Inspector-General of Taxation

Statement by the Chief Executive Officer and Chief Finance Officer

In our opinion, the attached financial statements for the year ended 30 June 2012 are based on properly maintained financial records and give a true and fair view of the matters required by the Finance Minister's Orders made under the Financial Management and Accountability Act 1997, as amended.

[SIGNED]
Ali Noroozi
Inspector-General of Taxation
29 August 2012

[SIGNED]
Andrew McLoughlin
Chief Finance Officer
29 August 2012

 

Statement of comprehensive income
for the period ended 30 June 2012
  Notes 2012
$
2011
$
EXPENSES      
Employee benefits 3A 1,402,220 1,165,754
Suppliers 3B 819,781 815,331
Depreciation and amortisation 3C 116,168 83,721
Finance costs 3D 2,754 3,257
Write-down and impairment of assets 3E 1,061 -
TOTAL EXPENSES   2,341,984 2,068,063
LESS      
OWN-SOURCE INCOME      
Own-source revenue      
Rental income 4A - 45,014
Other revenue 4B 4,746 1,040
Total own-source revenue   4,746 46,054
Gains      
Other gains 4C 25,000 62,680
Total gains   25,000 62,680
Total own-source income   29,746 108,734
Net cost of services   2,312,238 1,959,329
Revenue from Government 4D 2,686,000 2,134,000
Surplus on continuing operations   373,762 174,671
OTHER COMPREHENSIVE INCOME      
Changes in asset revaluation reserves   - 46,549
Total other comprehensive income   - 46,549
Total comprehensive income   373,762 221,220

The above statement should be read in conjunction with the accompanying notes.

Balance sheet
as at 30 June 2012
  Notes 2012
$
2011
$
ASSETS      
Financial assets      
Cash and cash equivalents 5A 37,479 21,169
Trade and other receivables 5B 2,939,220 2,397,056
Total financial assets   2,976,699 2,418,225
Non-financial assets      
Property, plant and equipment 6A,6C 48,490 46,311
Leasehold improvements 6B,6C 59,518 161,142
Other non-financial assets 6D 26,876 25,754
Total non-financial assets   134,884 233,207
Total Assets   3,111,583 2,651,432
LIABILITIES      
Payables      
Suppliers 7A 39,297 73,108
Other payables 7B 37,637 68,914
Total payables   76,934 142,022
Provisions      
Employee provisions 8A 246,237 135,514
Other provisions 8B 94,323 91,569
Total provisions   340,560 227,083
Total liabilities   417,494 369,105
Net Assets   2,694,089 2,282,327
EQUITY      
Contributed equity   77,573 39,573
Reserves   294,138 294,138
Retained surplus   2,322,378 1,948,616
Total equity   2,694,089 2,282,327

The above statement should be read in conjunction with the accompanying notes.

Cash flow statement
for the period ended 30 June 2012
  Notes 2012
$
2011
$
OPERATING ACTIVITIES      
Cash received      
Appropriations   2,231,910 2,043,136
Rents   - 50,513
Other cash received   311 1,040
Net GST received from the Australian Taxation Office   70,953 74,040
Total cash received   2,303,174 2,168,729
Cash used      
Employees   (1,290,681) (1,210,416)
Suppliers   (941,974) (906,922)
Return section 31 appropriation to Official Public Account   (36,427) (70,203)
Total cash used   (2,269,082) (2,187,541)
Net cash used by operating activities 9 34,092 (18,812)
INVESTING ACTIVITIES      
Cash used      
Purchases of property, plant and equipment   (17,782) (2,400)
Total cash used   (17,782) (2,400)
Net cashflows used by investing activities   (17,782) (2,400)
Net increase (decrease) in cash held   16,310 (21,212)
Cash and cash equivalents at the beginning of the      
reporting period   21,169 42,381
Cash and cash equivalents at the end of the reportingperiod 5A 37,479 21,169

The above statement should be read in conjunction with the accompanying notes.

Statement of changes in equity
for the period ended 30 June 2012
  Retained earnings Asset revaluation Contributed equity Total equity
  2012
$
2011
$
2012
$
2011
$
2012
$
2011
$
2012
$
2011
$
Opening Balance                
Balance carried forward from previous period 1,948,616 1,773,945 294,138 247,589 39,573 1,573 2,282,327 2,023,107
Adjusted opening balance 1,948,616 1,773,945 294,138 247,589 39,573 1,573 2,282,327 2,023,107
Comprehensive income                
Revaluations - - - 46,549 - - - 46,549
Re-statement of 'Make Good' - - - - - - - -
Surplus for the period 373,762 174,671         373,762 174,671
Total comprehensive income 373,762 174,671 - 46,549 - - 373,762 221,220
Transactions with owners                
Contributions by owners                
Departmental capital budget - - - - 38,000 38,000 38,000 38,000
Sub-total transactions with owners - - - - 38,000 38,000 38,000 38,000
Closing balance at 30 June 2,322,378 1,948,616 294,138 294,138 77,573 39,573 2,694,089 2,282,327

The above statement should be read in conjunction with the accompanying notes.

Schedule of commitments
as at 30 June 2012
  2012
$
2011
$
BY TYPE    
Commitments receivable    
GST recoverable on commitments 155,928 49,266
Total commitments receivable 155,928 49,266
Commitments payable    
Other commitments    
Operating leases1 1,715,215 422,319
Other commitments2 - 119,604
Total other commitments 1,715,215 541,923
Total commitments payable 1,715,215 541,923
Net commitments by type 1,559,287 492,657
BY MATURITY    
Commitments receivable    
Other commitments receivable    
One year or less 22,753 34,905
From one to five years 91,283 14,360
Over five years 41,892 -
Total other commitments receivable 155,928 49,265
Commitments payable    
Operating lease commitments    
One year or less 250,286 264,355
From one to five years 1,004,118 157,963
Over five years 460,811 -
Total operating lease commitments 1,715,215 422,318
Other commitments    
One year or less - 119,604
From one to five years - -
Over five years - -
Total other commitments - 119,604
Net commitments by maturity 1,559,287 492,657

Commitments are GST inclusive where relevant.

Note Nature of lease General description of leasing arrangements
1 Leases for office accommodation The agreement allows annual fixed rental increases. The agency has entered into a further lease at the current premises that becomes effective in 2012/13.
Note Description General description of the agreement
2 Service Agreement for the provision of office services The agreement is a fixed rate over the term. This agreement is currently undergoing renewal for a further period.

The above schedule should be read in conjunction with the accompanying notes.

Schedule of contingencies
as at 30 June 2012
  2012
$
2011
$
Contingent liabilities - -
Contingent assets - -
Net contingent liabilities - -

The above schedule should be read in conjunction with the accompanying notes.

Notes to and forming part of the financial statements
for the year ended 30 June 2012

Note 1: Summary of significant accounting policies

1.1 Objectives of the Inspector-General of Taxation

The Inspector-General of Taxation (IGT) is an Australian Government controlled entity. It is a not-for-profit entity. The objective of the Inspector-General of Taxation is to improve the administration of the tax laws for the benefit of all taxpayers. The IGT is structured to meet one outcome:

'Improved tax administration through community consultation, review, and independent advice to Government'.

Agency activities contributing toward this outcome are classified as departmental. Departmental activities involve the use of assets, liabilities, income and expenses controlled or incurred by the agency in its own right.

The Inspector-General of Taxation Act 2003 (the Act) established an independent statutory agency on 7 August 2003 to review:

  • systems established by the Australian Taxation Office to administer the tax laws; and
  • systems established by tax laws in relation to administrative matters;

for the purpose of reporting and making recommendations to Government on how those systems could be improved.

The IGT's departmental activities are identified under Outcome 1 by one program, Program 1.1 Inspector-General of Taxation.

The continued existence of the agency in its present form, and with its present program, is dependent on Government policy and on continuing funding by Parliament for the agency's administration and programs.

1.2 Basis of preparation of financial statements

The financial statements are general purpose financial statements and are required by section 49 of the Financial Management and Accountability Act 1997.

The financial statements have been prepared in accordance with:

  • Finance Minister's Orders (FMO) for reporting periods ending on or after 1 July 2011; and
  • Australian Accounting Standards and Interpretations 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 are presented in Australian dollars and values are expressed in whole dollars.

Unless an alternative treatment is specifically required by an Accounting Standard or the FMOs, assets and liabilities are recognised in the Balance Sheet when and only when it is probable that future economic benefits will flow to the Entity or a future sacrifice of economic benefits will be required and the amounts of assets or liabilities can be reliably measured. However, assets and liabilities arising under Executory Contracts are not recognised unless required by an Accounting Standard. Liabilities and assets that are unrecognised are reported in the Schedule of Commitments and the Schedule of Contingencies (other than unquantifiable or remote contingencies, which are reported at Note 10).

Unless alternative treatment is specifically 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.

1.3 Significant accounting judgements and estimates

In the process of applying the accounting policies listed in this note, there are no judgements that have a significant impact on the amounts recorded in the financial statements.

No accounting assumptions or estimates have been identified that have a significant risk of causing a material adjustment to carrying amounts of assets and liabilities within the next reporting period.

1.4 New Australian Accounting Standards
Adoption of new Australian Accounting Standard requirements

No accounting standard has been adopted earlier than the application date as stated in the standard. No new accounting standards, amendments to standards and interpretations issued by the Australian Accounting Standards Board prior to the sign-off date that are applicable to the current period have had a material financial impact on the agency.

Future Australian Accounting Standard requirements

No new standards, amendments to standards or interpretations that have been issued by the Australian Accounting Standards Board prior to the sign-off date and are effective for future reporting periods are expected to have a material financial impact on the agency.

1.5 Revenue
Revenue from Government

Amounts appropriated for departmental appropriations for the year (adjusted for any formal additions and reductions) are recognised as Revenue from Government when the Agency gains control of the appropriation, except for certain amounts that relate to activities that are reciprocal in nature, in which case revenue is recognised only when it has been earned.

Appropriations receivable are recognised at their nominal amounts.

Other types of revenue

Revenue from rendering of services is recognised by reference to the stage of completion of contracts at the reporting date. The revenue is recognised when:

  • the amount of revenue, stage of completion and transaction costs incurred can be reliably measured; and
  • the probable economic benefits with the transaction will flow to the entity.

The stage of completion of contracts at the reporting date is determined by reference to the proportion that costs incurred to date bear to the estimated total costs of the transaction.

Receivables for services, which have 30 day terms, are recognised at the nominal amounts due, less any impairment allowance amount. Collectability of debts is reviewed at the end of the reporting period. Provisions are made when collectability of the debt is no longer probable.

Interest revenue is recognised using the effective interest method as set out in AASB 139 Financial Instruments: Recognition and Measurement.

1.6 Gains
Resources received free of charge

Resources received free of charge are recognised as gains when and only when a fair value can be reliably determined and 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.

Contributions of assets at no cost of acquisition or for nominal consideration are recognised as gains at their fair value when the asset qualifies for recognition, unless received from another government agency as a consequence of a restructuring of administrative arrangements.

Sale of assets

Gains from disposal of non-current assets are recognised when control of the asset has passed to the buyer.

1.7 Transactions with the Government as owner
Equity injections

Amounts appropriated designated as 'equity injections' for a year (less any formal reductions) and Departmental Capital Budgets (DCB) are recognised directly in Contributed Equity in that year.

1.8 Employee benefits

Liabilities for 'short-term employee benefits' (as defined in AASB 119 Employee Benefits) and termination benefits due within twelve months of the end of the reporting period are measured at their nominal amounts. The nominal amount is calculated with regard to the rates expected to be paid on settlement of the liability.

Other long term employee benefits are measured as the net total of the present value of the defined benefit obligation at the end of the reporting period, minus the fair value at the end of the reporting period of plan assets (if any) out of which the obligations are to be settled directly.

Leave

The liability for employee benefits includes provision for annual leave and long service leave. No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave taken in future years by employees of the agency is estimated to be less than the annual entitlement for sick leave.

The leave liabilities are calculated on the basis of employees' remuneration at the estimated salary rates that will be applied at the time the leave is taken, including the agency's employer superannuation contribution rates to the extent that the leave is likely to be taken during service rather than paid out on termination.

The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation.

Separation and redundancy

Provision is made for separation and redundancy benefit payments. The agency recognises a provision for termination when it has developed a detailed formal plan for the terminations and has informed those employees affected that it will carry out the terminations.

Superannuation

Staff of the agency in general are members of the Public Sector Superannuation Scheme (PSS) or the PSS accumulation plan (PSSap).

The PSS is a defined benefit scheme for the Australian Government. The PSSap is a defined contribution scheme.

The liability for defined benefits is recognised in the financial statements of the Australian Government and is settled by the Australian Government in due course. This liability is reported by the Department of Finance and Deregulation's administered schedules and notes.

The IGT makes employer contributions to the employees' superannuation scheme at rates determined by an actuary to be sufficient to meet the cost to the Government. The agency accounts for the contributions as if they were contributions to defined contribution plans.

The liability for superannuation recognised as at 30 June represents outstanding contributions for the final fortnight of the year.

1.9 Leases

A distinction is made between finance leases and operating leases. Finance leases effectively transfer from the lessor to the lessee substantially all the risks and rewards incidental to ownership of leased non-current assets. An operating lease is a lease that is not a finance lease. In operating leases, the lessor effectively retains substantially all such risks and benefits.

Where a non-current asset is acquired by means of a finance lease, the asset is capitalised at either the fair value of the lease property or, if lower, the present value of minimum lease payments at the inception of the contract and a liability recognised at the same time and for the same amount.

The discount rate used is the interest rate implicit in the lease. Leased assets are amortised over the period of the lease. Lease payments are allocated between the principal component and the interest expense.

Operating lease payments are expensed on a straight line basis which is representative of the pattern of benefits derived from the leased assets.

1.10 Borrowing costs

All borrowing costs are expensed as incurred.

1.11 Cash

Cash and cash equivalents includes cash on hand, cash held with outsiders and demand deposits in bank accounts with an original maturity of 3 months or less that are readily convertible to known amounts of cash and subject to insignificant risk of changes in value. Cash is recognised at its nominal amount.

1.12 Financial assets

The IGT classifies its financial assets in the following categories:

  • 'loans and receivables'.

The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Financial assets are recognised and derecognised upon 'trade date'.

Loans and receivables

Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'loans and receivables'. Loans and receivables are measured at amortised cost using the effective interest method less impairment. Interest is recognised by applying the effective interest rate.

Impairment of financial assets

Financial assets are assessed for impairment at each balance date.

  • Financial assets held at amortised cost — If there is objective evidence that an impairment loss has been incurred for loans and receivables, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the asset's original effective interest rate. The carrying amount is reduced by way of an allowance account. The loss is recognised in the Statement of Comprehensive Income.
1.13 Financial liabilities

Financial liabilities are classified as other financial liabilities. Financial liabilities are recognised and derecognised upon 'trade date'.

Other financial liabilities

Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.

Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.

Supplier and other payables are recognised at amortised cost. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced).

1.14 Contingent liabilities and contingent assets

Contingent liabilities and contingent assets are not recognised in the Balance Sheet but are reported in the relevant schedules and notes. They may arise from uncertainty as to the existence of a liability or asset, or represent an asset or liability in respect of which the amount cannot be reliably measured. Contingent assets are disclosed when settlement is probable but not virtually certain, and contingent liabilities are recognised when settlement is greater than remote.

1.15 Acquisition of assets

Assets are recorded at cost on acquisition except as stated below. The cost of acquisition includes the fair value of assets transferred in exchange and liabilities undertaken. Financial 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 incomes at their fair value at the date of acquisition, unless acquired as a consequence of restructuring of administrative arrangements. In the latter case, assets are initially recognised as contributions by owners at the amounts at which they were recognised in the transferor agency's accounts immediately prior to the restructuring.

1.16 Property, plant and equipment (PP&E)
Asset recognition threshold

Purchases of property, plant and equipment are recognised initially at cost in the Balance Sheet, except for purchases costing less than $2000 and computer equipment of less than $1000, which are expensed in the year of acquisition (other than where they form part of a group of similar items which are significant in total).

The initial cost of an asset includes an estimate of the cost of dismantling and removing the item and restoring the site on which it is located. This is particularly relevant to restoration provisions in property leases taken up by the IGT where there exists an obligation to restore the property to its original condition. These costs are included in the value of the IGT's leasehold improvements with a corresponding provision for the present value of the restoration recognised.

Revaluations

Fair values for each class of asset are determined as shown below:

Asset class:

  • Leasehold improvements
  • Property, plant and equipment

Fair value measured at:

  • Depreciated replacement cost
  • Market selling price
 

Following initial recognition at cost, property plant and equipment are carried at fair value less subsequent accumulated depreciation and accumulated impairment losses. Valuations are conducted with sufficient frequency to ensure that the carrying amounts of assets do not differ materially with the assets' fair values as at the reporting date. The regularity of independent valuations depends upon the volatility of movements in market values for the relevant assets.

Revaluation adjustments are made on a class basis. Any revaluation increment is credited to equity under the heading of asset revaluation reserve except to the extent that it reverses a previous revaluation decrement of the same asset class that was previously recognised in the surplus or deficit. Revaluation decrements for a class of assets are recognised directly through surplus or deficit except to the extent that they reverse a previous revaluation increment for that class.

Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the asset restated to the revalued amount.

Depreciation

Depreciable property, plant and equipment assets are written off to their estimated residual values over their estimated useful lives to the agency using, in all cases, the straightline method of depreciation. Leasehold improvements are depreciated on a straightline basis over the lesser of the estimated useful life of the improvements or the unexpired period of the lease.

Depreciation rates (useful lives), residual values and methods are reviewed at each reporting date and necessary adjustments are recognised in the current, or current and future reporting periods, as appropriate. Depreciation rates applying to each class of depreciable asset are based on the following useful lives:

  2011–12 2010–11
Property, plant and equipment 3-10 years 3-10 years
Leasehold improvements Lease term Lease term
Impairment

All assets were assessed for impairment at 30 June 2012. Where indications of impairment exist, the asset's recoverable amount is estimated and an impairment adjustment made if the asset's recoverable amount is less than its carrying amount.

The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use. Value in use is the present value of the future cash flows expected to be derived from the asset. Where the future economic benefit of an asset is not primarily dependent on the asset's ability to generate future cash flows, and the asset would be replaced if the IGT were deprived of the asset, its value in use is taken to be its depreciated replacement cost.

No indicators of impairment were found for assets at fair value.

1.17 Taxation

The agency is exempt from all forms of taxation except for Fringe Benefits Tax and Goods and Services Tax (GST). Revenues, expenses and assets are recognised net of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office, and except for receivables and payables.

Note 2: Events after the reporting period

There was no subsequent event that had the potential to significantly affect the ongoing structure and financial activities of the agency.

Note 3: Expenses

  2012
$
2011
$
Note 3A: Employee benefits    
Wages and salaries 1,106,359 938,618
Superannuation:    
Defined contribution plans 74,140 20,592
Defined benefit plans 66,331 94,447
Leave and other benefits 148,099 104,749
Other employee expenses 7,291 7,348
Total employee benefits 1,402,220 1,165,754
Note 3B: Suppliers    
Goods and services    
Consultants and contractors 137,484 167,721
Travel 142,358 97,471
Service Level Agreement with Treasury 116,450 102,716
Advertising and printing 28,660 44,220
Seminars and conferences 9,867 11,647
Subscriptions and periodicals 10,191 11,328
Other 77,138 97,580
Total goods and services 522,148 532,683
Goods and services are made up of:    
Provision of goods - related entities 6,492 12,992
Provision of goods - external parties 37,391 91,036
Rendering of services - related entities 159,989 137,016
Rendering of services - external entities 318,276 291,639
Total goods and services 522,148 532,683
Other supplier expenses    
Operating lease rentals - external parties    
Minimum lease payments 292,342 277,655
Workers compensation expenses 5,291 4,993
Total other supplier expenses 297,633 282,648
Total supplier expenses 819,781 815,331
Note 3C: Depreciation and Amortisation    
Depreciation:    
Property, plant and equipment 58,485 54,376
Total depreciation 58,485 54,376
Amortisation:    
Leasehold improvements - Make Good provision 57,683 29,345
Total amortisation 57,683 29,345
Total depreciation and amortisation 116,168 83,721
Note 3D: Finance costs    
Unwinding of discount 2,754 3,257
Total finance costs 2,754 3,257
Note 3E: Write-down and impairment of assets    
Asset write-downs 1,061 -
Total write-down of assets 1,061 -

Note 4: Income

  2012
$
2011
$
Revenue    
Note 4A: Rental income    
Property sub-lease rent received - 45,014
Total rental income - 45,014
Note 4B: Other revenue    
Other revenue 4,746 1,040
Total other revenue 4,746 1,040
Gains    
Note 4C: Other gains    
Employee entitlements re-statement - 22,428
Re-statement of Make Good provision - 20,252
Resources received free of charge 25,000 20,000
Total other gains 25,000 62,680
Revenue from Government    
Note 4D: Revenue from Government    
Appropriations:    
Departmental appropriations 2,686,000 2,134,000
Total revenue from Government 2,686,000 2,134,000

Note 5: Financial assets

  2012
$
2011
$
Note 5A: Cash and cash equivalents    
Cash on hand or on deposit 37,479 21,169
Total cash and cash equivalents 37,479 21,169
Note 5B: Trade and other receivables    
Goods and services:    
Goods and services - related entities - -
Total receivables for goods and services - -
Appropriations receivable:    
Section 31 appropriations receivable 97,125 103,469
For existing programs 2,817,332 2,282,470
Total appropriations receivable 2,914,457 2,385,939
Other receivables:    
GST receivable from the Australian Taxation Office 20,328 11,117
Other receivables 4,435 -
Total other receivables 24,763 11,117
Total trade and other receivables (gross) 2,939,220 2,397,056
Less impairment allowance account:    
Goods and services - -
Total impairment allowance account - -
Total trade and other receivables (net) 2,939,220 2,397,056
Receivables are expected to be recovered in:    
No more than 12 months 24,763 11,117
More than 12 months 2,914,457 2,385,939
Total trade and other receivables (net) 2,939,220 2,397,056
Receivables are aged as follows:    
Not overdue 24,763 11,117
Overdue by:    
0 to 30 days - -
31 to 60 days - -
61 to 90 days - -
more than 90 days 2,914,457 2,385,939
Total receivables (net) 2,939,220 2,397,056

Note 6: Non-financial assets

  2012
$
2011
$
Note 6A: Property, plant and equipment    
Property, plant and equipment    
Fair value 63,033 46,311
Accumulated depreciation (14,543) -
Total property, plant and equipment 48,490 46,311
Note 6B: Leasehold improvements    
Leasehold improvements    
Fair value 161,143 161,142
Accumulated amortisation (101,625) -
Total leasehold improvements 59,518 161,142

No indications of impairment were found for property, plant and equipment.

No property, plant and equipment were expected to be sold or disposed of in the next 12 months.

All property, plant and equipment are at valuation as at 30 June 2011 in accordance with the agency's revaluation policy (note 1.16).

Note 6C: Reconciliation of the opening and closing balances of property, plant and equipment 2012
  Plant and
equipment
$
Leasehold
improvements
$
Total$
As at 1 July 2011      
Gross book value 46,311 161,143 207,454
Accumulated depreciation/amortisation - - -
Net book value 1 July 2011 46,311 161,143 207,454
Additions by purchase 17,782 - 17,782
Revaluations - - -
Depreciation/amortisation expense (14,543) (101,625) (116,168)
Asset write-downs (1,061) - (1,061)
Disposals:      
other disposals - - -
Net book value 30 June 2012 48,489 59,518 108,007
Net book value as of 30 June 2012 represented by:      
Gross book value 63,032 161,143 224,175
Accumulated depreciation/amortisation (14,543) (101,625) (116,168)
Net book value 30 June 2012 48,489 59,518 108,007
As at 1 July 2010      
Gross book value 69,617 254,819 324,436
Accumulated depreciation/amortisation (13,205) (69,006) (82,211)
Net book value 1 July 2010 56,412 185,813 242,225
Additions by purchase 2,400 - 2,400
Revaluations 186 46,363 46,549
Depreciation/amortisation expense (12,687) (71,034) (83,721)
Net book value 30 June 2011 46,311 161,142 207,453
Net book value as of 30 June 2011 represented by:      
Gross book value 46,311 161,142 207,453
Accumulated depreciation/amortisation - - -
Net book value 30 June 2011 46,311 161,142 207,453
  2012
$
2011
$
Note 6D: Other non-financial assets    
Prepayments 26,876 25,754
Total other non-financial assets 26,876 25,754
All other non-financial assets are current assets.    
Total other financial assets are expected to be recovered in:    
No more than 12 months 26,876 25,754
Total other non-financial assets 26,876 25,754

No indicators of impairment were found for other non-financial assets.

Note 7: Payables

  2012
$
2011
$
Note 7A: Suppliers    
Trade creditors and accruals 39,297 73,108
Total supplier payables 39,297 73,108
Supplier payables expected to be settled within 12 months:    
Related entities 988 8,930
External parties 38,309 64,178
Total supplier payables 39,297 73,108
Settlement is usually made within 30 days.    
Note 7B: Other payables    
Salaries and wages 21,895 30,505
Superannuation 2,539 2,572
Lease incentive 13,203 35,837
Total other payables 37,637 68,914
Total other payables are expected to be settled in:    
No more than 12 months 37,637 53,825
More than 12 months - 15,089
Total other payables 37,637 68,914

Note 8: Provisions

  2012
$
2011
$
Note 8A: Employee provisions    
Leave 246,237 135,514
Total employee provisions 246,237 135,514
Employee provisions are expected to be settled in:    
No more than 12 months 69,973 71,245
More than 12 months 176,264 64,269
Total employee provisions 246,237 135,514
Note 8B: Other provisions    
Provision for restoration obligations 94,323 91,568
Total other provisions 94,323 91,568
Other provisions are expected to be settled in:    
No more than 12 months 94,323 91,568
Total other provisions 94,323 91,568
Provision for restoration obligations    
Carrying amount at 1 July 91,568 108,562
Re-statement of 'Make Good' - (20,251)
Unwinding of discount 2,754 3,257
Closing balance 30 June 94,322 91,568

The agency renewed the lease agreement for the premises in 2009. The lease has a provision requiring restoration of the premises to its original condition at the conclusion of the term. The agency has made a provision to reflect the present value of this obligation.

The agency has entered into a further lease at its current premises effective 2012/13 that will require a further provision for restoration of the premises at the end of the term.

Note 9: Cash flow reconciliation

  2012
$
2011
$
Reconciliation of cash and cash equivalents as per    
Balance Sheet to Cash Flow Statement    
Cash and cash equivalents as per:    
Cash Flow Statement 37,479 21,169
Balance Sheet 37,479 21,169
Difference - -
Reconciliation of net cost of services to net cash from    
operating activities:    
Net cost of services 2,312,238 1,959,329
Add revenue from Government 2,686,000 2,134,000
  373,762 174,671
Adjustments for non-cash items    
Depreciation and amortisation 116,168 83,721
Finance costs 2,754 3,257
Net write-down of non-financial assets 1,061 -
Changes in assets/liabilities    
(Increase)/decrease in receivables (504,164) (160,852)
(Increase)/decrease in prepayments (1,122) (22,955)
Increase/(decrease) in payables (33,814) 25,011
Increase/(decrease) in other payables (31,277) (45,670)
Increase/(decrease) in employee provision 110,721 (75,996)
Net cash from/(used by) operating activities 34,091 (18,813)

Note 10: Contingent liabilities and assets

There are no unquantifiable or significant remote contingencies.

Note 11: Senior executive remuneration

Note 11A: Senior executive remuneration expenses for the reporting period
  2012
$
2011
$
Short-term employee benefits:    
Salary 598,525 566,610
Annual leave accrued 45,694 43,933
Total short-term employee benefits 644,219 610,543
Post-employment benefits:    
Superannuation 52,300 49,925
Total post-employment benefits 52,300 49,925
Other long term benefits:    
Long-service leave 11,787 10,373
Total other long-term benefits 11,787 10,373
Termination benefits - -
Total employment benefits 708,306 670,841

Notes:

1. Note 11A was prepared on an accruals basis (therefore the performance bonus expenses disclosed above may differ from the cash 'Bonus paid' in Note 11B).

2. Note 11A excludes acting arrangements and part-year service where remuneration expensed for a senior executive was less than $150,000.

Note 11B: Average annual reportable remuneration paid to substantive senior executives during the reporting period
2012
Average annual reportable remuneration1 Senior
executives
No.
Reportable
salary2
$
Contributed
superannuation3
$
Reportable
allowances4
$
Bonus
paid5
$
Total
$
Total remuneration (including part-time arrangements):            
$270,000 to $299,999 1 240,978 35,548 - - 276,526
$360,000 to $389,999 1 254,580 15,762 92,546 - 362,888
Total 2          
2011
Average annual reportable remuneration1 Senior
executives
No.
Reportable
salary2
$
Contributed
superannuation3
$
Reportable
allowances4
$
Bonus
paid5
$
Total
$
  No. $ $ $ $ $
Total remuneration (including part-time arrangements):            
$240,000 to $269,999 1 231,600 34,740 - - 266,340
$330,000 to $359,999 1 247,160 15,185 75,941 - 338,286
Total 2          

Notes:

1. This table reports substantive senior executives who received remuneration during the reporting period. Each row is an averaged figure based on headcount for individuals in the band.

2. 'Reportable salary' includes the following: a) gross payments (less any bonuses paid, which are separated out and disclosed in the 'bonus paid' column); b) reportable fringe benefits (at the net amount prior to 'grossing up' to account for tax benefits); and c) exempt foreign employment income.

3. The 'contributed superannuation' amount is the average actual superannuation contributions paid to senior executives in that reportable remuneration band during the reporting period, including any salary sacrificed amounts, as per the individuals' payslips.

4. 'Reportable allowances' are the average actual allowances paid as per the 'total allowances' line on individuals' payment summaries.

5. 'Bonus paid' represents average actual bonuses paid during the reporting period in that reportable remuneration band. The 'bonus paid' within a particular band may vary between financial years due to various factors such as individuals commencing with or leaving the entity during the financial year.

6. Various salary sacrifice arrangements were available to senior executives including superannuation, motor vehicle and expense payment fringe benefits. Salary sacrifice benefits are reported in the 'reportable salary' column, excluding salary sacrificed superannuation, which is reported in the 'contributed superannuation' column.

Note 11C: Other highly paid staff
2012
Average annual reportable remuneration1 Senior
executives
No.
Reportable
salary2
$
Contributed
superannuation3
$
Reportable
allowances4
$
Bonus
paid5
$
Total
$
Total remuneration (including part-time arrangements):
$150,000 to $179,999
1 157,977 20,509 - - 178,486
Total 1          
2011
Average annual reportable remuneration1 Senior
executives
No.
Reportable
salary2
$
Contributed
superannuation3
$
Reportable
allowances4
$
Bonus
paid5
$
Total
$
Total remuneration (including part-time arrangements):
$150,000 to $179,999
1 150,664 20,120 - - 170,784
Total 1          

Notes:

1. This table reports substantive senior executives who received remuneration during the reporting period. Each row is an averaged figure based on headcount for individuals in the band.

2. 'Reportable salary' includes the following: a) gross payments (less any bonuses paid, which are separated out and disclosed in the 'bonus paid' column); b) reportable fringe benefits (at the net amount prior to 'grossing up' to account for tax benefits); and c) exempt foreign employment income.

3. The 'contributed superannuation' amount is the average actual superannuation contributions paid to senior executives in that reportable remuneration band during the reporting period, including any salary sacrificed amounts, as per the individuals' payslips.

4. 'Reportable allowances' are the average actual allowances paid as per the 'total allowances' line on individuals' payment summaries.

5. 'Bonus paid' represents average actual bonuses paid during the reporting period in that reportable remuneration band. The 'bonus paid' within a particular band may vary between financial years due to various factors such as individuals commencing with or leaving the entity during the financial year.

6. Various salary sacrifice arrangements were available to senior executives including superannuation, motor vehicle and expense payment fringe benefits. Salary sacrifice benefits are reported in the 'reportable salary' column, excluding salary sacrificed superannuation, which is reported in the 'contributed superannuation' column.

Note 12: Remuneration of auditors

  2012
$
2011
$
Financial statement audit services were provided free of charge
to the agency by the Australian National Audit Office (ANAO).
   
Fair value of the services provided    
Financial statement audit services 25,000 20,000
Total 25,000 20,000

No other services were provided by the auditors of the financial statements.

Note 13: Financial instruments

  2012
$
2011
$
Note 13A: Categories of financial instruments    
Financial assets    
Loans and receivables:    
Cash and cash equivalents 37,479 21,169
Trade and other receivables - -
Carrying amount of financial assets 37,479 21,169
Financial liabilities    
At amortised cost:    
Other liabilities    
Payables - suppliers 39,297 73,108
Carrying amount of financial liabilities 39,297 73,108
Note 13B: Net income and expense from financial assets    
Loans and receivables    
Interest revenue - -
Net gain/(loss) from loans and receivables - -
Net gain/(loss) from financial assets - -
There was no interest income from financial assets not at fair    
value through profit and loss in the year ending 2012 (2011: NIL).    
Note 13C: Net income and expense from financial liabilities    
Financial liabilities - at amortised cost    
Interest expense - -
Net gain/(loss) from financial liabilities - at amortised cost - -
Net gain/(loss) from financial liabilities - -

There was no interest expense from financial liabilities not at fair value through profit and loss in the year ending 2012 (2011: NIL).

Note 13D: Fair value of financial instruments
    2012 2011
  Notes Carrying
amount
$
Fair
value
$
Carrying
amount
$
Fair
value
$
Financial assets          
Cash and cash equivalents 5A 37,479 37,479 21,169 21,169
Receivables 5B - - - -
Total financial assets   37,479 37,479 21,169 21,169
Financial liabilities          
Supplier payables 7A 39,297 39,297 73,108 73,108
Total financial liabilities   39,297 39,297 73,108 73,108

The carrying amounts of the agency's financial instruments is a reasonable approximation of fair value.

Fair value measurements categorised by fair value hierarchy

The following table provides an analysis of financial instruments that are measured at fair value, by valuation method. The different levels are defined below:

Level 1: Fair value obtained from unadjusted quoted prices for identical instruments.

Level 2: Fair value derived from inputs other than quoted prices included within Level 1 that are observable for the instrument, either directly or indirectly.

Level 3: Fair value derived from inputs that are not based on observable market data.

Fair value hierarchy for financial assets
  Level 3 Total
  2012 2011 2012 2011
Financial assets at fair value        
  - - - -
Total - - - -
There was no transfer between levels.        
Fair value hierarchy for financial liabilities
  Level 3 Total
  2012 2011 2012 2011
Financial liabilities at fair value        
  - - - -
Total - - - -
There was no transfer between levels.        
Reconciliation of Level 3 fair value hierarchy for financial assets
  Financial assets at fair value Total
  2012
$
2011
$
2012
$
2011
$
Opening balance        
Purchases - - - -
Closing balance - - - -
1. No gains or losses for the period have been recognised resulting from the Level 3 financial assets.
Reconciliation of Level 3 fair value hierarchy for financial liabilities
  Financial liabilities at fair value Total
  2012
$
201
1$
2012
$
2011
$
Opening balance        
Purchases - - - -
Closing balance - - - -
1. No gains or losses for the period have been recognised resulting from the Level 3 financial liabilities.
Note 13E: Credit risk
The agency is exposed to minimal credit risk as receivables are cash and trade receivables.
The maximum exposure to credit risk is the risk that arises from the potential default of a debtor.
This amount is equal to the total amount of the trade receivables (2012: $0, and 2011: $0).
The agency has assessed the risk of the default on payment and has made no allocations to doubtful debts in 2012 (2011: NIL)
.
The following table illustrates the entity's gross exposure to credit risk, excluding any collateral or credit enhancements
    2012
$
2011
$
Financial assets      
Cash and cash equivalents 5A 37,479 21,169
Receivables 5B - -
Total financial assets   37,479 21,169
Financial liabilities      
Supplier payables 7A 39,297 73,108
Total financial liabilities   39,297 73,108

The agency holds no collateral to mitigate against the credit risk.

Credit quality of financial instruments not past due or individually determined as impaired
  Not past due
nor
impaired
2012
$
Not pas due
nor
impaired
2011
$
Past due
or
impaired
2012
$
Past due
or
impaired
2011
$
Loans and receivables        
Cash and cash equivalents 37,479 21,169 - -
Trade receivables - - - -
Total 37,479 21,169 - -
Ageing of financial assets that were past due but not impaired for 2012
  0 to
30 days
$
31 to
60 days
$
61 to
90 days
$
90+
days
$
Total
$
Loans and receivables          
Trade receivables - - - - -
Total - - - - -
Ageing of financial assets that were past due but not impaired for 2011
  0 to
30 days
$
31 to
60 days
$
61 to
90 days
$
90+
days
$
Total
$
Loans and receivables          
Trade receivables - - - - -
Total - - - - -
Note 13F: Liquidity risk
The agency's financial liabilities are payables. The exposure to liquidity risk is based on the notion that the agency will encounter difficulty in meeting its obligations associated with financial liabilities. This is highly unlikely due to the appropriation funding and mechanisms available to the agency and interim policies and procedures put in place to ensure that there are appropriate resources to meet its financial obligations.
Maturities for non-derivative financial liabilities 2012
  On
demand
$
Within
1 year
$
1 to 2
years
$
2 to 5
years
$
> 5
years
$
Total
$
Other liabilities            
Payables - suppliers - 39,297 - - - 39,297
Total - 39,297 - - - 39,297
Maturities for non-derivative financial liabilities 2011
  On
demand
$
Within
1 year
$
1 to 2
years
$
2 to 5
years
$
> 5
years
$
Total
$
Other liabilities            
Payables - suppliers - 73,108 - - - 73,108
Total - 73,108 - - - 73,108

The agency is appropriated funding from the Australian Government. The agency manages its budgeted funds to ensure that it has adequate funds to meet payments as they fall due. In addition, the agency has policies in place to ensure timely payments are made when due and has no past experience of default.

Note 13G: Market risk

IGT holds basic financial instruments that do not expose the agency to certain market risks. The agency is not exposed to currency risk, other price risk, or interest rate risk.

Note 14: Financial assets reconciliation

    2012
$
2011
$
Financial assets Notes    
Total financial assets as per balance sheet   2,976,699 2,418,225
Less: non-financial instruments components      
Appropriations receivable 5B 2,914,457 2,385,939
Other receivables 5B 24,763 11,117
Total non-financial instruments components   2,939,220 2,397,056
Total financial assets as per financial instruments note   37,478 21,169

Note 15: Appropriations

Table A: Annual appropriations (recoverable GST exclusive)
2012 Appropriations
  Appropriation Act FMA Act Appropriation
applied in 2012
(current and prior
years)
$
Total
appropriation
$
Variance
$
  Annual appropriation
$
Appropriations reduced1
$
Section 30
$
Section 31
$
DEPARTMENTAL              
Ordinary annual services 2,724,000 - 91,281 311 2,815,592 2,231,910 583,682
Total departmental 2,724,000 - 91,281 311 2,815,592 2,231,910 583,682
2011 Appropriations
  Appropriation Act FMA Act Appropriation
applied in 2011
(current and prior
years)
$
Total
appropriation
$
Variance
$
  Annual appropriation
$
Appropriations reduced1
$
Section 30
$
Section 31
$
DEPARTMENTAL              
Ordinary annual services 2,172,000 - 85,157 50,513 2,307,670 2,119,738 187,932
Total departmental 2,172,000 - 85,157 50,513 2,307,670 2,119,738 187,932

Notes:

1. Appropriations reduced under Appropriation Acts (No. 1 & 3) 2010-11: sections 10, 11, 12 and 15 and under Appropriation Acts (No. 2 & 4) 2010-11: sections 12, 13, 14 and 17. Departmental appropriations do not lapse at financial year-end. However, the responsible Minister may decide that part or all of a departmental appropriation is not required and request the Finance Minister to reduce that appropriation. The reduction in the appropriation is effected by the Finance Minister's determination and is disallowable by Parliament. In 2011, there was no reduction in departmental and non-operating departmental appropriations.

Table B: Departmental Capital Budgets (recoverable GST exclusive)
  2012 Capital Budget Appropriations Capital Budget Appropriations applied in 2012 (current and prior years)
  Appropriation Act FMA Act Total Capital
Budget
Appropriations
$
Payments for
non-financial
assets3
$
Payments
for other
purposes
$
Total
payments
$
Variance
$
  Annual Capital
Budget
$
Appropriations
reduced2
$
Section 32
$
DEPARTMENTAL                
Ordinary annual services -                
Departmental Capital Budget1 38,000 - - 38,000 17,782 - 17,782 20,218
  2011 Capital Budget Appropriations Capital Budget Appropriations applied in 2011 (current and prior years)
  Appropriation Act FMA Act Total Capital
Budget
Appropriations
$
Payments for
non-financial
assets3
$
Payments
for other
purposes
$
Total
payments
$
Variance
$
  Annual Capital
Budget
$
Appropriations
reduced2
$
Section 32
$
DEPARTMENTAL                
Ordinary annual services -                
Departmental Capital Budget1 38,000 - - 38,000 2,400 - 2,400 35,600

Notes:

1. Departmental Capital Budgets are appropriated through Appropriations Acts (No. 1, 3 & 5). They form part of ordinary annual services, and are not separately identified in the Appropriation Acts. For more information on ordinary annual services appropriations, please see Table A: Annual appropriations.

2. Appropriations reduced under Appropriations Acts (No. 1, 3 & 5) 2011-12; sections 10, 11, 12 and 15 via a determination by the Finance Minister.

Table C: Unspent departmental annual appropriations (recoverable GST exclusive)
Authority 2012
$
2011
$
Appropriation Act (No. 1) 2004-05 - 60,000
Appropriation Act (No. 1) 2005-06 729,000 1,149,000
Appropriation Act (No. 1) 2006-07 360,776 360,776
Appropriation Act (No. 1) 2007-08 285,335 285,335
Appropriation Act (No. 1) 2008-09 243,249 243,249
Appropriation Act (No. 1) 2009-10 - 93,264
Appropriation Act (No. 1) 2010-11 194,315 194,315
Appropriation Act (No. 1) 2011-12 1,101,782 -
Total 2,914,457 2,385,939

Note 16: Compensation and Debt Relief

  2012
$
2011
$
Compensation and Debt Relief - Departmental    
No 'Act of Grace' payments were expensed were incurred duringthe reporting period. - -
No waivers of amounts owing to the Australian Government weremade pursuant to subsection 34(1) of the Financial Management and Accountability Act 1997. - -
No ex-gratia payments were provided for during the reportingperiod. - -
No payments were provided under the Compensation for Detriment caused by Defective Administration (CDDA) Scheme during thereporting period. - -
No payments were provided in special circumstances relating toAPS employment pursuant to section 73 of the Public Service Act1999 (PS Act) during the reporting period. - -

Note 17: Reporting of outcomes

The Inspector-General of Taxation has one outcome:

'Improved tax administration through community consultation, review, and independent advice to Government'.

Note 17A: Net cost of outcome delivery
  2012
$
2011
$
Expenses    
Departmental 2,341,984 2,068,063
Total 2,341,984 2,068,063
Other own-source income    
Rents - 45,014
Other revenue 4,746 1,040
Gains 25,000 62,680
Total 29,746 108,734
Net cost of outcome delivery 2,312,238 1,959,329
Note 17B: Major classes of departmental revenues and expenses by outcome
Outcome 1 Total
  2012
$
2011
$
Expenses    
Employees 1,402,220 1,165,754
Suppliers 819,781 815,331
Finance costs 2,754 3,257
Depreciation and amortisation 116,168 83,721
Write down of assets 1,061 -
Total 2,341,984 2,068,063
Income    
Income from Government 2,686,000 2,134,000
Rents - 45,014
Other revenue 4,746 1,040
Gains 25,000 62,680
Total 2,715,746 2,242,734
Assets    
Financial assets:    
Cash and cash equivalents 37,479 21,169
Receivables 2,939,221 2,397,056
Non-financial assets:    
Property, plant and equipment 108,008 207,453
Other non-financial assets 26,877 25,754
Total 3,111,585 2,651,432
Liabilities    
Payables 76,934 106,185
Provisions 340,560 262,920
Total 417,494 369,105

Outcome 1 is described in Note 1.1. Net costs shown include intra-government costs that are eliminated in calculating the actual Budget outcome.

Note 18: Net cash appropriation arrangements

  2012
$
2011
$
Total comprehensive income less depreciation/amortisation expenses previously funded through revenue appropriations1 489,930 304,941
Plus: depreciation/amortisation expenses previously funded through revenue appropriations (116,168) (83,721)
Total comprehensive income - as per the Statement of Comprehensive Income 373,762 221,220

1. From 2010-11, the Government introduced net cash appropriation arrangements, where revenue appropriations for depreciation/amortisation expenses ceased. Entities now receive a separate capital budget provided through equity appropriations. Capital budgets are to be appropriated in the period when cash payment for capital expenditure is required.