Administered expenses (Programs 1.6–1.24)

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.

Administered program performance

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

We paid $10.7 billion in administered expenses in 2015–16, $226 million (or 2.2%) higher than 2014–15 and $48 million (or 0.4%) more than forecast in the 2015–16 Budget. The largest expense was fuel tax credits with payments of $6.1 billion. This was $110 million below the 2015–16 Budget forecast and $38 million above the 2014–15 outcome. We paid a total of $80 million in claims under the product stewardship for oil program and the cleaner fuels grant scheme.

Research and development refundable tax offset claims increased by 6.4% to $2.5 billion over the previous year, attributable to continued strong take-up of the incentive. Australian screen production incentive claims increased by $183 million (or 128.2%) to $325 million. This significant growth in claims was driven by a small number of large films; however, by their nature, large film tax offset claims are irregular.

We administered $373 million in expense payments to assist families and individual taxpayers; $44 million higher than 2014–15, and $13 million above the Budget forecast. We supported the superannuation savings of lower income individuals through low income superannuation contributions of $788 million and superannuation co‑contribution scheme payments of $154 million. Superannuation guarantee charge entitlements of $373 million were also distributed.

TABLE 2.13 Administered expenses, 2013–14 to 2015–16(a)(b)
 

2013–14
$m

2014–15
$m

2015–16
$m

Energy/fuel schemes payments

     

Fuel tax credits scheme

5,726

6,050

6,089

Product stewardship for oil program

40

49

63

Cleaner fuels grants scheme

91

172

17

Total energy/fuel scheme payments

5,857

6,271

6,169

Other administered payments

     

Education tax refund

7

4

2

Baby bonus

2

1

Private health insurance rebate

201

215

247

First home saver account

23

26

2

National rental affordability scheme

37

82

122

Tax bonus for working Australians

2

0

Superannuation co-contribution

242

169

154

Research and development tax offsets

2,021

2,332

2,480

Australian screen production incentive

252

143

325

Low income superannuation contribution

686

791

788

Interest payments on lost superannuation accounts

2

3

11

Seafarer tax offset

0

8

Conservation tillage tax offset

18

28

Total administered payments

9,348

10,075

10,300

Distribution of superannuation guarantee charge entitlements

388

372

373

TOTAL(c)

9,735

10,448

10,674

  1. Totals may differ from the sum of components due to rounding.
  2. This table is prepared on a cash basis, while the agency resource statement table is based on accrued expenses amount.
  3. Total excludes $185.8 million of interest on overpayments of tax, $3.8 million of delayed refund interest and $0.8 million interest on early payments of tax (total $190.4 million).

 

TABLE 2.14 Administered programs, 2013–14 to 2015–16

Program 1.6: Australian screen production incentive

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Number of tax offsets processed

Corporate plan / PBS

140

166

206

Value of tax offsets processed

Corporate plan / PBS

$251.9 million

$142.5 million

$325.2 million

Number of tax offsets issued compared to the number of tax offset entitlements

Corporate plan / PBS

166

Issued: 206

Entitled: 286

Value of tax offsets issued compared to the value of tax offset entitlements

Corporate plan / PBS

$142.5 million

Issued:
$325.2 million

Entitled:
$388.1 million

Analysis

Claims under this program vary from year to year. Increased film activity resulted in a larger number and total value of entitled offsets issued compared to previous years.

Program 1.7: Cleaner fuels grant scheme

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Number of claims processed

Corporate plan / PBS

740

817

33

Number of participants registered

Corporate plan / PBS

32

32

32

Value of payments processed

Corporate plan / PBS

$91.2 million

$171.8 million

$17.3 million

Proportion of payments processed within service standard timeframes

Corporate plan / PBS

89%

45%

Analysis

The scheme ceased on 1 July 2015. Clients had until 30 June 2016 to lodge final claims. This resulted in only 33 claims being received.

Claims were more complex and took time to process as clients worked with the ATO to finalise their operations.

Program 1.8: Conservation tillage refundable tax offset

The conservation tillage refundable tax offset ceased from 1 July 2014. There were no deliverables for the program in 2015–16.

Program 1.9: Exploration development incentive

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Number of applications made by mining exploration companies

Corporate plan / PBS

84

Value of exploration expenditure sought to be converted into credits before ATO applies statutory cap on total credits

Corporate plan / PBS

$70.3 million

Modulation factor provided by the ATO in sufficient time to allowed allocation of capped exploration credits to shareholders

Corporate plan / PBS

Yes

Analysis

The exploration development incentive allows certain exploration expenditure from 2014–15 to be converted into exploration credits which may be claimed by the recipients of these credits in the 2015–16 year.

Applications for participation in year one of the scheme closed on 30 September 2015. A communications and public relations campaign was undertaken to target the relevant taxpaying community to increase awareness of the scheme.

As 84 applications were received and the total notified exploration expenditure was $70.3 million, the statutory cap did not apply.

The modulation factor was registered and published on 27 November 2015 which is earlier than the 1 January 2016 deadline.

Program 1.10: Fuel tax credits scheme

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Number of registered participants

Corporate plan / PBS

263,355

253,611

231,591

Value of claims

Corporate plan / PBS

$5.7 billion

$6.1 billion

$6.1 billion

Proportion of payments processed within service standard timeframes

Corporate plan / PBS

99%

99%

Analysis

No significant increase in registrations for fuel tax credits is expected. There has been a decline in business clients with active registrations and a slight increase in non-business clients with active registrations.

The value of claims paid is consistent with expectations of the program and reflect less than a 1% variance from the original Budget forecast.

The service standard performance criterion was introduced in 2014–15 and was met for 2015–16.

Program 1.11: National rental affordability scheme

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Number of tax offsets processed

Corporate plan / PBS

15,231

23,985

27,305

Value of tax offsets processed

Corporate plan / PBS

$36.6 million

$82.3 million

$122.0 million

Ratio of claims made through the ATO compared to the Department of Social Services

Corporate plan / PBS

3:1 (approx.)

3:1 (approx.)

3:1 (approx.)

Analysis

The year-on-year growth reflects the maturity of the scheme. In Budget 2016–17, the government announced that it is not proceeding with round 5 of the scheme. This may have also affected the number and total value of claims.

Program 1.12: Product stewardship for oil

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Number of claims processed

Corporate plan / PBS

364

484

530

Number of participants registered

Corporate plan / PBS

50

37

41

Value of payments processed

Corporate plan / PBS

$40.0 million

$49.1 million

$62.7 million

Value of revenue collected

Corporate plan / PBS

$21.5 million

$33.8 million

$29.3 million

Proportion of payments processed within service standard timeframes

Corporate plan / PBS

97%

93%

Analysis

No significant change is expected in the number of clients registered to claim or pay under this program.

Overall, the number of registrants has fallen compared with 2013–14, with a number of inactive registrations ceasing. This was partially offset by a small number of new clients in 2015–16.

There was an increase in claims and payments as a result of new claimants and a change in claiming pattern for an existing claimant.

Given the high proportion of payments processed within the service standard, resources were reallocated to assist with processing of other payments. This resulted in a modest decrease in this performance criterion when compared with 2014–15.

Program 1.13: Research and development tax incentive

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Number of claims processed for 40% non-refundable research and development tax offset claimants

Corporate plan / PBS

1,780

1,762

1,515

Value of claims processed for 40% non-refundable research and development tax offset claimants

Corporate plan / PBS

$15.2 billion

$14.2 billion

$4.3 billion
tax offset paid

Number of claims processed for 45% refundable research and development tax offset claimants

Corporate plan / PBS

8,200

8,901

10,608

Value of claims processed for 45% refundable research and development tax offset claimants

Corporate plan / PBS

$4.4 billion(7)

$5.2 billion(7)

$2.5 billion
tax offset paid

Proportion of offsets processed within service standard timeframes

Corporate plan / PBS

51.4%

33.9%

Analysis

The methodology for reporting the research and development tax incentive from 2015–16 has changed to express the measure as research and development tax offsets claimed and used, rather than research and development expenditure claimed.

Reporting offset amounts better reflects the nature of the current research and development tax incentive. However, this affects the ability for prior-year comparisons.

The decrease in the proportion of offsets paid within service standard timeframes was the result of an additional review step added to address risks presented by refundable research and development tax offset claims, with the program now generating refundable offsets of $2.5 billion annually. This includes data validation and integrity checking. We are exploring options to improve processing times while appropriately managing the risks.

(7) Calculations for the numbers and values of the claims reported in the 2013–14 and 2014–15 annual report used a different method and these results are not comparable to the outcomes for 2015–16.

Program 1.14: Seafarer tax offset

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Number of tax offsets processed

Corporate plan / PBS

0

Less than 5

0

Value of tax offsets processed

Corporate plan / PBS

0

$8.4 million

$0 million

Relevant taxpayers are aware of how to claim the offset

Corporate plan / PBS

100%

100%

Analysis

There were no claims processed in 2015–16. Legislation was proposed in 2015–16 to abolish the seafarer tax offset. However, this did not pass the Senate and accordingly, the seafarer tax offset administered program has not ceased.

Program 1.15: Baby bonus

The baby bonus program ceased on 30 June 2009 but claimants could lodge claims until 30 June 2014. There were no deliverables for the program in 2014–15 or 2015–16. Residual payments of $1.5 million for the baby bonus were finalised in the 2014–15 financial year.

Program 1.16: Education tax refund

The education tax refund finished on 30 June 2012. There were no deliverables for the program in 2014–15 or 2015–16. Residual payments of $3.9 million for education tax refund were finalised in the 2014–15 financial year with a further $2.0 million in 2015–16.

Program 1.17: First home saver accounts

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Number of government contributions paid

Corporate plan / PBS

49,400

37,111

0

Value of government contributions paid

Corporate plan / PBS

$22.6 million

$26.1 million

$1.8 million

Value of account balances

Corporate plan / PBS

$616.8 million

$618.0 million

$0.1 million

Proportion of government contributions paid to eligible account holders within 60 days

Corporate plan / PBS

99.4%

98.2%

0

Analysis

This scheme closed on 1 July 2015, with residual payments to be made through to 30 June 2017.

Program 1.18: Low income superannuation contribution

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Number of beneficiaries of entitlements determined

Corporate plan / PBS

2.7 million

3.2 million

3.1 million

Value of entitlements determined and paid

Corporate plan / PBS

$718.8 million determined

$686.1 million paid

$797.3 million determined

$791.2 million paid

$798.5 million determined

$788.0 million paid

Proportion of original contributions paid within 60 days

Corporate plan / PBS

82.2%

99.9%

100%

Analysis

The number of beneficiaries entitled to this program fluctuates as beneficiaries move outside the eligibility threshold. The amount of entitlement determined and paid is influenced by increases in beneficiary incomes.

Program 1.19: Private health insurance rebate

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Number of claims processed(8)

Corporate plan / PBS

531,365

628,825(8)

660,087

Value of rebates processed

Corporate plan / PBS

$201.0 million

$215.4 million

$247.5 million

Proportion of private health insurance rebates claimed through the tax system, and liability imposed on, lodging eligible individuals

Corporate plan / PBS

$206.6 million rebates

$547.3 million liability imposed

$225.5 million rebates

$551.8 million liability imposed

To be reported in 2016–17

Analysis

Tax returns received and processed have been increasing gradually over the past three years. Over that time, the percentage of taxpayers receiving this rebate has increased slightly from 57% to 58% for the 2014–15 tax year.

The proportion of private health insurance rebates cannot be calculated until the tax year is closed. This will be reported in 2016–17.

(8) Excludes near-zero dollar reconciliation assessments.

Program 1.20: Superannuation co-contribution scheme

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Number of beneficiaries of entitlements determined

Corporate plan / PBS

548,218

509,475

488,037

Value of entitlements determined

Corporate plan / PBS

$185.0 million determined

$241.9 million distributed co-contribution

$161.8 million determined

$168.9 million distributed co-contribution

$153.8 million determined

$154.2 million distributed co-contribution

Proportion of original co-contributions paid within 60 days

Corporate plan / PBS

91.4%

98.1%

98.8%

Analysis

Eligibility and income threshold changes to super co-contributions over time have reduced the average entitlement.

Program 1.21: Superannuation guarantee scheme

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Number of superannuation guarantee complaints leading to a superannuation liability being raised and those leading to no result

Corporate plan / PBS

11,539 liability raised

6,568 no result

11,333 liability raised(9)

6,111 no result(9)

10,761 liability raised

4,120 no result

Number of employees who have had superannuation guarantee entitlements raised as a result of ATO compliance activities and voluntary disclosures

Corporate plan / PBS

149,458 compliance activities

284,200 voluntary disclosures

132,604 compliance activities

85,117 voluntary disclosures

94,963 compliance activities

111,518 voluntary disclosures

Number of employers whose records are checked and the number leading to a superannuation liability raised

Corporate plan / PBS

18,943

21,033

18,614

Value of superannuation guarantee charge raised (including penalties and interest)

Corporate plan / PBS

$843.9 million

$734.9 million

$670.4 million

Value of superannuation guarantee charge collected

Corporate plan / PBS

$395.1 million

$379.2 million

$341.3 million

Value of superannuation guarantee entitlements distributed to individuals or superannuation funds

Corporate plan / PBS

$387.8 million

$372.4 million

$373.3 million

Value of superannuation guarantee debt on hand and the amount of superannuation guarantee debt irrecoverable at law or uneconomical to pursue

Corporate plan / PBS

$1.0 billion debt on hand

$256.8 million
not pursued

$1.2 billion debt on hand

$223.1 million
not pursued

$1.36 billion debt on hand

$124.4 million
not pursued

Proportion of employers for whom superannuation guarantee liabilities were raised by the ATO

Corporate plan / PBS

2.4%

1.5%

Analysis

For the 2015–16 year there was a slight reduction in the total amount of complaint cases actioned.

We used a wider range of tailored responses, including early contact and engagement which meant more employers paid superannuation guarantee shortfall amounts directly to employees’ super fund accounts rather than the ATO. This improved outcomes for employees and reduced liabilities to pay the superannuation guarantee charge. We continue to focus on early engagement and making it easier for employers to get it right and to comply with their obligations.

(9) Refer to Appendix 14: Corrections.

Program 1.22: Targeted assistance through the taxation system

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Interest payments on unclaimed superannuation monies:

Corporate plan / PBS

     
  • number of interest payments processed

198,658

347,146

  • value of interest payments processed

$3.4 million

$10.8 million

Proportion of unclaimed superannuation accounts where interest is paid to the account owner compared to total accounts transferred

Corporate plan / PBS

100%

100%

Analysis

The increase in claims and payments is mostly due to the increase in the small and insoluble account threshold. This increased on 31 December 2015 from $2,000 to $4,000 resulting in more unclaimed superannuation accounts.

Program 1.23: Interest on overpayments and early payments of tax

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Number of clients entitled to credit interest due to processing performance

Corporate plan / PBS

650,879

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

Corporate plan / PBS

$51.9 million

Proportion of credit interest paid due to processing performance compared to all credit interest paid

Corporate plan / PBS

26.3%

28.4%

Analysis

Care should be taken when looking at these figures, as they can be distorted by large payments made as the result of court decisions and may not be representative of the average payments made.

Adjustments to the performance criteria were made in 2015–16.

Program 1.24: Bad and doubtful debts and remissions

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Value of provision for bad and doubtful debts

Corporate plan / PBS

$5.8 billion

$3.5 billion

$3.4 billion

Value of remissions

Corporate plan / PBS

$2.5 billion

$1.4 billion

$1.2 billion

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

Corporate plan / PBS

38%

36%

Penalty remissions as a proportion of penalty imposed

Corporate plan / PBS

36%

22%

Interest remissions as a proportion of interest imposed

Corporate plan / PBS

27%

56%

Analysis

The value of bad and doubtful debts and remissions has remained steady from 2014–15 to 2015–16 following significant settlement activity between the ATO and taxpayers during this period. This is a substantial reduction from 2013–14 where a number of significant cases were yet to enter settlement with the amounts in dispute being recognised as a provision for bad and doubtful debts.

The ATO implemented a new accounting policy in its financial statements to account for settlements between the ATO and taxpayers, which has been applied to the 2014–15 and 2015–16 years. The effect of the policy has been to re-classify some amounts from the value of provisions for bad and doubtful debts and remissions from being recognised as an expense to be recognised as a reduction in income.