individuals have linked to the ATO through myGov

Around 25,000 tax practices and almost 10,500 BAS practices have registered to use these services

Help: We help you to get things right Helpful: The ATO is helpful if you need them. 69/100

06Commissioner of Taxation annual report 2019-20

182

TABLE 6.1 Our performance against the Taxpayers’ Charter, 2019-20 continued

Charter element How we measure this element(a) 2019-20 result(b)

Decisions: We explain the decisions we make about you The ATO explains the reasons for our decisions as a matter of course. To demonstrate this, we provide

outcomes of decisions for objections and private binding rulings.

Objections resolved 22,290

Private binding rulings 4,126

Your right to question: We respect your right to a review and/or to make a complaint

The ATO respects and supports taxpayers in reviewing our decisions. To demonstrate this, our review/complaint framework includes:

ƒ the right to object to an ATO decision ƒ a dedicated complaints phone line and web form ƒ the opportunity for independent review by the Inspector-General of Taxation and Taxation

Ombudsman (IGTO).

Complaints lodged 24,778

Easy for you to comply: We make it easier for you to comply Easy: The amount of effort required for me to meet my tax obligations is reasonable.

66/100

Accountability: We are accountable

The ATO is accountable to a range of stakeholders in our administration of the tax and superannuation systems. This includes the community, government and external scrutineers, such as the IGTO and the Australian National Audit Office (ANAO).

Our service commitment framework (see page 197) demonstrates our accountability

Notes (a) Some elements of the Taxpayers’ Charter are measured using our Client and Community Confidence survey data, while other elements are measured using other data we collect, such as the number of objections or the percentage of lodgments.

(b) Some results are presented as an index, based on one or more survey questions. An 11-point Likert scale (0 to 10) is used to capture the responses and these responses are converted to a score between 0 and 100 to create an index score out of 100.

06Appendixes

Appendix 3: Public advice and dispute management

183

Appendix 3: Public advice and dispute management

The ATO tailors its approach to providing public advice and guidance, using various avenues including web-based guidance, fact sheets, rulings and more detailed explanations users can access depending on their needs. This flexible approach is of particular value in times of crises - such as the recent natural disasters and COVID-19, where we worked with our clients to provide timely yet accurate web guidance, followed by consultation on more formal products for issues that were highly technical.

We received positive feedback on our responsiveness to delivery of public advice and guidance during COVID-19. As part of the COVID-19 response, our suite of public advice offerings on the ATO website played a key role in providing timely and targeted practical advice. The extensive use of ato.gov.au during 2020 demonstrates the critical need this served during the pandemic.

We continue to seek feedback on content throughout the development of public advice and guidance products, including through targeted consultation groups, to ensure our advice and guidance meets community needs.

The following tables provide statistics on how the ATO assists people to understand their tax and superannuation obligations, and how we work with people who disagree with our assessments.

Public advice The ATO provides advice in public rulings and a range of other product types as shown in Table 6.2. Timeliness of our public advice is presented in Table 6.3 (for public rulings).

TABLE 6.2 Key public advice and guidance products, 2017-18 to 2019-20

Product 2017-18 2018-19 2019-20

Total public rulings (including significant addenda)(a) 64 54 51

Practical compliance guidelines (including significant updates)(b) 13 20 22

Taxpayer alerts 1 4 3

Decision impact statements 10 7 11

Synthesised texts of the Multilateral Instrument and Australian tax treaties n/a 6 9

TOTAL 88 91 96

Notes (a) Includes both draft and final rulings, excludes class and product rulings.

(b) Includes both draft and final guidelines.

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TABLE 6.3 Timeliness(a) of draft public rulings finalised, 2019-20

Product Number 0-6 months 7-12 months

Over 12 months

Taxation rulings and determinations(b) 13 5 3 5

Law companion rulings 4 1 2 1

Annual rulings 6 All published

within tax time requirements

n/a n/a

Notes (a) Timeliness refers to the time taken to finalise following the end of the public consultation period.

(b) Excludes class and product rulings.

TABLE 6.4 Business, partner and government interactions, 2017-18 to 2019-20

Activity 2017-18 2018-19 2019-20

Effectiveness of public advice issued. In particular in 2019-20, responses showed:

ƒ steady results generally - indicating that our public advice and guidance is continuing to meet the needs of our clients

ƒ overall, qualitative feedback on our responses to natural disasters and COVID-19 has been positive.

The external survey results are positive overall, showing that our public advice and guidance is meeting the needs of our clients.

Responses for 2018-19 indicate overall a similar level of satisfaction to that reported for 2017-18, with a marked improvement in the ability of our clients to find the guidance they needed.

Much of our public advice and guidance focus for 2019-20 has been on providing advice on natural disasters and COVID-19. Overall, qualitative feedback on our responses to those crises has been positive.

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Dispute management We resolved over 22,290 objections. There were 455 applications for Part IVC review or appeal to the Administrative Appeals Tribunal (AAT) or other courts in 2019-20, with 153 decisions made either in relation to these applications or applications made in earlier years.

Table 6.5 presents information on the numbers and types of our dispute cases.

TABLE 6.5 Disputes, 2017-18 to 2019-20

Cases 2017-18 2018-19 2019-20

Returns lodged 36,572,123 37,628,879 38,853,917

Adjustments arising from audits 361,107 530,508(a) 467,884

Disputed cases resolved

ƒ objections 24,350 26,276 22,290

ƒ settlements 673 635 417

ƒ litigations 326 314 375

ƒ independent reviews 16 13 22

ƒ small business independent reviews(b) n/a 66 87

Part IVC cases lodged to courts/tribunals 478 441 455

Part IVC cases resolved prior to court hearing 224 212 222

Part IVC cases proceeded to decision 102 102 153

Objections to new Part IVC litigation matters(c) 15.8 per thousand 14.1 per thousand 16.9 per thousand

Number of test case litigations finalised 5 7 10

Notes (a) Increased use of advanced analytics and automation led to increased review and audit activities for individuals not in business.

(b) The small business independent review service has been in pilot phase since 1 July 2018.

(c) Previously reported as the proportion of objections that result in litigation.

Settlement cases reviewed under our Independent Assurance of Settlements Program for 2019-20 are shown in Table 6.6. Independent assurers review settlements only after they have been finalised. As a result, settlements finalised in the second half of any financial year will likely be reviewed by an independent assurer in the following financial year.

TABLE 6.6 Settlements reviewed by our Independent Assurance of Settlements program during 2019-20(a)

Financial year of settlement Settlement cases

ATO

position $m

Settled position $m

Variance $m

Variance %

2017-18 1 38.8 6.0 32.8 85

2018-19 8 486.2 287.6 198.5 41

2019-20 7 426.0 319.4 106.5 25

TOTAL 16 951.0 613.1 337.9 36

Note (a) Totals may differ from the sum of components due to rounding.

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Tables 6.7 and 6.8 provide more detail on settlements that occurred during 2019-20.

TABLE 6.7 Stage at which settlement occurred, 2019-20(a)

Stage

Settlement cases % of total settlements

ATO

position $m

Settled position $m

Variance $m

Variance %

Pre-audit 150 36 277.6 178.4 99.2 36

Audit 172 41 1,316.9 869.6 447.3 34

Objection 73 18 1,167.9 797.2 370.7 32

AAT 20 5 54.5 22.6 31.8 58

Federal Court 2 0 397.4 149.4 248.0 62

High Court 0 0 0 0 0 0

TOTAL 417 100 3,214.5 2,017.4 1,197.1 37

Note (a) Totals may differ from the sum of components due to rounding.

TABLE 6.8 Settlements by client group, 2019-20(a)(b)

Client group

Settlement cases

% of total settlements

ATO

position $m

Settled position $m

Variance $m

Variance %

Individuals(c) 20 5 4.8 2.9 1.9 40

Small business 91 22 74.3 45.3 29.0 39

Privately owned and wealthy groups

134 32 204.1 101.4 102.7 50

Public and multinational businesses

112 27 2,927.3 1,864.5 1,062.8 36

Not-for-profit organisations(d)

0 0 0 0 0 0

Self-managed superannuation funds

55 13 2.9 2.3 0.6 19

APRA-regulated superannuation funds

5 1 1.2 1.2 0.8 7

TOTAL 417 100 3,214.5 2,017.4 1,197.1 37

Notes (a) Totals may differ from the sum of components due to rounding.

(b) The methodology used to identify the client experience has been updated. As such, the data is not directly comparable with previous years.

(c) The client group Individuals does not include those who are in business - for example, sole traders.

(d) The client group Not-for-profit organisations includes government entities.

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Appendix 4: Legal services expenditure

Our total legal expenditure for 2019-20 decreased by $3.15 million (or 3%) when compared to the previous year.

Our internal legal services costs were almost $1.9 million higher than 2018-19 due to an increase in casework conducted in-house, as well as additional costs for ACNC legal services.

External expenditure reduced by around $5.0 million. This is attributed to:

ƒ lower disbursements costs - partially due to a reduction in the number of experts engaged and a reduction in summons fees ƒ a reduction in professional fees of the Australian Government Solicitor following their change to a cost-recovery charging model

ƒ the COVID-19 pandemic and the Australian bushfires, which led to a 56% reduction in debt activities, and consequently a reduction in recovery proceedings.

These reductions offset increases in the cost of indemnity fees, and higher external legal costs associated with the renewal of major IT infrastructure projects.

TABLE 6.9 Legal services expenditure, 2019-20(a)(b)

Type of expenditure $

Total costs recovered 10,606,804

Briefs to counsel 15,354,335

Briefs for Independent Assurance of Settlements work 403,975

Disbursements (excluding counsel) 21,940,273

Professional fees paid 23,505,019

External legal services expenditure(c) 61,203,602

Internal legal services expenditure(d) 30,647,517

TOTAL (external and internal expenditure) 91,851,118

Notes (a) Includes Tax Practitioners Board (TPB) and Australian Charities and Not-for-profits Commission (ACNC) legal costs for 2019-20. Total TPB external legal services expenditure was $730,330. Total internal legal services expenditure for the TPB was $2,550,452. Total ACNC external legal services expenditure was $74,682. Total internal legal services expenditure for the ACNC was $1,056,916.

(b) External expenditure in this table excludes GST.

(c) Excludes costs awarded against the ATO, costs for settlements, expenditure on compensation and legal costs attributable to the ATO’s test case program.

(d) ATO internal legal officers manage tax litigation (under Part IVC of the Taxation Administration Act 1953), debt litigation, general legal advice and freedom of information. This amount consists of the cost of labour and expenses for those activities. Some ATO employees perform functions with some characteristics of legal work (for example, preparation of writs, statutory demands and bankruptcy notices) and provide interpretative advice on complex areas of tax and superannuation law. These activities are not undertaken by legal officers and are therefore not included in this amount.

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TABLE 6.10 Number and value of briefs to counsel, 2019-20(a)

Type of brief Number

Value $

Direct briefs to male senior counsel 146 1,957,141

Direct briefs to female senior counsel 73 1,072,329

Indirect briefs to male senior counsel 243 5,852,988

Indirect briefs to female senior counsel 96 2,647,547

Total senior 558 11,530,005

Direct briefs to male junior counsel 79 637,527

Direct briefs to female junior counsel 67 521,110

Indirect briefs to male junior counsel 116 1,768,791

Indirect briefs to female junior counsel 72 896,902

Total junior 334 3,824,330

TOTAL 892 15,354,335

Note (a) Direct briefs cover counsel briefed directly by the ATO and who work with our in-house litigators and/or business areas. Indirect briefs are counsel briefed by the ATO’s external legal providers acting on behalf of the ATO.

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Appendix 5: Strategic litigation

For the 2019-20 financial year, 76% of reported litigation outcomes under Part IVC of the Taxation Administration Act 1953 wholly supported the ATO’s position or assessments. This excludes cases funded by the ATO under the Test Case Litigation Program. Of the litigation decisions under Part IVC, the remaining 24% supported the taxpayer’s position in whole or in part.

Table 6.11 lists significant cases decided by the courts and the Administrative Appeals Tribunal (AAT) in 2019-20. The main issues of each case are listed, as well as the outcome or status as at 30 June 2020. The significant cases reported are those with the potential for ongoing impact on the tax system.

Those marked with an asterisk (*) were funded by the ATO under the Test Case Litigation Program 2019-20. For more information about the test case funding program, see ato.gov.au/testcaselitigationprog.

The Commissioner has released decision impact statements in a number of these cases. These are available at ato.gov.au/decisionimpactstatements.

TABLE 6.11 Significant cases, 2019-20

Matter Issue Outcome

Income tax cases - trusts

*Melbourne Apartment Project Pty Ltd (as trustee) v Commissioner of Taxation [2019] FCA 2118

Whether the words ‘supply of accommodation’ in the GST legislation included the sale of a residential apartment

The Federal Court found in favour of the taxpayer. The court held that the sale of a residential apartment is a supply of accommodation.

Peter Greensill Family Co Pty Ltd (trustee) v Commissioner of Taxation [2020] FCA 559

Whether a capital gain taxed to the trustee of a resident trust is disregarded where the trustee makes a non-resident beneficiary presently or specifically entitled to the capital gain

The taxpayer’s appeal to the Federal Court was dismissed. The court held that the gain went into the calculation of the trust’s net income.

The taxpayer subsequently appealed to the Full Court.

Watson as trustee for the Murrindindi Bushfire Class Action Settlement Fund v Commissioner of Taxation [2020] FCAFC 92

Whether the trustee was entitled to claim a deduction for his costs incurred as trustee against interest income earned on the settlement funds

The Full Court dismissed the taxpayer’s appeal. The costs of the trustee were not deductible against the fund’s interest income.

The taxpayer subsequently sought special leave to appeal to the High Court.

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TABLE 6.11 Significant cases, 2019-20 continued

Matter Issue Outcome

Income tax cases - other

*Addy v Commissioner of Taxation [2019] FCA 1768 Whether the taxpayer was a resident of Australia for tax purposes and, if

so, whether the application of the working holiday tax rate offended the anti-discrimination article of the UK Double Tax Agreement

The taxpayer’s appeal was allowed. The court held that the taxpayer was a resident and that, as such, the anti-discrimination article in the Double Tax Agreement prevented the working holiday rates applying.

The Commissioner subsequently appealed to the Full Court.

BAC Holdings Ltd v Commissioner of Taxation [2020] FCA 413 Whether initial activities associated with building a runway were

themselves a ‘project’ for the purposes of deductibility for capital expenditure, and whether the appeal was competent

The Federal Court dismissed the taxpayer’s appeal, upholding the Commissioners’ objection to competency.

BHP Billiton Ltd v Commissioner of Taxation [2020] HCA 5 Whether the taxpayer was sufficiently influenced by associates

and consequently liable to pay additional tax on tainted sales income under the controlled foreign corporation (CFC) rules

The High Court upheld the Full Court’s decision. The court held that the taxpayer was an associate and was sufficiently influenced such that it was subject to the CFC rules.

Burton v Commissioner of Taxation [2019] FCAFC 141 Whether Australian taxpayers, to whom the 50% CGT discount applies,

are only entitled to a foreign income tax offset in respect of half of the US tax paid

The taxpayer’s appeal was dismissed. The Full Court found that the taxpayer was only entitled to a foreign tax offset in respect of half of the US tax paid.

Caltex Australia Petroleum Pty Ltd v Commissioner of Taxation [2019] FCA 1849

Whether diesel is a ‘petroleum based oil’ under the Product Stewardship (Oil) Act 2000, giving rise to benefits for the refinement of contaminated diesel

The taxpayer’s appeal was successful. The court held that diesel is a petroleum based oil.

Coles Supermarkets Australia Pty Ltd v Commissioner of Taxation [2019] FCA 1582

Entitlement to fuel tax credits or adjustments in respect of fuel lost through evaporation or leakage whilst held for sale

The court found that there was no entitlement to a credit for the lost fuel.

*Commissioner of Taxation v Eichmann [2019] FCA 2155 Whether land used in storing material used in a building, bricklaying and

paving business was an active asset, enlivening CGT concessions

The Federal Court allowed the Commissioner’s appeal. The court held that the land was not an active asset.

The taxpayer subsequently appealed to the Full Court.

*Commissioner of Taxation v Sharpcan Pty Ltd [2019] HCA 36 Whether the taxpayer’s expenditure to purchase gaming machine

entitlements was deductible as a revenue rather than capital expense

The High Court allowed the Commissioner’s appeal, confirming that the expenditure was on capital account.

*Fortunatow v Commissioner of Taxation [2019] FCA 1247 Construction and application of the ‘unrelated clients test’ in the

personal services income (PSI) regime - specifically, the operation of the test in cases involving the use of intermediaries

The Federal Court allowed the taxpayer’s appeal concluding that advertising will be regarded as an offer or invitation to the public / section of the public, even if all the services are provided through an intermediary such as a recruitment agency, for the purposes of the unrelated clients test. The matter was remitted back to the AAT for reconsideration.

The Commissioner subsequently appealed to the Full Court.

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TABLE 6.11 Significant cases, 2019-20 continued

Matter Issue Outcome

Glencore Investment Pty Ltd v Commissioner of Taxation [2019] FCA 1432

Whether dealings between a Swiss-based company and an Australian subsidiary breached transfer pricing rules in relation to the sale and purchase of copper concentrate

The Federal Court made a decision favourable to the taxpayer, finding no breach of the transfer pricing rules.

The Commissioner subsequently appealed the decision to the Full Court.

Hamilton v Commissioner of Taxation [2020] AATA 1812 Whether income earned performing work for the International Monetary

Fund is exempt from tax under the International Organisations (Privileges and Immunities) Act 1963

The Tribunal found in favour of the Commissioner, finding that the taxpayer was not exempt from paying income tax.

The taxpayer subsequently appealed to the Federal Court.

Hart v Commissioner of Taxation [2019] FCAFC 179 Whether a capital gain made on disposal of shares acquired through a

sequence of roll-overs was a discount capital gain

The Federal Court dismissed the taxpayers’ appeals, finding that there was no entitlement to ‘discount capital gains’.

Healius Ltd v Commissioner of Taxation [2019] FCA 2011 Whether lump sum payments made to health practitioners to cease

trading from their own premises, and commence working exclusively from a medical centre operated by Healius, are income or capital in nature

The Federal Court upheld the taxpayer’s appeal, finding that the payments were deductible.

The Commissioner subsequently appealed to the Full Court.

*Military super matters:

ƒ Douglas v Commissioner of Taxation [2020] AATA 494 ƒ Burns v Commissioner of Taxation [2020] AATA 671

ƒ GDGR v Commissioner of Taxation [2020] AATA 766

Whether the invalidity benefits received by ex-servicemen should be taxed as superannuation income stream benefits or superannuation lump sum benefits

The AAT handed down favourable decisions to all three taxpayers, finding that the invalidity benefits should be taxed as lump sum benefits.

The Commissioner has subsequently appealed all three matters to the Full Court.

Mingos v Commissioner of Taxation (No 2) [2019] FCAFC 211 Whether the main residence exemption from CGT was available for

a property held in a trust

The Full Court dismissed the taxpayer’s appeal. The taxpayer was not entitled to the exemption.

Origin Energy Limited v Commissioner of Taxation (No 2) [2020] FCA 409

Whether ‘capacity charges’ were outgoings of a capital nature and, if so, deductible over 5 years as ‘black hole’ expenditure

The Federal Court dismissed the taxpayer’s appeals, finding that the payments were not deductible.

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TABLE 6.11 Significant cases, 2019-20 continued

Matter Issue Outcome

Taxation administration cases

ACN 154 520 199 Pty Ltd (in liq) v Commissioner of Taxation [2019] AATA 5981

Whether the taxpayer made creditable acquisitions, through refining scrap gold, and carried on a scheme for the dominant purpose of deriving a GST benefit

The Commissioner’s decision was upheld, and the taxpayer had no entitlement to input tax credits.

The taxpayer subsequently appealed the decision to the Full Court.

Bosanac v Commissioner of Taxation [2019] HCA 41 Whether the Full Court and Full Federal Court failed to exercise

jurisdiction in respect of the appeals they considered, and whether the Commissioner should be required to amend his assessments

The taxpayer’s High Court application in the court’s original jurisdiction was dismissed by a single justice.

The taxpayer subsequently sought to appeal that decision. That appeal was also dismissed.

Commissioner of Taxation v Iannuzzi (No 2) [2019] FCA 1818 Whether the defendant’s name should be removed from the register of

liquidators and he be restrained for 10 years from applying to register

The court found in favour of the Commissioner, removing the defendant’s name from the register and restraining him from applying to be on the register for 10 years.

Commissioner of Taxation v Pavihi [2019] FCA 2056 Declaratory relief sought by the Commissioner, and the imposition of

civil penalties on the respondent for contraventions of the Superannuation Industry (Supervision) Act 1993, for promoting a scheme

The declaratory relief sought by the Commissioner was granted, and penalties for the contraventions were imposed.

*Commissioner of Taxation v Racing Queensland Board [2019] FCAFC 224

Whether the board was liable to pay superannuation guarantee shortfalls relating to riding fees paid to jockeys who rode in its races

The Full Court allowed the Commissioner’s appeal, finding that the board was liable to pay superannuation for the jockeys.

The taxpayer subsequently sought special leave which was denied.

*Commissioner of Taxation v Scone Race Club Ltd [2019] FCAFC 225

Whether the club was liable to pay superannuation guarantee shortfalls relating to riding fees paid to jockeys who rode in its races

The Full Court allowed the Commissioner’s appeal, finding that the club was liable to pay superannuation for the jockeys.

The taxpayer subsequently sought special leave which was denied.

Commissioner of Taxation v Travelex Limited [2020] FCAFC 10 Whether delayed refund interest is payable from the date of the original or

amended GST return

The Full Court dismissed the Commissioner’s appeal. The court held that there is no legislative entitlement to amend a pre-1 July 2012 GST return. Despite this, the majority held that delayed refund interest was payable from date of lodgment of the original GST return.

The Commissioner has been granted special leave to appeal the decision.

Deputy Commissioner of Taxation v Buzadzic [2019] VSCA 221 Whether the conclusive evidence provisions prevent the Supreme Court

from looking behind an assessment in recovery proceedings

The Supreme Court of Victoria, Court of Appeal, allowed the Commissioner’s appeal, finding that it could not look behind the assessment.

The taxpayer subsequently sought special leave, which was denied.

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TABLE 6.11 Significant cases, 2019-20 continued

Matter Issue Outcome

Deputy Commissioner of Taxation v MWB Accountants Pty Ltd [2019] VCC 1516

Meaning of ‘administrative overpayment’ in section 8AAZN of the Taxation Administration Act 1953, and whether GST refunds that had been allegedly fraudulently obtained by a tax agent could be recovered from the tax agent as an administrative overpayment

The County Court dismissed the Deputy Commissioner’s appeal, holding that he was not entitled to be repaid the overpaid GST refunds as administrative overpayments by the allegedly fraudulent tax agent.

The Deputy Commissioner subsequently appealed to the Victorian Court of Appeal.

Deputy Commissioner of Taxation v Shi [2020] FCAFC 100 Whether it was in the interests of justice for the Commissioner to have

access to an affidavit filed by the taxpayer disclosing assets pursuant to a direction made in connection with the granting of a freezing order, where the affidavit might indicate an offence may have been committed

The Commissioner’s appeal was dismissed on the basis that it was not in the interests of justice for the affidavit to be disclosed.

The Commissioner subsequently sought special leave to appeal.

Jordan, Commissioner of Taxation v Second Commissioner of Taxation & Anor [2019] FCA 1602

Whether the disclosure to the Commissioner of information concerning the taxation affairs of the second respondent, for the purpose of defending defamation proceedings filed against him by the second respondent, constituted a permitted disclosure under the taxation secrecy and confidentiality provisions

The Federal Court confirmed that disclosure of the taxation affairs of the second respondent was permitted in the circumstances of this case.

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Appendix 6: Debt management

The following tables show statistics on debt holdings and debt not pursued.

Small businesses continue to account for the majority of collectable debt and are a key focus of our payment and debt strategies. We recognise that small businesses may experience cash flow issues for various reasons at any time, and that they have been particularly impacted over the last year by the severity of natural disasters and the COVID-19 pandemic. In response, we granted additional time beyond the original due date for more than 12.9 million lodgments and payments along with 680,000 payment plans tailored to individual circumstances.

TABLE 6.12 Value of debt holdings by client experience, 2017-18 to 2019-20(a)

Activity

2017-18 $b

2018-19 $b

2019-20 $b

Individuals ƒ collectable debt 2.7 2.9 3.8

ƒ debt subject to objection or appeal 0.2 0.2 0.2

ƒ insolvency debt 0.4 0.4 0.6

Small business ƒ collectable debt 15.1 16.5 21.4

ƒ debt subject to objection or appeal 1.0 1.4 1.2

ƒ insolvency debt 3.7 3.9 4.8

Privately owned and wealthy groups ƒ collectable debt 5.0 5.6 7.0

ƒ debt subject to objection or appeal 3.0 3.4 4.0

ƒ insolvency debt 2.6 2.8 2.8

Public and multinational businesses ƒ collectable debt 0.7 1.1 1.3

ƒ debt subject to objection or appeal 5.5 6.3 5.0

ƒ insolvency debt 0.3 0.4 0.5

Not-for-profit organisations ƒ collectable debt 0.1 0.2 0.3

ƒ debt subject to objection or appeal 0.0 0.0 0.0

ƒ insolvency debt 0.0 0.0 0.0

Self-managed superannuation funds ƒ collectable debt 0.1 0.2 0.3

ƒ debt subject to objection or appeal 0.1 0.0 0.0

ƒ insolvency debt 0.0 0.0 0.0

Superannuation funds ƒ collectable debt 0.1 0.1 0.0

ƒ debt subject to objection or appeal 0.0 0.0 0.0

ƒ insolvency debt 0.0 0.0 0.0

Note (a) The sum of collectable debt, debt subject to objection, review or appeal under Part IVC of the Taxation Administration Act 1953 (TAA) and insolvency debt in this table will vary from the ‘value of debt holdings by main revenue type’ table as only the main revenue types are included there.

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The proportions of debt accounted for by activity statement debt, income tax debt and superannuation guarantee charge debt are reasonably consistent over time.

TABLE 6.13 Value of debt holdings by main revenue type, 2017-18 to 2019-20(a)

Activity

2017-18 $b

2018-19 $b

2019-20 $b

Activity statement

ƒ collectable debt 12.3 14.3 19.9

ƒ debt subject to objection or appeal 0.8 0.9 0.5

ƒ insolvency debt 4.1 4.2 4.8

Income tax

ƒ collectable debt 10.3 10.8 12.5

ƒ debt subject to objection or appeal 8.6 10.0 9.4

ƒ insolvency debt 2.0 2.3 2.7

Superannuation guarantee charge

ƒ collectable debt 0.9 1.1 1.2

ƒ debt subject to objection or appeal 0.1 0.1 0.1

ƒ insolvency debt 0.9 1.0 1.1

Note (a) The sum of collectable debt, debt subject to objection, review or appeal under Part IVC of the TAA and insolvency debt in this table will vary from the ‘value of debt holdings by client experience’ table as only the main revenue types are included here.

Determining that some debts are either uneconomical to pursue or irrecoverable at law helps ensure that we are focusing our collection activities on the right debts.

TABLE 6.14 Debt not pursued, 2017-18 to 2019-20(a)

Activity 2017-18 2018-19 2019-20

Value of debt

ƒ uneconomical to pursue $1.1b $1.4b $0.7b

ƒ irrecoverable at law $3.7b $2.8b $0.9b

Ratio of debt uneconomical to pursue to ATO net cash collections 0.3% 0.3% 0.2%

Note (a) If a decision is made to not pursue a debt on the basis that it is uneconomical to do so, the debt can be pursued at a future time. A debt that is irrecoverable at law is effectively extinguished.

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Appendix 7: Compensation statistics

The information below only relates to compensation under the Commonwealth’s Scheme for Compensation for Detriment caused by Defective Administration (CDDA). For information about work health and safety, see page 103.

Under the CDDA scheme, compensation may be paid to an individual, company or other organisation that has experienced detriment as a result of our defective actions or inaction.

Payments under the scheme are discretionary. The information below provides details of claims processed under the scheme in 2019-20.

Compensation claims In 2019-20, we registered 143 compensation cases and finalised 146, with 72 resulting in compensation being offered.

In response to the independent review of CDDA in relation to the ATO and small business, the ATO has implemented new arrangements that have affected time frames for claim completion.

For straightforward claims, we aim to give the claimant a decision within 56 days. For more complex claims, we aim to give a preliminary view within 56 days. Claimants are then given an opportunity to comment on the preliminary view prior to the decision being made. The extended time frame includes time taken for the claimant to consider the ATO’s preliminary view.

TABLE 6.15 Completion time frames of compensation claims, 2019-20

Claims 1 month 2-3 months 3-6 months 6-12 months 1 year +

Percentage of claims 12% 58% 21% 7% 2%

Compensation payments The total amount of compensation payments made in 2019-20 was $630,573. The median payment was $661 and the average was $7,507.

While these statistics have been compiled from a number of data sources, all possible care has been taken to ensure consistency.

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Appendix 8: Service commitments and activities

The ATO reports on a range of service commitments and provides information about our activities that deliver outcomes for the community. Our annual results are provided in the following tables.

Service commitments Our service commitments are designed to assure the ATO and the community that the services we provide are of a consistent and high standard. Many of our commitments have targets, which are meaningful to our clients and challenge us to deliver the best possible service.

We regularly report on our service commitments. These are available at ato.gov.au/servicecommitments.

We did not meet all our targets for service commitments in place at 30 June 2020.

TABLE 6.16 Commitments to service - Timely, 2018-19 and 2019-20

Target

Achieved 2018-19

Achieved 2019-20

Service commitment % % Indicator % Indicator

General calls over the tax time period, as at 31 October

- A total of 3,016,461 calls were answered, 207,741 abandoned (6% of calls offered) and 485,348 calls were blocked in 2019-20

answered within 5 minutes

80 87  79 X

Tax practitioner calls over the tax time period, as at 31 October

- A total of 554,347 calls were answered, 9,617 abandoned (2% of calls offered) an zero calls were blocked in 2019-20

answered within 2 minutes

90 92  90 

Electronic taxpayer requests finalised in

15 business days 90 92  93 

Private rulings finalised in

28 calendar days of receiving all necessary information

80 88  88 

Superannuation guarantee employee notifications finalised within 4 months

60 51 X 16 X

Superannuation guarantee employee notifications finalised within 9 months

90 99  88 X

Electronic tax returns and activity statements(a) finalised in 12 business days

94 99  99 

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TABLE 6.16 Commitments to service - Timely, 2018-19 and 2019-20 continued

Target

Achieved 2018-19

Achieved 2019-20

Service commitment % % Indicator % Indicator

Electronic amendments finalised in

20 business days 90 96  97 

Paper tax returns, activity statements and amendments finalised in 50 business days

80 97  98 

Australian residents’ ABR registrations finalised in 20 business days 93 99  99 

Electronic Commissioner of Taxation registrations finalised in 20 business days

93 96  98 

Complaints received resolved in

15 business days or within the date negotiated with the client

85 88  83(b) X

 = met X = not met Notes (a) Target applies to current-year tax returns only.

(b) 73% of complaints resolved in 15 business days, regardless of additional time negotiated with the client.

TABLE 6.17 Commitments to service - Keep me informed, 2018-19 and 2019-20

Target

Achieved 2018-19

Achieved 2019-20

Service commitment % % Indicator % Indicator

Electronic tax returns(a) (individuals not in business) inform if unable to finalise within

30 calendar days of receipt

100 100  100 

Private rulings contact within

14 calendar days if request will take more than 28 calendar days to resolve

80 93  93 

Superannuation guarantee employee notifications notification commenced within

28 days of receipt

99 100  100 

 = met X = not met Note (a) For 2018-19, only successful notifications for tax agent clients are included.

06Appendixes

Appendix 8: Service commitments and activities

199

Activities We undertake a range of activities to support the delivery of the tax and superannuation systems. Outputs include information assistance services, processing and assurance activities, along with internal services for our staff.

TABLE 6.18 Activities and outputs - Information and assistance services, 2017-18 to 2019-20(a)

Activity 2017-18 2018-19 2019-20

Number of non-digital, inbound customer service interactions

11,004,282 9,996,161 10,525,162

Number provided of: ƒ interpretative guidance products 55,048 51,584 53,191

ƒ private rulings 6,459 5,285 4,126

Perceptions that the process was fair in(b): ƒ disputes 54% 49% 52%

— individuals - 49% 52%

— business - 50% 54%

ƒ audits, advice or private rulings 66% 62% 58%

— individuals - 61% 57%

— business - 65% 65%

Perceptions that the final decision was fair in: ƒ disputes - 57% 65%

— individuals - 57% 67%

— business - 57% 61%

ƒ audits, advice or private rulings - 62% 58%

— individuals - 61% 57%

— business - 64% 63%

- = New, not previously reported in the annual report for the given years, or not previously reported using the same methodology.

Notes (a) Some items reported for 2019-20 (such as Proportion of tax returns lodged electronically) relate to the 2018-19 tax year.

(b) Survey methodology changes were implemented in 2017-18, with presented results reflecting outcomes for part of the 2017-18 financial year. Caution should be exercised in comparing trends across years.

TABLE 6.19 Activities and outputs - Obligations and entitlements processing, 2017-18 to 2019-20(a)

Activity 2017-18 2018-19 2019-20

Number of registrations processed 1.8m 1.9m 1.7m

Number of returns, statements and forms processed 105.9m 334.0m 358.5m

Proportion of taxpayers who lodge: ƒ income tax returns 88.8% 88.8% 89.8%

ƒ activity statements 88.9% 88.6% 85.5%

Proportion of tax returns lodged electronically 97.0% 97.3% 97.8%

Number of payments processed 27.0m 29.7m 27.3m

Proportion of payments made and received through electronic channels 98.2% 98.6% 98.9%

Note (a) Some items reported for 2019-20 (such as proportion of tax returns lodged electronically) relate to the 2018-19 tax year.

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TABLE 6.20 Activities and outputs - Revenue assurance, 2017-18 to 2019-20(a)

Activity 2017-18 2018-19 2019-20

Number of refunds issued 13.4m 13.6m 14.6m

Number of compliance activities undertaken 3.4m 4.3m 3.9m

Number of international information exchanges(b) ƒ incoming 463 393 367

ƒ outgoing 243 243 151

Value of tax collected: ƒ gross $498.9b $533.1b $537.0b

ƒ net $396.6b $426.0b $404.7b

Value of refunds paid $102.3b $107.2b $132.3b

Value of compliance liabilities as a result of compliance audits, reviews and other checks: ƒ raised $16.9b $15.3b $12.7b

ƒ collected $11.8b $10.5b $9.5b

Value of penalties and interest collected $2.8b $2.2b $2.4b

Notes (a) Some items reported for 2019-20 (such as Proportion of tax returns lodged electronically) relate to the 2018-19 tax year.

(b) Figures do not include automatic exchanges of information under agreements, such as country-by-country reporting, Common Reporting Standard and the Foreign Account Tax Compliance Act (FATCA). They do include spontaneous exchange of rulings.

TABLE 6.21 Activities and outputs - Securing retirement income, 2017-18 to 2019-20(a)

Activity 2017-18 2018-19 2019-20

Number of lost superannuation accounts(b) 579,722 674,190 433,918

Number of ATO-held superannuation accounts(c) 5.7m 5.4m 5.6m

Proportion of member contribution statements lodged on time(d) 97.0% 97.1% 99.4%

Number of excess contributions determinations issued(e) 84,453 197,578 181,068

Number of Division 293 tax assessments issued(f) 144,761 233,030 228,668

Proportion of self-managed superannuation funds (SMSFs) with contraventions reported by approved SMSF auditors compared to the total number of SMSFs

1.5%(g) Less than 2%(h) 2.1%(i)

Value of lost superannuation accounts $13.5b $16.5b $10.3b

Value of ATO-held superannuation accounts(c) $4.1b $4.0b $3.6b

Value of excess contributions determinations issued $734.6m $1.9b $1.9b

Value of Division 293 tax assessments issued $530.6m $730.7m $667.7m

Proportion of super guarantee compliance casework consisting of ATO-initiated work - 40% 23%

- = New, not previously reported in the annual report for the given years, or not previously reported using the same methodology.

Notes (a) Some items reported for 2019-20 (such as Proportion of tax returns lodged electronically) relate to the 2018-19 tax year.

(b) For 2018-19, funds transitioned their lost member reporting to event-based reporting improving the accuracy and timeliness of lost member account reporting.

(c) ATO-held super accounts include unclaimed super money and Superannuation Holding Accounts special account.

(d) Of those member contribution statements lodged by large APRA-regulated funds.

(e) The increase in 2018-19 compared to the previous year reflects the lowering of the contributions-caps on 1 July 2017. Determinations issued in the 2019-20 year primarily relate to the 2018-19 year.

(f) The increase in 2018-19 compared to the previous year reflects the lowering of the threshold for Division 293 tax from $300,000 to $250,000 on 1 July 2017. Division 293 assessments issued in the 2019-20 financial year primarily relate to the 2018-19 year.

(g) Relates to the contraventions reported for 2015-16 as at June 2018.

(h) Relates to the contraventions reported for 2016-17 as at June 2019.

(i) Relates to the contraventions reported for 2017-18 as at June 2020.

06Appendixes

Appendix 8: Service commitments and activities

201

TABLE 6.22 Activities and outputs - Corporate services, 2017-18 to 2019-20

Activity 2017-18 2018-19 2019-20

Rate of unscheduled absence (days) 13.4 13.6 12.5

Employee perceptions of senior leadership 54% 58% -

- = Result unavailable at time of publishing, due to delayed 2020 APS Employee Census

TABLE 6.23 Activities and outputs - Administered program outputs, 2017-18 to 2019-20

Activity 2017-18 2018-19 2019-20

Program 1.5 - Australian Screen Production Incentive - Number of tax offsets processed 203 155 237

Program 1.7 - Fuel Tax Credits Scheme - Number of registered participants 240,538 246,666 252,819

Program 1.7 - Fuel Tax Credits Scheme - Proportion of payments processed within service standard time frames 99% 99% 99%

Program 1.9 - Product Stewardship for Oil - Number of claims processed 419 368 376

Program 1.9 - Product Stewardship for Oil - Number of participants registered 41 45 43

Program 1.9 - Product Stewardship for Oil - Proportion of payments processed within service standard time frames 99% 95% 89%

Program 1.11 - Low Income Superannuation Tax Offset - Number of beneficiaries of entitlements determined 3.0m 2.9m 2.8m

Program 1.11 - Low Income Superannuation Tax Offset - Value of entitlements determined $772.4m $737.6m $711.8m

Program 1.11 - Low Income Superannuation Tax Offset - Proportion of original contributions paid within 60 days 99.99% 99.98% 99.92%

Program 1.12 - Private Health Insurance Rebate - Number of individuals with private health insurance rebate details assessed through the tax system

7.6m 7.7m 7.9m

Program 1.13 - Superannuation Co-contribution Scheme - Number of beneficiaries of entitlements determined 405,659 376,398 393,154

Program 1.13 - Superannuation Co-contribution Scheme - Value of entitlements determined $130m $121m $123m

Program 1.13 - Superannuation Co-contribution Scheme - Proportion of original co contributions paid within 60 days

87.7% 95.8% 97.7%

Program 1.14 - Superannuation Guarantee Scheme - Number of superannuation guarantee complaints leading to: ƒ a superannuation liability being raised 13,441 10,917 8,726

ƒ no result 5,472 3,804 3,806

Program 1.14 - Superannuation Guarantee Scheme - Number of employees who have had superannuation guarantee entitlements raised as a result of: ƒ ATO compliance activities 237,945 173,876 182,663

ƒ voluntary disclosures 77,785 105,463 164,613

Program 1.14 - Superannuation Guarantee Scheme - Number of: ƒ employers whose records are checked 24,106 22,236 16,290

ƒ checks leading to a superannuation liability being raised 16,416 15,965 12,273

Program 1.14 - Superannuation Guarantee Scheme - Proportion of employers for whom superannuation guarantee liabilities were raised by the ATO

1.8% 1.7% 1.4%

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TABLE 6.23 Activities and outputs - Administered program outputs, 2017-18 to 2019-20 continued

Activity 2017-18 2018-19 2019-20

Program 1.15 - Targeted Assistance Through the Taxation system - Number of interest payments processed 289,876 520,274 2.67m

Program 1.15 - Targeted Assistance Through the Taxation system - Proportion of unclaimed superannuation accounts where interest is paid to the account owner compared to total accounts transferred

100% 100% 100%

Program 1.16 - Interest on Overpayment and Early Payments of Tax - Number of clients entitled to credit interest due to processing performance

406,833 337,356 480,852

Program 1.18 - Seafarer Tax Offset - Number of tax offsets processed Less than 5 Less than 5 Less than 5

Program 1.18 - Seafarer Tax Offset - Value of tax offsets processed $9.1m $9.9m $9.4m

06Appendixes

Appendix 9: Advertising, direct mail, media placement and market research

203

Appendix 9: Advertising, direct mail, media placement and market research

Advertising campaigns During 2019-20, the ATO conducted the following advertising campaigns:

ƒ ACNC recruitment advertising ƒ ATO business visits advertising ƒ ATO recruitment advertising ƒ BAS lodgment advertising campaign

ƒ Customs warehouse public notice ƒ Fraud refund scheme advertising ƒ Government procurement advertising campaign ƒ GST at settlement advertising campaign

ƒ Instant asset write-off advertising campaign ƒ Pop-up shops advertising ƒ Protecting our community advertising campaign ƒ Single Touch Payroll advertising campaign

ƒ Superannuation guarantee amnesty advertising campaign ƒ Supporting our community advertising campaign ƒ Tax and super basics advertising campaign ƒ Tax, super + you competition advertising campaign

ƒ Transition to myGovID advertising campaign ƒ Unregistered tax agent advertising campaign - relating to work undertaken on behalf of the Tax Practitioners Board ƒ Winding up scheme advertising.

Further information on advertising campaigns is available at ato.gov.au and in reports on Australian Government advertising prepared by the Department of Finance, available at finance.gov.au.

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Payments for advertising, direct mail, media placement and market research Under the Commonwealth Electoral Act 1918, agencies are required to provide details of payments over $14,000 (GST inclusive) made to advertising, direct mail, media placement and market research organisations. Amounts paid during 2019-20 are set out below.

TABLE 6.24 Amounts paid to advertising, direct mail, media placement and market research organisations, 2019-20(a)

Organisation Initiative, event or product

Total

payments ($)

Advertising

RedBoat Pty Ltd Single Touch Payroll advertising campaign $31,300

Spinach Advertising Pty Ltd Single Touch Payroll advertising campaign $321,439

The LOTE Agency Tax and super basics advertising campaign $35,200

TOTAL $387,939

Media placement

Universal McCann ATO business visits advertising $44,420

Universal McCann ATO recruitment advertising $289,656

Universal McCann BAS lodgment advertising campaign $52,782

Universal McCann Fraud refund scheme advertising $33,318

Universal McCann Government procurement advertising campaign $53,692

Universal McCann GST at settlement advertising campaign $53,900

Universal McCann Instant asset write-off advertising campaign $16,996

Universal McCann Pop-up shops advertising $23,541

Universal McCann Protecting our community advertising campaign $272,903

Universal McCann Single Touch Payroll advertising campaign $1,628,231

Universal McCann Superannuation guarantee amnesty advertising campaign $38,283

Universal McCann Supporting our community advertising campaign $439,942

Universal McCann Tax and super basics advertising campaign $131,895

Universal McCann Tax, super + you competition advertising campaign $35,904

Universal McCann Transition to myGovID advertising campaign $40,000

TOTAL $3,155,463

06Appendixes

Appendix 9: Advertising, direct mail, media placement and market research

205

TABLE 6.24 Amounts paid to advertising, direct mail, media placement and market research organisations, 2019-20(a) continued

Organisation Initiative, event or product

Total

payments ($)

Market research

Colmar Brunton Pty Ltd Small business black economy measurement framework $27,214

Culture Plus Consulting Pty Ltd ATO Staff Experience Diversity and Inclusion $70,015

EY Sweeney Small business and superannuation research services $65,848

Hall and Partners Pty Ltd Single Touch Payroll campaign benchmarking and tracking research $64,882

Newgate Communications Australia Pty Ltd Small business and community debt research $165,346

Orima Research Pty Ltd ATO Culture Pulse 2019-20 $38,140

Orima Research Pty Ltd Measuring community perceptions $461,806

Snapcracker Research & Strategy Pty Ltd Single Touch Payroll campaign concept testing research $58,355

TOTAL $951,606

Note (a) For the purposes of section 311A of the Commonwealth Electoral Act 1918, the ATO does not undertake polling activity and made no payments to direct mail organisations in 2019-20.

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Appendix 10: Use of access powers

In most circumstances, we work cooperatively with taxpayers and third parties to obtain relevant information without having to exercise our formal powers. Our approach to information gathering, including the policies and procedures for the use of our powers, is available at ato.gov.au.

Use of formal information-gathering notices is necessary where third parties, such as financial institutions, are required to provide private tax-related information to us. They are also necessary to establish the relevant facts and evidence in audits and other investigations.

On three occasions we needed to gather relevant information using our powers to obtain access without notice.

During 2019-20, there were 17,705 formal notices issued to obtain relevant information and documents. These included situations where we combined notices for information and documents with notices requiring formal interviews. The number of requests has reduced compared to previous years, primarily due to our response to COVID-19 impacts and an associated reduction in compliance activity since March 2020.

TABLE 6.25 Formal access and information-gathering powers used by the Commissioner, 2017-18 to 2019-20

Access - approved submissions 2017-18 2018-19 2019-20

With notice 14 16 11

Without notice 3 5 3

Immediate 0 1 1

TOTAL 17 22 15

Formal information-gathering notices 2017-18 2018-19 2019-20

Information or document 20,612 25,299 17,403

Attend and give evidence 352 410 246

Formal offshore requests 32 43 56

TOTAL 20,996 25,752 17,705

Note Care should be taken in extrapolating trends from this data. Figures include all formal notices issued, including the re-issue of a formal notice, and do not represent the number of taxpayers who have received a formal notice.

Use of assumed identities Our employees may use assumed identities to gather intelligence and evidence against individuals and criminal networks under investigation. Under the Crimes Act 1914, we are required to regularly audit records of authorisations and revocations of assumed identities.

As at 30 June 2020, there were no authorisations for our field intelligence staff to hold assumed identities.

06Appendixes

Appendix 11: Information provided to law enforcement agencies

207

Appendix 11: Information provided to law enforcement agencies

Section 355-70 (item 1) of Schedule 1 to the Taxation Administration Act 1953 allows the disclosure of taxpayer information to specified law enforcement agencies where the information is:

ƒ relevant to determining whether a serious offence has been, or is being, committed ƒ for enforcing a law, the contravention of which is a serious offence ƒ for proceeds of crime order proceedings.

Table 6.26 shows requests from agencies and ATO-initiated disclosures, while Table 6.27 shows the general categories of offence in 2019-20.

TABLE 6.26 Requesting agencies and ATO-initiated disclosures, 2019-20

New requests Processed requests

Agencies On hand

1 July 2019 Requests received ATO-initiated Total requests received Withdrawn Rejected Total requests disclosed On hand 30 June 2020

Subsection 355-70(1)(item 1) - serious offence

ACT Supreme Court 0 0 1 1 0 0 1 0

Australian Commission for Law Enforcement Integrity 0 12 0 12 1 0 11 1

Australian Criminal Intelligence Commission 14 328 15 343 13 0 348 9

Australian Federal Police 20 335 61 396 17 0 386 30

Australian Securities & Investments Commission 6 17 0 17 0 0 20 3

Commonwealth Director of Public Prosecutions 0 1 0 1 0 0 1 0

County Court Melbourne 0 0 1 1 0 0 1 0

Crime and Corruption Commission Queensland 4 73 1 74 1 0 78 0

Crime and Corruption Commission Western Australia 1 13 0 13 0 1 13 1

District Court NSW - Downing Centre 0 0 5 5 0 0 5 0

District Court NSW - Parramatta 0 0 1 1 0 0 1 0

Independent Broad-based Anti-corruption Commission, Victoria 1 23 0 23 1 0 23 1

New South Wales Crime Commission 10 173 1 174 11 0 179 5

NSW Independent Commission against Corruption 1 34 0 34 1 0 35 0

NSW Police Force 35 416 4 420 32 3 432 23

Northern Territory Police Force 1 16 0 16 1 0 16 1

Queensland Police Service 7 183 31 214 13 1 204 17

South Australia Police 3 87 0 87 1 0 90 0

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TABLE 6.26 Requesting agencies and ATO-initiated disclosures, 2019-20 continued

New requests Processed requests

Agencies On hand

1 July 2019 Requests received ATO-initiated Total requests received Withdrawn Rejected Total requests disclosed On hand 30 June 2020

Southport Court, Queensland 0 0 3 3 0 0 3 0

Tasmania Police 0 15 2 17 1 0 16 1

Victoria Police 20 260 5 265 19 0 272 13

Western Australian Police Force 6 181 1 182 2 0 169 19

Total 129 2,167 132 2,299 114 5 2,304 124

Subsection 355-70(1)(item 2) - ASIO

Australian Security Intelligence Organisation 0 2 0 2 0 0 2 0

Total 0 2 0 2 0 0 2 0

Subsection 355-70(1)(item 4) - Fraud & Anti-Corruption Centre Taskforce

AUSTRAC 0 8 3 11 0 0 11 0

Australian Border Force 0 15 106 121 0 0 121 0

Australian Criminal Intelligence Commission 1 18 17 35 0 0 36 0

Australian Competition & Consumer Commission 0 1 0 1 0 0 1 0

Australian Federal Police 1 14 0 14 0 0 15 0

Australian Securities & Investments Commission 0 1 0 1 0 0 1 0

Department of Agriculture, Water and the Environment 3 1 0 1 0 0 4 0

National Disability Insurance Agency 0 7 0 7 0 0 6 1

Total 5 65 126 191 0 0 195 1

Subsection 355-70(1)(item 4) - Fusion Centre Taskforce

Australian Criminal Intelligence Commission 0 0 10 10 0 0 10 0

Total 0 0 10 10 0 0 10 0

Subsection 355-70(1)(item 4) - National Anti-Gang Taskforce

Australian Criminal Intelligence Commission 0 107 2 109 0 0 109 0

Australian Federal Police 3 1,195 22 1,217 3 0 1,219 1

Total 3 1,302 24 1,326 3 0 1,328 1

Subsection 355-70(1)(item 4) - Phoenix Taskforce

Attorney-General’s Department 0 6 21 27 0 0 27 0

AUSTRAC 0 3 18 21 0 0 21 0

Australian Border Force 1 2 9 11 0 0 12 0

Australian Building and Construction Commission 0 4 12 16 0 0 16 0

Australian Competition & Consumer Commission 0 3 10 13 1 0 13 0

Australian Criminal Intelligence Commission 0 3 13 16 0 0 16 0

Australian Federal Police 0 8 13 21 0 0 21 0

Australian Financial Security Authority 0 3 13 16 0 0 16 0

Australian Securities & Investments Commission 2 4 49 53 0 0 55 0

Clean Energy Regulator 0 3 7 10 0 0 10 0

06Appendixes

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209

TABLE 6.26 Requesting agencies and ATO-initiated disclosures, 2019-20 continued

New requests Processed requests

Agencies On hand

1 July 2019 Requests received ATO-initiated Total requests received Withdrawn Rejected Total requests disclosed On hand 30 June 2020

Consumer Affairs Victoria 0 3 7 10 0 0 10 0

Department of Environment 0 3 7 10 0 0 10 0

Department of Health 0 1 0 1 0 0 1 0

Department of Home Affairs 0 5 25 30 0 0 30 0

Department of Industry, Science, Energy and Resources 0 3 7 10 0 0 10 0

Department of Education, Skills and Employment 1 0 7 7 0 0 8 0

Department of Mines, Industry Regulation & Safety 0 0 1 1 0 0 1 0

Department of Treasury and Finance - SA 0 3 8 11 0 0 11 0

Fair Work Ombudsman 1 4 24 28 0 0 29 0

Labour Hire Authority Victoria 0 7 14 21 0 0 20 1

NSW Fair Trading 0 4 12 16 0 0 16 0

NSW Long Service Corporation 0 3 9 12 0 0 12 0

NSW Police 0 3 10 13 0 0 13 0

Office of Industrial Relations - Queensland 0 6 32 38 0 0 37 1

Office of State Revenue (all states) 1 29 87 116 0 0 116 1

Queensland Building & Construction Commission 0 3 12 15 0 0 15 0

Return to Work SA 0 3 10 13 0 0 13 0

State Insurance Regulatory Authority - NSW 0 3 13 16 0 0 16 0

Victoria Police 0 3 11 14 0 0 14 0

Victorian Building Authority 0 3 11 14 0 0 14 0

Victorian Legal Services Board and Commissioner 0 3 10 13 0 0 13 0

WA Building Commission 0 4 8 12 0 0 12 0

WorkCover - QLD 0 3 10 13 0 0 13 0

Total 6 138 500 638 1 0 641 3

Subsection 355-70(1)(item 4) - Illicit Tobacco Taskforce

AUSTRAC 0 1 25 26 0 0 24 2

Australian Border Force 0 3 86 89 0 0 85 4

Australian Criminal Intelligence Commission 0 1 23 24 0 0 22 2

Total 0 5 134 139 0 0 131 8

Subsection 355-70(1)(item 4) - Serious Financial Crime Taskforce

Attorney-General’s Department 0 3 45 48 0 0 48 0

AUSTRAC 0 9 60 69 0 0 68 1

Australian Border Force 0 4 18 22 0 0 22 0

Australian Criminal Intelligence Commission 0 34 139 173 3 0 173 0

Australian Federal Police 0 32 143 175 0 0 175 0

Australian Securities & Investments Commission 0 3 56 59 0 0 59 0

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TABLE 6.26 Requesting agencies and ATO-initiated disclosures, 2019-20 continued

New requests Processed requests

Agencies On hand

1 July 2019 Requests received ATO-initiated Total requests received Withdrawn Rejected Total requests disclosed On hand 30 June 2020

Commonwealth Director of Public Prosecutions 0 3 46 49 0 0 49 0

Department of Agriculture, Water and the Environment 0 1 0 1 0 0 1 0

Department of Home Affairs 0 2 13 15 0 0 15 0

Services Australia 0 0 2 2 0 0 2 0

Total 0 91 522 613 3 0 612 1

Subsection 355-70(1)(item 4) - Trusts Taskforce

AUSTRAC 0 0 3 3 0 0 3 0

Australian Criminal Intelligence Commission 0 0 3 3 0 0 3 0

Australian Federal Police 0 0 6 6 0 0 6 0

Australian Securities & Investments Commission 0 0 3 3 0 0 3 0

Total 0 0 15 15 0 0 15 0

Subsection 355-70(1)(item 4) - Criminal Assets Confiscation Taskforce

AUSTRAC 0 8 0 8 0 0 7 1

Australian Criminal Intelligence Commission 0 191 4 195 0 0 195 0

Australian Federal Police 6 111 12 123 11 0 124 5

Total 6 310 16 326 11 0 326 6

Subsection 355-70(1)(item 4) - Black Economy Taskforce

Attorney-General’s Department 0 0 1 1 0 0 1 0

AUSTRAC 0 1 1 2 0 0 2 0

Australian Border Force 0 1 2 3 0 0 3 0

Australian Criminal Intelligence Commission 0 1 1 2 0 0 2 0

Australian Federal Police 0 1 1 2 0 0 2 0

Department of Home Affairs 0 1 0 1 0 0 1 0

Department of Treasury and Finance 0 0 1 1 0 0 1 0

Fair Work Ombudsman 0 1 3 4 0 0 4 0

Services Australia 0 1 1 2 0 0 2 0

Total 0 7 11 18 0 0 18 0

Subsection 355-70(1)(item 5) - Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry

Royal Commission 0 0 0 0 0 0 0 0

Total 0 0 0 0 0 0 0 0

GRAND TOTAL 149 4,087 1,490 5,577 132 5 5,582 144

06Appendixes

Appendix 11: Information provided to law enforcement agencies

211

TABLE 6.27 General categories of offence, 2019-20

New requests Processed requests

Categories On hand

1 July 2019 Requests received ATO-initiated Total requests received Withdrawn Rejected Total requests disclosed On hand 30 June 2020

Anti-Money Laundering and Counter Terrorism Financing Act 2006 1 17 0 17 1 0 18 0

Charter of United Nations Act 1945 0 1 0 1 0 0 1 0

Child Protection (Offenders Registration) Act 2000 (NSW) 0 4 0 4 0 0 4 0

Common Law 1 12 0 12 0 0 12 1

Confiscation Act 1997 (Vic) 3 35 0 35 0 0 37 1

Coroners Act 1900 (NSW) 0 1 0 1 1 0 1 0

Corporations Law(a) 2 16 0 16 0 0 16 2

Crimes and Criminal Code Acts (Commonwealth)(b) 28 560 45 605 28 0 600 33

Crimes and Criminal Code Acts (state)(c) 59 825 58 883 60 2 888 54

Criminal Assets Confiscation Act 2005 (SA) 0 9 0 9 0 0 9 0

Criminal Assets Recovery Act 1990 (NSW) 10 151 0 151 8 0 157 4

Criminal Code Compilation Act 1913 (WA) 0 22 1 23 0 1 20 3

Criminal Law Consolidations Act 1935 (SA) 1 18 1 19 0 0 20 0

Criminal Proceeds Confiscation Act 2002 (Qld) 2 58 2 60 1 0 57 5

Criminal Property Confiscation Act 2000 (WA) 1 25 0 25 0 0 23 3

Customs Act 1901 (Importation) 0 4 0 4 0 0 4 0

Drug Misuse and Trafficking Acts(d) 13 261 20 281 12 2 280 14

Drugs Poisons and Controlled Substances Act 1981 (Vic) 5 132 0 132 3 0 134 3

Family Law Act 1975 0 1 0 1 0 0 1 0

Firearms Acts(e) 1 5 1 6 0 0 7 0

Heavy Vehicle National Law 2014 0 1 0 1 0 0 0 1

Income Tax Assessment Act 1997 0 0 1 1 0 0 1 0

Migration Act 1958 1 1 0 1 0 0 2 0

Proceeds of Crime Act 2002 1 6 3 9 0 0 10 0

Sex Workers Act 1994 (Vic) 0 2 0 2 0 0 2 0

TOTAL 129 2,167 132 2,299 114 5 2,304 124

Notes (a) Corporations Law includes Corporations Act 2001 and Corporations (Aboriginal & Torres Strait Islander) Act 2006.

(b) Crimes and Criminal Code Acts (Commonwealth) include Bankruptcy Act 1966, Criminal Code Act 1995 and Fair Work Act 2009.

(c) Crimes and Criminal Code Acts (state) include Crime Commission Act 2012 (NSW), Crimes Act 1900 (NSW), Crimes Act 1958 (Vic), Criminal Code 2002 (ACT), Criminal Code 1899 (Qld), Criminal Code Act Compilation Act 1913 (WA) and Criminal Code Act 1983 (NT).

(d) Drug Misuse and Trafficking Acts include Drug Misuse Act 1986 (Qld), Drug Misuse and Trafficking Act 1985 (NSW), Misuse of Drugs Act 1981 (WA), Misuse of Drugs Act 2001 (Tas) and Misuse of Drugs Act 1990 (NT).

(e) Firearms Acts include Firearms Act 1996 (ACT), Firearms Act 1996 (NSW), Firearms Act 1996 (Tas) and Firearms Act 1973 (WA).

For information disclosed to authorised law enforcement agency officers under section 70-40 of the Tax Agent Services Act 2009, see the TPB’s annual report at tpb.gov.au.

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Appendix 12: Corrections

The following errors appeared in our 2018-19 annual report.

Work health and safety The rate noted at P4 in Table 4.24 was incorrect.

As printed on page 90:

TABLE 4.24 Safety, Rehabilitation and Compensation Commission performance indicators, 2016-17 to 2018-19(a)

Indicator 2016-17 2017-18 2018-19

P1.1 Incidence of injuries with five or more days lost time per 1,000 full-time equivalent employees 1.9 1.6 1.4

P1.2 Incidence of injuries with 30 or more days lost time per 1,000 full-time equivalent employees 1.0 0.6 0.8

P1.3 Incidence of injuries with 60 or more days lost time per 1,000 full-time equivalent employees 0.7 0.6 0.5

P4 Lost time injury (claims) frequency rate 1.1 0.9 1.6 0.8

C1 Average time taken (in calendar days from date of injury to lodging claim with Comcare) 109 80 50

R1 Percentage of claims with incapacity for 10 or more days and a return to work plan (%)

54 33 52

R2 Quality of return to work (% achieving return to work on case closure) 64 39 44

Note (a) Figures for previous years in this table may vary from those reported in past annual reports as Comcare may continue to accept claims for past years.

06Appendixes

Appendix 12: Corrections

213

Activities The number of excess contributions determinations issued was incorrectly reported in Table 6.21.

As printed on page 183:

TABLE 6.21 Activities and outputs - Securing retirement income, 2016-17 to 2018-19(a)

Activity 2016-17 2017-18 2018-19

Number of lost superannuation accounts(b) 628,658 579,722 674,190

Number of ATO-held superannuation accounts(c) 5.7m 5.7m 5.4m

Proportion of member contribution statements lodged on time(d) 98.9% 97% 97.1%

Number of excess contributions determinations issued(e) 80,384 84,453 197,578 192,357

Number of Division 293 tax assessments issued(f) 139,562 144,761 233,030

Proportion of excess contributions issued within 6 months of ATO receiving all relevant information 97.2% 99.4% 99.98%

Proportion of self-managed superannuation funds (SMSFs) with contraventions reported by approved SMSF auditors compared to the total number of SMSFs

1.4%(g) 1.5%(h) Less than 2%(i)

Value of lost superannuation accounts $14.1b $13.5b $16.5b

Value of ATO-held superannuation accounts(c) $3.8b $4.1b $4.0b

Value of excess contributions determinations issued $632.8m $734.6m $1.9b

Value of Division 293 tax assessments issued $512.0m $530.6m $730.7m

Proportion of super guarantee compliance casework consisting of ATO-initiated work - - 40%

- = New, not previously reported in the annual report for the given years, or not previously reported using the same methodology.

Notes (a) Some items reported for 2018-19 (such as Proportion of tax returns lodged electronically) relate to the 2017-18 tax year.

(b) For 2018-19 funds transitioned their lost member reporting to event-based reporting improving the accuracy and timeliness of lost member account reporting.

(c) ATO-held super accounts include unclaimed super money and Superannuation Holding Accounts special account.

(d) Of those member contribution statements lodged by large APRA-regulated funds.

(e) The increase reflects the lowering of the contributions caps on 1 July 2017. Determinations issued in the 2018-19 year primarily relate to the 2017-18 year.

(f) The increase reflects the lowering of the threshold for Division 293 tax from $300,000 to $250,000 on 1 July 2017. Division 293 assessments issued in the 2018-19 financial year primarily relate to the 2017-18 year.

(g) Relates to the contraventions reported for 2014-15 as at June 2017.

(h) Relates to the contraventions reported for 2015-16 as at June 2018.

(i) Relates to the contraventions reported for 2016-17 as at June 2019.

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Reference material

List of tables Table 2.1 Performance results, 2017-18 to 2019-20 36

Table 2.2 ABR results, 2017-18 to 2019-20 50

Table 2.3 Administered payments 2017-18 to 2019-20 53

Table 2.4 Programs 1.5 to 1.13 and 1.15 to 1.19 Administered programs performance 54

Table 3.1 ATO net tax cash collections, 2017-18 to 2019-20 60

Table 3.2 Expected revenue - variation between budget forecast and actual net collections in 2019-20 61

Table 3.3 Amount refunded, 2017-18 to 2019-20 61

Table 3.4 Net tax gap estimate - all federal taxes, 2014-15 to 2019-20 63

Table 3.5 Net tax gap estimates - Transaction-based taxes, 2014-15 to 2019-20 63

Table 3.6 Net tax gap estimates - Income-based taxes, 2014-15 to 2019-20 64

Table 3.7 Net gap estimates - Programs we administer, 2014-15 to 2019-20 64

Table 3.8 Income tax liabilities raised (plans and results), 2017-18 to 2019-20 68

Table 3.9 Income tax total revenue effects, 2017-18 to 2019-20 68

Table 3.10 GST liabilities raised (plans and results), 2017-18 to 2019-20 68

Table 3.11 GST total revenue effects, 2017-18 to 2019-20 69

Table 3.12 Penalties and interest, 2017-18 to 2019-20 69

Table 3.13 Working holiday maker tax returns processed, 2016-17 to 2019-20 70

Table 4.1 Details of the Accountable Authority, 2019-20 73

Table 4.2 Internal fraud allegations or reports, by outcome, 2019-20 73

Table 4.3 Details of the Audit and Risk Committee, 2019-20 76

Table 4.4 Employees, by level and employment type, at 30 June 2020 85

Table 4.5 Employees, by level and employment type, at 30 June 2019 85

Table 4.6 Ongoing employees, by level and gender, at 30 June 2020 86

Table 4.7 Ongoing employees, by level and gender, at 30 June 2019 87

Table 4.8 Non-ongoing employees, by level and gender, at 30 June 2020 88

Table 4.9 Non-ongoing employees, by level and gender, at 30 June 2019 88

Table 4.10 Ongoing employees belonging to diversity groups, at 30 June 89

Table 4.11 Indigenous employees, by employment type, at 30 June 90

Table 4.12 Employees, by job family, at 30 June 90

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Table 4.13 Employees, by business area, at 30 June 2020 91

Table 4.14 Total employees, by location and employment type, at 30 June 92

Table 4.15 Ongoing employees, by location and gender, at 30 June 2020 93

Table 4.16 Ongoing employees, by location and gender, at 30 June 2019 94

Table 4.17 Non-ongoing employees, by location and gender, at 30 June 2020 95

Table 4.18 Non-ongoing employees, by location and gender, at 30 June 2019 96

Table 4.19 Years of service for ongoing employees, at 30 June 97

Table 4.20 Reasons for ongoing employee separations, 2018-19 and 2019-20 97

Table 4.21 Employment arrangements of SES and non-SES employees, at 30 June 2020 98

Table 4.22 Salary ranges (excluding non-salary benefits) by classification level, at 30 June 2020 99

Table 4.23 Remuneration for key management personnel, 2019-20 100

Table 4.24 Remuneration for senior executives, 2019-20 101

Table 4.25 Remuneration for other highly paid staff, 2019-20 102

Table 4.26 Safety, Rehabilitation and Compensation Commission performance indicators, 2017-18 to 2019-20 103

Table 4.27 Notifiable incidents, 2017-18 to 2019-20 104

Table 4.28 Capital expenditure, 2017-18 to 2019-20 106

Table 4.29 Agency resource statement, 2019-20 107

Table 4.30 Budgeted expenses and resources for Outcome 1, 2019-20 108

Table 4.31 Number of and expenditure on consultancy contracts, 2017-18 to 2019-20 111

Table 4.32 Energy intensity ratings and EEGO targets, 2019-20 113

Table 6.1 Our performance against the Taxpayers’ Charter, 2019-20 181

Table 6.2 Key public advice and guidance products, 2017-18 to 2019-20 183

Table 6.3 Timeliness of draft public rulings finalised, 2019-20 184

Table 6.4 Business, partner and government interactions, 2017-18 to 2019-20 184

Table 6.5 Disputes, 2017-18 to 2019-20 185

Table 6.6 Settlements reviewed by our Independent Assurance of Settlements program during 2019-20 185

Table 6.7 Stage at which settlement occurred, 2019-20 186

Table 6.8 Settlements by client group, 2019-20 186

Table 6.9 Legal services expenditure, 2019-20 187

Table 6.10 Number and value of briefs to counsel, 2019-20 188

Table 6.11 Significant cases, 2019-20 189

Table 6.12 Value of debt holdings by client experience, 2017-18 to 2019-20 194

Table 6.13 Value of debt holdings by main revenue type, 2017-18 to 2019-20 195

Table 6.14 Debt not pursued, 2017-18 to 2019-20 195

Table 6.15 Completion time frames of compensation claims, 2019-20 196

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Table 6.16 Commitments to service - Timely, 2018-19 and 2019-20 198

Table 6.17 Commitments to service - Keep me informed, 2018-19 and 2019-20 198

Table 6.18 Activities and outputs - Information and assistance services, 2017-18 to 2019-20 199

Table 6.19 Activities and outputs - Obligations and entitlements processing, 2017-18 to 2019-20 199

Table 6.20 Activities and outputs - Revenue assurance, 2017-18 to 2019-20 200

Table 6.21 Activities and outputs - Securing retirement income, 2017-18 to 2019-20 200

Table 6.22 Activities and outputs - Corporate services, 2017-18 to 2019-20 201

Table 6.23 Activities and outputs - Administered program outputs, 2017-18 to 2019-20 201

Table 6.24 Amounts paid to advertising, direct mail, media placement and market research organisations, 2019-20 204

Table 6.25 Formal access and information-gathering powers used by the Commissioner, 2017-18 to 2019-20 206

Table 6.26 Requesting agencies and ATO-initiated disclosures, 2019-20 207

Table 6.27 General categories of offence, 2019-20 211

List of figures Figure 1.1 ATO client landscape, at 30 June 2020 4

Figure 1.2 ATO organisational structure, at 30 June 2020 10

Figure 3.1 Total revenue effects 66

Figure 3.2 Total revenue effects, 2017-18 to 2019-20 by estimated source of total revenue effects 67

Figure 4.1 ATO governance structure, at 30 June 2020 72

Figure 4.2 Complaint issues, 2019-20 82

Figure 4.3 Our locations, at 30 June 2020 92

Figure 4.4 Operating expenditure, 2019-20 105

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Glossary

ABN Lookup The public view of the Australian Business Register (ABR). It provides access to publicly available information supplied by businesses when they register for an Australian business number (ABN).

ABR Connect Provides access to multiple government agency registers via a single business register, the ABR. It reduces the number of registers businesses need to access each time they update information.

ABR Explorer An online reporting and analytical tool that makes using ABR data easy.

application programming interface (API)

A set of routines, communication protocols and tools for building software applications.

ATO online services A range of tax and superannuation services available from our website, including lodging tax returns and activity statements and keeping track of super. Individuals, soles traders, businesses, tax agents, BAS agents and non-residents can register and log in at ato.gov.au.

audit yield The additional tax liabilities identified and collected through audit activities. It also includes interest and penalties.

AUSkey A single electronic identifier for businesses to access online government services with participating government agencies. AUSkey was decommissioned in March 2020 and replaced by myGovID and Relationship Authorisation Manager (RAM).

black economy Economic activity not declared, which may be a result of attempts to avoid tax obligations. Also known as the ‘cash economy’ or ‘non-observed economy’.

Business Authentication Manager (BAM)

A system that enables government agencies to accept digital identity and user authentication from their portal.

Cash Flow Boost The temporary Cash Flow Boost scheme is available to eligible small and medium businesses and not-for-profit organisations that employ staff and have been affected during the economic downturn associated with COVID-19. Cash flow boosts are delivered as credits in the activity statement system.

collectable debt Debt that is not subject to objection or appeal or to some form of insolvency administration.

COVID-19 The particular strain of novel coronavirus that led the World Health Organisation to declare a Public Health Emergency of International Concern in early 2020.

country-by-country reporting One of a range of international measures aimed at combating tax avoidance, through more comprehensive exchanges of information between agencies.

Certain types of significant global entities are required to report on international related-party dealings, revenues, profits and taxes paid, by jurisdiction.

departing Australia superannuation payment (DASP)

The payment of a superannuation balance for an eligible temporary resident leaving Australia.

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digital service provider (DSP)

Anyone who develops and delivers digital services to the community, including software developers, gateway providers, third-party providers, system implementers and clearing houses.

director identification number A unique number that identifies a director of a company, registered Australian body or registered foreign company.

Dispute Assist An ATO service designed to help unrepresented individuals and small businesses through the dispute process.

e-invoicing A form of electronic billing. It enables exchange of the invoice document between a supplier and buyer in an integrated electronic format.

enterprise client profile (ECP) A system designed to provide our staff with access to client facts and insights in a contemporary way. It can be tailored to specific work requirements.

guidance Assistance we provide to taxpayers to help them understand their obligations and entitlements. It does not address a taxpayer’s specific circumstances and is not binding on the Commissioner.

high wealth individual An Australian resident who controls net assets of over $30 million.

JobKeeper The JobKeeper Payment scheme is a wage subsidy for eligible businesses significantly affected by coronavirus (COVID-19).

large business A business with annual turnover of over $250 million.

myGov A government system that provides secure access to a range of Australian Government services with one username and password.

myGovID A secure proof-of-identity app that provides access to government online services for individuals and businesses. It is used in combination with the Relationship Authorisation Manager (RAM) and replaced AUSkey in 2020.

net tax collections Total tax collections less refunds paid to taxpayers.

Online services for agents A new ATO system that provides tax and BAS agents with access to services that are currently provided by our portals. It includes features and functions not

available in the portals.

Online services for DSPs A new system that provides a modern and secure platform for digital service providers (DSPs) to interact with the ATO.

phoenix activity The systematic process of deliberately incorporating and liquidating operating companies with the intent of having the company avoid its obligations to its employees, to its suppliers, and to the tax system.

portal An online system for taxpayers to access information and services.

pre-filling Automatic population of labels in electronically prepared income tax returns. It includes information from government agencies, financial institutions and employers.

private ruling A legally binding written expression of our opinion on the way in which a relevant provision applies, or would apply, to a particular taxpayer.

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privately owned and wealthy group We view privately owned and wealthy groups as: ƒ companies and their associated subsidiaries (often referred to as economic

groups) with an annual turnover greater than $10 million, that are not public groups or foreign owned ƒ resident individuals who, together with their business associates, control net wealth over $5 million.

public and multinational group Most of the largest organisations operating in Australia are publicly listed Australian or multinational groups.

public ruling/ determination

The Commissioner’s considered opinion on the way in which a relevant provision applies to taxpayers generally or a class of taxpayers. Any taxpayer covered by the ruling may rely on it and receive the associated protection.

Relationship Authorisation Manager (RAM)

A new digital service that can be used by individuals and businesses to set up and manage relationships across government online services. RAM allows people to manage who is authorised to act on their behalf online.

remote desktop application (RDA) Secure technology that allows users to remotely access their office desktop computers. Unlike VDP, they the user must already be logged in to their

computer in the workplace to establish a remote connection.

robotic process automation (RPA) Technology that uses robotic processes or artificial intelligence.

self-managed super fund (SMSF) A complying superannuation fund with fewer than five members, who are individual trustees of the fund.

significant global entity An entity is a significant global entity for an income year if it is either: ƒ a global parent entity with annual global income of A$1 billion or more

ƒ a member of a consolidated group of entities where the global parent entity has an annual global income of A$1 billion or more.

This includes both:

ƒ Australian-headquartered entities (either with or without foreign operations) ƒ the Australian operations of foreign headquartered multinational entities.

small business A business with less than $10 million aggregated turnover in the previous financial year. Prior to 2016-17, the threshold was $2 million.

Standard Business Reporting (SBR) Enables businesses to prepare and provide reports to government directly from their business software.

Standing Committee A committee that conducts inquiries on behalf of the Australian Government into any matter referred to it by either the House or a Minister, including any pre-legislation proposal, bill, motion, petition, vote or expenditure, other financial matter, report or document.

super guarantee Super guarantee refers to the minimum level of superannuation contributions an employer must make for eligible employees.

super guarantee charge statement An employer that does not make super guarantee contributions for an eligible employee within the required period must lodge a super guarantee charge

statement with the ATO.

tax assured An estimate of the proportion of tax reported that we are highly confident is correct.

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tax gap An estimate of the difference between the amounts the ATO collects and what we would have collected if every taxpayer was fully compliant with tax law.

taxable payments annual report (TPAR) Some businesses and government entities need to report the total payments they make to contractors each year on a taxable payments annual report

(or TPAR).

Test Case Litigation Program Provides financial assistance to taxpayers who are litigating matters that will clarify the tax and superannuation laws we administer. By developing legal

precedent, we seek to ensure we are providing the community with clear principles on how to apply the law.

total revenue effects An estimate of the additional tax revenue resulting from our client engagement activities. It is a combination of audit yield and wider revenue effects.

Towards 2024 Reflects our ongoing commitment to transformation. Building on the gains of our reinvention program, the ATO corporate plan 2018-19 contains the next steps on the journey to achieving our 2024 aspirations. Our aim is to build trust and confidence in the tax and superannuation systems and to create a streamlined, integrated and data-driven future.

transfers Administered expenses incurred by the ATO, including superannuation guarantee, super co-contributions, and personal and business benefits and subsidies.

virtual desktop platform (VDP)

Secure technology that allows users to remotely log on to a virtual copy of their office desktop computers. Unlike RDA, the user is are logging on to a virtual machine hosted on a remote server.

wider revenue effects An estimate of the additional tax revenue arising from our broader suite of activities, which we can defensibly measure and that is not already captured by audit yield.

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Abbreviations AASB Australian Accounting Standards Board AAT Administrative Appeals Tribunal ABN Australian business number ABR Australian Business Register ABS Australian Bureau of Statistics ACNC Australian Charities and Not-for-profits

Commission

AHRI Australian Human Resources Institute ANAO Australian National Audit Office API application programming interface APRA Australian Prudential Regulation Authority APS Australian Public Service APSC Australian Public Service Commission ASIC Australian Securities and

Investments Commission ATO Australian Taxation Office AUSTRAC Australian Transaction Reports

and Analysis Centre

AWOTE average weekly ordinary time earnings BAM Business Authentication Manager BAS business activity statement CBD central business district CDDA Compensation for Detriment caused by

Defective Administration CFC controlled foreign corporation CGT capital gains tax CHIATO Carers, Helpers and Interested others in

the ATO

COVID-19 coronavirus disease 2019 DASP departing Australia superannuation payments DIN Director identification number DSP digital service provider ECP enterprise client profile EEGO Energy Efficiency in

Government Operations EL executive level

FACTA Foreign Account Tax Compliance Act FBT fringe benefits tax FCA Federal Court of Australia FCAFC Federal Court of Australia Full Court FOI Act Freedom of Information Act 1982 GST goods and services tax HELP Higher Education Loan Program HR human resources IAM identity and access management ICT information and communication

technology

IGTO Inspector-General of Taxation and Taxation Ombudsman IOP interest on overpayment IPAA Institute of Public Administration Australia IPS Information Publication Scheme IT information technology JITSIC Joint International Taskforce on Shared

Intelligence and Collaboration LCT luxury car tax

LGBTI lesbian, gay, bisexual, transgender and intersex people M2M machine-to-machine MBR Modernising Business Registers program NABERS National Australian Built Environment

Rating System

OAIC Office of the Australian Information Commissioner OECD Organisation for Economic Co-operation and Development PAYG pay as you go PBS Portfolio Budget Statements PEO principal executive office PEPPOL Pan-European Public Procurement

On-Line

PGPA Act Public Governance, Performance and Accountability Act 2013 PITAA Pacific Islands Tax Administrators Association PS Act Public Service Act 1999 PSI personal services income RAM Relationship Authorisation Manager RDA remote desktop application RPA robotic process automation SBR Standard Business Reporting SES senior executive service SFSS Student Financial Supplement Scheme SGATAR Study Group on Asian Tax Administration

& Research

SMSF self-managed super fund SSAM Security Standard for Add-on Marketplaces STP Single Touch Payroll TAA Taxation Administration Act 1953 TFN tax file number TPAR taxable payments annual report TPB Tax Practitioners Board VDP virtual desktop platform WET wine equalisation tax

WHS Act Work Health and Safety Act 2011

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Key resources Our key resources for 2019-20 include:

ƒ ABN Lookup ƒ Australian Charities Not-for-profits Commission annual report ƒ ATO corporate plan ƒ ATO Gender equality action plan 2017-19

ƒ Australian Business Register ƒ Australian tax gaps - overview ƒ Business bulletins newsroom ƒ Commissioner’s remedial power

ƒ Dealing with disasters ƒ Decision impact statements ƒ Diversity ƒ Diversity and inclusion plan 2017-19

ƒ E-invoicing ƒ Financial difficulties and serious hardship ƒ Fuel schemes ƒ GST administration annual performance report

ƒ Help with paying ƒ JobKeeper Payment ƒ myDeductions ƒ Not-for-profit newsroom

ƒ Our service commitments ƒ Single Touch Payroll ƒ Small business assist ƒ Small business newsroom

ƒ Small Business Superannuation Clearing House ƒ Software developers ƒ Super Fund Lookup ƒ Supporting your small business

ƒ SuperStream ƒ Tax assured ƒ Tax Practitioners Board annual report ƒ Tax professionals newsroom

ƒ Taxpayers’ Charter ƒ Test Case Litigation ƒ Total revenue effects ƒ Use of powers

For more information on these products, plans, tools and services, visit ato.gov.au.

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Compliance index It is mandatory to provide a list of requirements as set out in the Public Governance, Performance and Accountability Act 2013 and Public Governance, Performance and Accountability Rules 2014.

Reference Description Requirement Page

17AD(g) Letter of transmittal

17AI A copy of the letter of transmittal signed and dated by accountable authority on date final text approved, with statement that the report has been prepared in accordance with section 46 of the Act and any enabling legislation that specifies additional requirements in relation to the annual report.

Mandatory V

17AD(h) Aids to access

17AJ(a) Table of contents. Mandatory VI-VII

17AJ(b) Alphabetical index. Mandatory 227-231

17AJ(c) Glossary of abbreviations and acronyms. Mandatory 217-220

17AJ(d) List of requirements. Mandatory 223-226

17AJ(e) Details of contact officer. Mandatory Inside front

cover

17AJ(f) Entity’s website address. Mandatory Inside front

cover

17AJ(g) Electronic address of report. Mandatory Inside front

cover

17AD(a) Review by accountable authority

17AD(a) A review by the accountable authority of the entity. Mandatory II-IV

17AD(b) Overview of the entity

17AE(1)(a)(i) A description of the role and functions of the entity. Mandatory 1

17AE(1)(a)(ii) A description of the organisational structure of the entity. Mandatory 10

17AE(1)(a)(iii) A description of the outcomes and programmes administered by the entity. Mandatory 2-3

17AE(1)(a)(iv) A description of the purposes of the entity as included in corporate plan. Mandatory 12, 47, 48, 52-53

17AE(1)(aa)(i) Name of the accountable authority or each member of the accountable authority. Mandatory 5, 73

17AE(1)(aa)(ii) Position title of the accountable authority or each member of the accountable authority. Mandatory 5, 73

17AE(1)(aa)(iii) Period as the accountable authority or member of the accountable authority within the reporting period. Mandatory 5, 73

17AE(1)(b) An outline of the structure of the portfolio of the entity. Portfolio

departments - mandatory

n/a

17AE(2) Where the outcomes and programs administered by the entity differ from any Portfolio Budget Statement, Portfolio Additional Estimates Statement or other portfolio estimates statement that was prepared for the entity for the period, include details of variation and reasons for change.

If applicable, Mandatory

54

17AD(c) Report on the Performance of the entity

Annual performance Statements

17AD(c)(i); 16F Annual performance statement in accordance with paragraph 39(1)(b) of the Act and section 16F of the Rule. Mandatory 11-57

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Reference Description Requirement Page

17AD(c)(ii) Report on Financial Performance

17AF(1)(a) A discussion and analysis of the entity’s financial performance. Mandatory 105-106

17AF(1)(b) A table summarising the total resources and total payments of the entity. Mandatory 107-110

17AF(2) If there may be significant changes in the financial results during or after the previous or current reporting period, information on those changes, including: the cause of any operating loss of the entity; how the entity has responded to the loss and the actions that have been taken in relation to the loss; and any matter or circumstances that it can reasonably be anticipated will have a significant impact on the entity’s future operation or financial results.

If applicable, Mandatory.

105

17AD(d) Management and Accountability

Corporate Governance

17AG(2)(a) Information on compliance with section 10 (fraud systems). Mandatory 73-74

17AG(2)(b)(i) A certification by accountable authority that fraud risk assessments and fraud control plans have been prepared. Mandatory v

17AG(2)(b)(ii) A certification by accountable authority that appropriate mechanisms for preventing, detecting incidents of, investigating or otherwise dealing with, and recording or reporting fraud that meet the specific needs of the entity are in place.

Mandatory v

17AG(2)(b)(iii) A certification by accountable authority that all reasonable measures have been taken to deal appropriately with fraud relating to the entity. Mandatory v

17AG(2)(c) An outline of structures and processes in place for the entity to implement principles and objectives of corporate governance. Mandatory 71-83

17AG(2)(d) - (e) A statement of significant issues reported to Minister under paragraph 19(1)(e) of the Act that relates to non-compliance with Finance law and action taken to remedy non-compliance.

If applicable, Mandatory

n/a

Audit Committee

17AG(2A)(a) A direct electronic address of the charter determining the functions of the entity’s audit committee. Mandatory 75

17AG(2A)(b) The name of each member of the entity’s audit committee. Mandatory 75-77

17AG(2A)(c) The qualifications, knowledge, skills or experience of each member of the entity’s audit committee. Mandatory 75-77

17AG(2A)(d) Information about the attendance of each member of the entity’s audit committee at committee meetings. Mandatory 75-77

17AG(2A)(e) The remuneration of each member of the entity’s audit committee. Mandatory 75-77

External Scrutiny

17AG(3) Information on the most significant developments in external scrutiny and the entity’s response to the scrutiny. Mandatory 78-80

17AG(3)(a) Information on judicial decisions and decisions of administrative tribunals and by the Australian Information Commissioner that may have a significant effect on the operations of the entity.

If applicable, Mandatory

78

189-193

17AG(3)(b) Information on any reports on operations of the entity by the Auditor General (other than report under section 43 of the Act), a Parliamentary Committee, or the Commonwealth Ombudsman.

If applicable, Mandatory

78-80

17AG(3)(c) Information on any capability reviews on the entity that were released during the period. If applicable, Mandatory

n/a

Management of Human Resources

17AG(4)(a) An assessment of the entity’s effectiveness in managing and developing employees to achieve entity objectives. Mandatory 84

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Reference Description Requirement Page

17AG(4)(aa) Statistics on the entity’s employees on an ongoing and non-ongoing basis, including: (a) full-time employees; (b) part-time employees; (c) gender; (d) staff location.

Mandatory 84-97

17AG(4)(b) Statistics on the entity’s APS employees on an ongoing and non-ongoing basis; including: (a) staffing classification level; (b) full-time employees; (c) part-time employees; (d) gender; (e) staff location; (f) employees who identify as Indigenous.

Mandatory 84-97

17AG(4)(c) Information on any enterprise agreements, individual flexibility arrangements, Australian workplace agreements, common law contracts and determinations under subsection 24(1) of the Public Service Act 1999.

Mandatory 98

17AG(4)(c)(i) Information on the number of SES and non-SES employees covered by agreements etc identified in paragraph 17AG(4)(c). Mandatory 98

17AG(4)(c)(ii) The salary ranges available for APS employees by classification level. Mandatory 99

17AG(4)(c)(iii) A description of non-salary benefits provided to employees. Mandatory 102-103

17AG(4)(d)(i) Information on the number of employees at each classification level who received performance pay. If applicable, Mandatory

99-101

17AG(4)(d)(ii) Information on aggregate amounts of performance pay at each classification level. If applicable, Mandatory

n/a

17AG(4)(d)(iii) Information on the average amount of performance payment, and range of such payments, at each classification level. If applicable, Mandatory

n/a

17AG(4)(d)(iv) Information on aggregate amount of performance payments. If applicable, Mandatory n/a

Assets Management

17AG(5) An assessment of effectiveness of assets management where asset management is a significant part of the entity’s activities. If applicable, mandatory

111

Purchasing

17AG(6) An assessment of entity performance against the Commonwealth Procurement Rules. Mandatory 111

Consultants

17AG(7)(a) A summary statement detailing the number of new contracts engaging consultants entered into during the period; the total actual expenditure on all new consultancy contracts entered into during the period (inclusive of GST); the number of ongoing consultancy contracts that were entered into during a previous reporting period; and the total actual expenditure in the reporting year on the ongoing consultancy contracts (inclusive of GST).

Mandatory 111

17AG(7)(b) A statement that “During [reporting period], [specified number] new consultancy contracts were entered into involving total actual expenditure of $[specified million]. In addition, [specified number] ongoing consultancy contracts were active during the period, involving total actual expenditure of $[specified million]”.

Mandatory 111

17AG(7)(c) A summary of the policies and procedures for selecting and engaging consultants and the main categories of purposes for which consultants were selected and engaged.

Mandatory 111-112

17AG(7)(d) A statement that “Annual reports contain information about actual expenditure on contracts for consultancies. Information on the value of contracts and consultancies is available on the AusTender website.”

Mandatory 112

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Reference Description Requirement Page

Australian National Audit Office Access Clauses

17AG(8) If an entity entered into a contract with a value of more than $100,000 (inclusive of GST) and the contract did not provide the Auditor-General with access to the contractor’s premises, the report must include the name of the contractor, purpose and value of the contract, and the reason why a clause allowing access was not included in the contract.

If applicable, Mandatory

n/a

Exempt contracts

17AG(9) If an entity entered into a contract or there is a standing offer with a value greater than $10,000 (inclusive of GST) which has been exempted from being published in AusTender because it would disclose exempt matters under the FOI Act, the annual report must include a statement that the contract or standing offer has been exempted, and the value of the contract or standing offer, to the extent that doing so does not disclose the exempt matters.

If applicable, Mandator

n/a

Small business

17AG(10)(a) A statement that “[Name of entity] supports small business participation in the Commonwealth Government procurement market. Small and Medium Enterprises (SME) and Small Enterprise participation statistics are available on the Department of Finance’s website.”

Mandatory 112

17AG(10)(b) An outline of the ways in which the procurement practices of the entity support small and medium enterprises. Mandatory 112

17AG(10)(c) If the entity is considered by the Department administered by the Finance Minister as material in nature—a statement that “[Name of entity] recognises the importance of ensuring that small businesses are paid on time. The results of the Survey of Australian Government Payments to Small Business are available on the Treasury’s website.”

If applicable, Mandatory

112

Financial Statements

17AD(e) Inclusion of the annual financial statements in accordance with subsection 43(4) of the Act. Mandatory 115-178

Executive Remuneration

17AD(da) Information about executive remuneration in accordance with Subdivision C of Division 3A of Part 2-3 of the Rule. Mandatory 100-102

17AD(f) Other Mandatory Information

17AH(1)(a)(i) If the entity conducted advertising campaigns, a statement that “During [reporting period], the [name of entity] conducted the following advertising campaigns: [name of advertising campaigns undertaken]. Further information on those advertising campaigns is available at [address of entity’s website] and in the reports on Australian Government advertising prepared by the Department of Finance. Those reports are available on the Department of Finance’s website.”

If applicable, Mandatory

203

17AH(1)(a)(ii) If the entity did not conduct advertising campaigns, a statement to that effect. If applicable, Mandatory

n/a

17AH(1)(b) A statement that “Information on grants awarded by [name of entity] during [reporting period] is available at [address of entity’s website].” If applicable, Mandatory

113

17AH(1)(c) Outline of mechanisms of disability reporting, including reference to website for further information. Mandatory 80-81

17AH(1)(d) Website reference to where the entity’s Information Publication Scheme statement pursuant to Part II of FOI Act can be found. Mandator 78

17AH(1)(e) Correction of material errors in previous annual report. If applicable,

mandatory

212-213

17AH(2) Information required by other legislation. Mandatory 82-83,

206-211 103-104 113-114

06Appendixes Reference material

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Alphabetical index

A A New Tax System (Australian Business Number) Act 1999, 48 ABN see Australian business number Aboriginal and Torres Strait Islander people

ATO employees, 44, 89 businesses, 112 Indigenous procurement policy, 112 ABR see Australian Business Register ABR Connect, 50, 217 ABR Explorer, 50, 217 access powers, 206 accountability, 26, 33, 71, 81-83, 182 Accountable Authority, v, 1, 72-73 112 statement by, 11 activity statement, see business activity statement administered programs, 2, 3, 53 administered payments, 53 outputs, 201 performance overview, 53 performance results, 54-57 Administrative Appeals Tribunal (AAT), 78 advertising, 203-205 advice and guidance, 7, 183-184 agency programs, 2 annual performance statement, 11-57 annual report, corrections to, 212-213 artificial intelligence, use of, 29, 30 asset management, 111 assumed identities, use of, 206 assurance, 15, 17, 23, 29, 33, 36, 41, 44, 45, 65, 72, 74-75, 77, 78, 80, 90, 105, 112, 185, 187, 200 ATO see Australian Taxation Office ATO corporate plan 2019-20, 12, 23, 35, 36, 48, 50, 54, 74, 105 ATO Executive, 5-9, 10, 72, 74, 91, 100 ATO IT systems, 31, 45 security capabilities, 32 ATO online services, 13, 16, 23, 31-32, 42, 43, 56, 217 Audit and Risk Committee, 11, 72, 74, 75-77 Auditor General, 78 audits, 13, 62, 78, 79, 185, 199, 200, 217 audit yield, 40, 66-67, 68, 69, 217, 220 Australian Bureau of Statistics (ABS), 19, 39 Australian business number (ABN), ii, 32, 37, 48, 49-50, 217 Australian Business Register (ABR), iv, v, 1, 3, 5, 9, 11, 19, 48-51, 108, 115, 198, 217 Australian Business Registrar, 49 Australian Business Software Industry Association (ABSIA), 32 Australian Charities and Notforprofits Commission (ACNC), v, 1, 3, 4, 52, 77, 78, 79, 84, 91, 108, 115, 138, 146, 187, 203 financial statement references, 138, 146, 148,

150, 170, 171, 175 Australian Federal Police, 73, 80, 207, 207-210 Australian Information Commissioner, 78

Australian National Audit Office (ANAO), 78-79, 106, 111, 182 Audit of financial statements, 116-120

Australian Public Service (APS), 98 Code of conduct, 73 Australian Securities and Investment Commission (ASIC), 39, 49, Australian Taxation Office (ATO)

administered programs, 2, 3, 53-57 agency programs, 2-3 annual performance statement, 11-57 budget statements, 35, 36, 47, 50, 52, 54 business portal, 23 corporate governance, 71-83 corporate plan 2019-20 see ATO corporate plan

2019-20 Diversity and inclusion plan 2017-19, 80, 89 enterprise agreement 2017, 98, 103 Executive see ATO Executive feedback from clients, 26, 41, 82, 183, 184 Fraud and corruption control plan 2019-20, 74 governance structure, 72 organisational structure, 10 performance against Taxpayers’ Charter, 181-182 purpose, 12, 35, 70 quality assurance activities, 33, 41 role and responsibilities, 1 tax gap estimates, 62-64 taxation of, 141 vision, 1 workforce by location, 92-96 automation, use of, 29, 30, 219

B BAS see business activity statement BAS agents, 4, 13, 20, 23, 47, 83, 217, 218 see also tax agents

Bad and Doubtful Debts program, 3, 55, 110 Better as usual program, 16-17, 20-21, 33 black economy, ii, 15, 49, 74, 205, 217 Black Economy Taskforce, 15, 74, 210 Board of Taxation

ATO assistance for working groups, 19 bushfires assistance for taxpayers, ii, 13, 43, 49, 56, 84

impact on revenue, 39-41, 46, 56, 66, 187 legislative measures, 18 businesses compliance liabilities, 41, 67, 200

digital identity, 13, 30-32, 45, 217 registration process, iv, 49 tax assured, 63-65 business activity statement debt, 192, 193, 195 digital lodgment, 26, 41, 217 lodgment for Cash Flow Boost stimulus, 57 lodgment performance, 57 refunds, 61 Business Authentication Manager (BAM), 32, 217, 221 business portal, 23

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C carers in the ATO workforce, 104 Cash Flow Boost, 18, 20, 53-57 ANAO audit of, 117

Chief Internal Auditor, 74 Chief Risk Officer, 74 Client Register, 39 clients

engagement, 21, 66-67 groups, 4 impacted by natural disasters, 66 improvements for, ii, iv, 20-21, 29 lodgment compliance, 67 Commissioner of Taxation

as accountable authority, 1, 72-73 remedial power, 83 responsibilities, 1, 48, 72 Commonwealth fraud control framework 2017, 73 Commonwealth Ombudsman, 80 Commonwealth procurement rules, 111, 113 Commonwealth property management framework, 92 Commonwealth risk management policy, 74 Communication Toolbar, 27 community confidence, iii, 15, 38, 181 community engagement, 56 companies large, 66 multinational, 4, 15, 65, 194 not-for-profit, 3-4, 52, 186, 194 registered, 39 company tax collections, 59 compensation claims and payments, 196 complaints, 80-82, 182, 198 complex issue and case program, 17 compliance activities audit yield, 40, 66-69 lodgment, 65 non-compliant behaviour, 74 superannuation, 17 compliance cost, 42 Conformance with obligations program, 77 consultancies, 111-112 contracting, 112 corporate governance, 71-83 corporate plan see ATO corporate plan 2019-20 corporate risk and assurance program, 74 COVID-19, economic stimulus packages administered programs, 54, 55, 110 ANAO audit of, 117 detecting fraud, iii, 23, 74, 75 development and delivery, ii, 13, 14, 18, 25, 38,

41, 84 payments made, 55, 56-57 COVID-19, pandemic ATO support for community, iii, iv, 13, 29, 33, 34,

43, 46, 49, 56, 183, 194 ATO support for tax professionals, 13, 23, 43 demand for ATO online services, 31-32, 56 impact on staff, 25-26, 28, 43, 44, 84, 98, 103

impact on revenue, 39-41, 46, 56, 61, 62, 66-67, 131, 187, 194 public advice and guidance, 183-184 shift to working from home, 14, 27-28, 44, 74 COVID-19 Steering Committee, 7, 10, 72 Crimes Act 1914, 206 culture, 25-26, 43 culture and integrity, 26 Culture strategy, 2024, 26, 43

D data analytics integration, 29 Data and Analytics Steering Committee, 19 data backbone, 29 data democratisation and visualisation, 29 data governance and ethics, 30 Data Sharing Ethical Framework, 19 debt management, 16, 21, 194-195 digital channel experience, 21 digital ecosystem, 22, 32 digital experience for staff, 44 digital identity

elements of, 32 individuals and businesses, 31-32, 45, 217 tax agents, 23 digital service providers (DSPs), 3, 22, 30, 32, 43, 49, 218 digital services for agents, 44 ATO awards, 23 ATO online services, 31, 56, 217 client experience, 22-23 e-invoicing, 22 enhancing digital ecosystem, 22 Online services for agents, 13, 16, 23, 42, 181,

218

Online services for business, 23 digital systems, 38, 45 disability reporting, 78-79 disability and inclusion, 89 disclosures

law enforcement agencies, 83, 207-210, 216 ministers, 82 protected information, 83 public interest, 80 taxpayer information, 207-210 voluntary, 66, 201 dispute management, vii, 179, 183-185 dispute resolution, 10, 20-21, 77, 91 diversity and inclusion, 80, 89, 205

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E Early Release of Superannuation, ii, 13, 18 ecologically sustainable development, 113 economic response to Coronavirus, 3, 15, 41, 53, 55,

56, 110, 180 see also COVID-19 economic stimulus packages e-invoicing, 22, 218, 222 employees see workforce end-to-end client experience, 20-21, 39 enterprise agreement 2017, 98, 103 enterprise capability framework, 25 Enterprise Client Profile (ECP), 29, 98, 103, 221 Enterprise Risk Management Committee, 72, 75 excise

collections, 16, 59-61, 67 revenue effects, 63, 65, 69 external scrutiny, 78

F feedback and compliments, 82 finance law, compliance with, 113 Financial Action Task Force, 74 Financial Crime Intelligence Network, 16 financial performance, 105-113

agency resource statement, 105-108 capital budget, 106 compliance with finance law, 113 operating expense budget, 105 financial statements, 121-177

administered reconciliation schedule, 135 administered schedule of assets and liabilities, 133-134 administered schedule of comprehensive

income, 130-132 cash flow statements, 128-129, 136 statement of changes in equity. 126-127 statement of comprehensive income, 122-123 statement of financial position, 124-125 Fraud and corruption control plan 2019-20, 74 fraud management, v, 73-74 freedom of information, 78 Freedom of Information Act 1982, 78 fringe benefits tax, 60-61, 64, 103, 221

compliance cost review, 19 fuel tax credits, 53, 64, 69, 190 fuel tax credit scheme, 3, 54, 109, 114, 131, 201

G Goods and services tax (GST) administration, 2, 106 collections, 58, 66-67

fraud, 74 revenue effects, 66-67 governance see corporate governance governance structures, 72 grants, 113

H Higher education loan program (HELP), 60, 221 HR Professional Stream Network, 26 human resources see workforce

I Illicit Tobacco Taskforce, 16, 74, 209 income tax cash collections, 60, 66, 68

lodgments, iii, 39-40, 67 pre-filled returns, 16, 38, 44-45 refunds, ii, iii, 60-61, 200 Indigenous Australians ATO workforce, 37, 44, 90 Evergreen Indigenous employment program, 44 procurement, 112 individuals digital identity, 31-32 registered, 36, 339 tax assured, 41, 62, 65 tax collections, 40, 58, 60 tax gap, 15 -16, 40, 62-64 Information Publication Scheme (IPS), 78 Inspector General of Taxation Act 2003, 80 Inspector General of Taxation Act 2003 (IGTO), 80 Intermediaries engagement and assurance, 23 international partnerships, 23-24 interest on overpayments and early payments of tax, 55-56, Intergovernmental Agreement on Federal Financial relations, 106 iTnews Benchmark Awards 2020, 23

J JobKeeper program, 13, 18, 21, 41, 53, 55-57 see also COVID-19 economic stimulus packages Joint Chiefs of Global Tax Enforcement (J5), 74 joint committee inquiries, 79 Joint International Taskforce on Shared Intelligence

and Collaboration (JITSIC), 23 judicial reviews, 76 Junior Minerals Exploration Incentive, 3, 53, 54, 109 justified trust program, 65

K key management personnel, 100, 158

L law enforcement agencies, disclosure to, 83, 207 letter of transmittal, v litigation, strategies, 185-189 lost and unclaimed super, 56 low income superannuation tax offset, 53, 55, 109, 201

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M machine to machine solution (M2M), 32 ministers, 4 Modernising Business Registers (MBR) program, 49 Multicultural access and equity action plan 2018-20, 89 Multilateral Partners Program Workshop, 24 myGovID, ii, iii, 13, 23, 33, 43, 49, 50, 112, 204, 218

N National disability strategy 2010-2020, 80 National Rental Affordability Scheme, 54, 109 National Tax Clinic Program, 19, 45 New Zealand, 22, 24

O offence categories, 211 Ombudsman, Commonwealth, 80 Ombudsman, Fair works, 209-210 Ombudsman, Taxation, 80 Online services for agents, iii, 13, 16, 42, 43 Online services for business, 23 Online services for DSPs, 43 Open and transparent operations, 78-80 Operating expense budget, 45, 105 organisational culture, 43 Organisation for Economic Co-operation and

Development (OECD), 23, 74 overpayments, interest on, 54, 56-57

P Pan-European Public Procurement On-Line (PEPPOL) interoperability framework, 22 parliamentary committees, 79 PAYG/GST instalment indexation suspension, 13, 18 payments, 13 penalties, 66-67 performance audits, 78-79 performance results, 35-46 petroleum resource rent tax, 60-61, 64 Phoenix Taskforce, 15, 19, 74, 208 pipeline methodology, 20 private rulings, 197-199 procurement, iii, 111-114 private health insurance rebate, 3, 53, 55, 109, 201 protected information, disclosure, 83 Protecting Your Superannuation, legislation, 56 public advice, 183-184 Public Governance, Performance and Accountability

Act 2013, v, 1, 72 Public Interest Disclosure Act 2013, 80 public interest disclosures, 80 Public Service Act 1999, 1

R Reasonable use of ATO Digital services policy, 30 Reconciliation action plan 2018-20, 89 Relationship Authorisation Manager (RAM), ii, 13, 32, 49 remuneration, 75-77, 98-103 Research and Development Tax Incentive, 3, 54-55,

109

resource rent taxes, 60, 61 resource statement, 107-108 revenue based performance measures, 15 revenue collection, viii, 8, 58 - 61 revenue effects, 36, 40, 62 65, 66-69

compliance activities, 36, 40, 66, 68, 69 excise and other indirect taxes, 69 goods and services tax, 68-69 impact of COVID-19, 62, 66-67 income tax, 68 penalties and interest, 66, 69 risk management, 65, 72-75 Robotic Process Automation (RPA) technologies, 30 Royal Commission into banking misconduct, 210

S Safety, Rehabilitation and Compensation Commission, 103 salaries see remuneration salary packaging, 103 salary ranges, 99, 101-102 Seafarer Tax Offset, 3, 53, 55, 110 Security and Business Continuity Management

Committee, 72 self-managed superannuation funds, 4, 60, 194, 200 Senate Estimates, 79 senior executive service, 37, 44, 90, 99, 101-102 Serious Financial Crime Taskforce, 15, 74, 209 service commitments, 197-198 settlements, 185-186, 187 single client accounting system, 14, 16, 31 Single Touch Payroll, ii, 21, 22, 42, 51 small business, 4

activity statements, 39 compensation, 196 debt, 194 disputes, 185-186 support for, 13, 15, 112 tax gap, 64 Small Superannuation Accounts Act 1995, 107 staff see workforce stakeholders, 3, 81-83 Standard Business Reporting (SBR), 32, 48, 219, 221 State of the service reports, 80 strategic litigation, 189-193 strategic objectives

client, 20-24 financial, 33-34 government, 15-19 operational, 29-32 workforce, 25-28 Strategy and Integration Committee, 72

06Appendixes Reference material

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superannuation closure of eligible rollover funds, 19 early release of, ii, 13, 18 low income superannuation tax offset, 53, 55,

109, 201 proactive payments, 56 reporting of, 15 superannuation co-contribution scheme

administered expenses, 109 administered payments, 53 administered program outputs, 201 superannuation funds contraventions, 200 revenue collection, 60-62 self-managed, 4, 60, 194, 200, 219 superannuation guarantee, 219 assurance, 17 gap, 17, 57 scheme, 55, 56, 57, 109, 201 Superannuation Guarantee Taskforce, 15 superannuation reporting, 51 surveys, 26, 43, 44, 112, 181

T Targeted Assistance through Taxation System, 3, 55, 56, 110, 202 taskforces, 15-16, 19, 23, 74, 79, 208-210

Black Economy, 15, 74, 210 Illicit Tobacco, 16, 74, 209 Joint International Taskforce on Shared Intelligence and Collaboration (JITSIC), 23

Phoenix, 15, 19, 72, 209 Serious Financial Crime, 15, 74, 209 Tax Avoidance, 15, 79 tax agents, 20, 23, 43, 47, 83, 181, 193 see also tax practitioners Tax Agent Services Act 2009, v, 47, 211 tax assured, 36, 41, 62, 65, 219 Taxation Administration Act 1953 (TAA), 81, 82-83, 107, 180, 185, 187, 189, 195 Tax Avoidance Taskforce, 15, 79 tax collection see revenue collection tax debt see debt management tax evasion, 72 tax file numbers (TFNs), 9, 37, 39 tax gap, 16, 62-64, 220 analysis, 15 estimates, 40, 62-64 income based, 63-64 individuals, 16, 64 as a proportion of revenue, 36, 40 transaction based, 63 Tax Integrity Centre, 72 Taxpayers’ Charter, 81, 181-182 Tax Practitioners Board (TPB), 1, 2, 23, 47, 77, 78, 80, 84, 91, 108, 115, 138, 187, 203, 211 financial statement references, 138, 149, 150,

177

Joint Compliance Program, 23 tax practitioner model, 23

tax practitioners, 13, 21, 22, 23, 45 see also tax agents tax professionals, see tax agents Tax Time 2019, ii, 21 Tax Time 2020, 43 taxable payments annual report (TPAR), 37 42, 220 technology, 2, 31, 38 test case litigation program, 185, 189, 220 Treasury

secondment program, 41 perceptions of ATO, 36, 41 Portfolio Budget Statements, 35, 36, 47, 50, 52, 54

working relationship, 13, 18, 19 Treasury Laws Amendment, 79

W Willing participation, 12, 35, 66, 69, 76 Wine equalisation tax, tax gap, 63 workforce

by business area, 91 Data and Analytics professional stream in, 29 digital experience, 44 diversity, 89 employee engagement, 26, 37, 43 employees with disability, 81 impact of COVID-19, pandemic, 44 indigenous representation, 37, 44 learning and development, 25 management, 84-104 non-ongoing employees, 87-88, 95-96 non-salary benefits, 102 planning, 25 remuneration, 96-101 retention and separation, 97 statistics of, 84-97 workplace agreements, 96 working from home arrangements, 14, 27, 74 Workforce strategy, 2024, 25 work health and safety, 103-104, 196 working holiday maker framework, 70 work related expenses, 16, 72

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ato.gov.au

Commissioner of Taxation annual report

2019-20