Part 03 Management and accountability

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Part 03

Management and

accountability

Discusses our external scrutiny and governance arrangements as well as workforce, financial and property management.

74

External scrutiny and governance

81

Workforce management

88

Financial management

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We are accountable to our ministers and government and subject to external

scrutiny. Our governance framework provides the structure for planning,

reporting and decision making.

Highlights

n Healthy relationships with key scrutineers n Complaints decreased by 30.5% compared

to 2011–12

n Ethical Behaviour Matters training completed by 24,345 employees n Reduced 2013–14 Comcover premium

by 8.8%

n Won ‘Business Continuity Team of the Year’ award at the Business Continuity Institute Australasian Awards

Looking ahead

n Include third‑party views, effectiveness and efficiency as standard measures in the performance card of the ATO

n Develop a clear statement of our vision for 2020, detailing our strategic intent, mission and strategies

n Respond to the Australian Public Service Commission’s capability review and implement our action plan

n Make organisational and structural changes to refresh leadership and move functions for productivity gains

n Broaden our fraud detection program, to address new and emerging fraud risks and vulnerabilities

Translating the strategic direction

Continually improving

Assurance

Mission statement

Contemporary

Intelligence led

Performance

Explore opportunities

Streamlined Culture

Clear and concise information

Australian Public Service ICARE values

Integrated planning and reporting Freedom of information

Scrutinised by a range of external stakeholders

Parliament

Organisational restructure

Vision 2020

Capability

Risk management

Governance

Ethics and values

Open, accountable and integrity based organisation

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Management and accountability

Parliamentary committees

Each year, the Commissioner of Taxation appears before the Joint Committee of Public Accounts and Audit to answer questions about our administration of the tax and superannuation systems.

The Committee released Report 434 in November 2012 containing seven recommendations across a range of topics. We have implemented all recommendations except one where implementation is ongoing.

We appeared with Treasury before three Senate Estimate hearings. from these hearings we received and responded to 502 questions on notice. We also appeared before 14 other parliamentary committees, including the:

n Senate Economics Legislation Committee inquiry into the Tax Laws Amendment (Countering Tax Avoidance and multinational Profit Shifting) Bill 2013

n Senate Economics References Committee inquiry into the development and operation of the minerals Resource Rent Tax

n Parliamentary Joint Committee on Corporations and financial Services inquiry into family Business in Australia.

Scrutineers

The Australian National Audit Office conducts performance audits of the efficiency and effectiveness of our operations and financial audits of our financial statements. In 2012–13, five reports involving us were released; we agreed with all seven recommendations and implementation of these recommendations is underway.

The Commonwealth Ombudsman (who is also the Taxation Ombudsman) investigates taxpayer complaints about our actions, and identifies and conducts own motion investigations on matters of administration. In 2012–13, 122 investigations were referred to us for follow up and further action. The Inspector‑General of Taxation reviews potentially systemic issues. There were three reports released in 2012–13. Out of the 66 recommendations directed to us, we agreed in whole, in part or in principle with 46, and 18 recommendations were a matter for government.

The Office of the Australian Information Commissioner includes the freedom of Information Commissioner and the Privacy Commissioner who review our compliance with information transparency, freedom of information (fOI) and privacy. This year, there were three findings by the Privacy Commissioner (relating to previous years’ privacy investigations) and one new privacy investigation opened, and the Office of the Australian Information Commissioner informed us of seven fOI complaint investigations and 19 fOI merit reviews.

The Productivity Commission conducts independent research projects and acts in an advisory role for the government on a range of issues. The findings from the recent review of Regulator Engagement with Small Business highlighted our effective small business engagement practices.

All finalised audits and reviews are summarised in Appendix 5.

Community perceptions

Complaints, compliments, research, media and external scrutiny provide insights into how we are perceived and highlight areas for improvement.

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We saw a decrease of 30.5% in the number of formal complaints received during 2012–13, when compared to 2011–12. We are also resolving complaints in a more timely manner, as evidenced by our service standards. The main types of complaints we resolved during 2012–13 were:

n timeliness of processing ABN applications, TfN applications and income tax returns n failed escalation of issues

n people disagreeing with our decisions.

Using feedback from the Commonwealth Ombudsman, we are looking to improve our communication with taxpayers.

Each year, as part of our ongoing research program, we conduct surveys to better understand community perceptions and to gauge satisfaction with aspects of our service.

This year we completed the final round of our current survey program which included professionalism, micro businesses perception, community perception, small and medium enterprises perception and tax practitioner surveys.

The results from these surveys were consistently high, as in previous years, with only slight variations in results compared to last year. The tax practitioner results were noticeably lower than those from the other markets; however their results showed some of the biggest improvement compared to previous years. The surveys in the current program will be combined to allow for greater comparisons, with a pilot of our single corporate perceptions survey expected to be conducted in early 2014.

In 2013, 82% of respondents to our community perceptions survey agreed that ‘overall the ATO is doing a good job’. This high level of endorsement has remained relatively stable over the last five years. Figure 3.1 ‘Overall the ATO is doing a good job’, 2009–13

0 20 40 60 80 100 2013 2012 2011 2010 2009 % Ag reement

Governance

Our governance framework provides the structure for efficient and effective program management, risk management, informed decision making and accountability.

Key management committees

Our senior management committees are key elements of our governance and assurance. They include the ATO Executive Committee, Audit Committee and the People Committee (largely comprised of external private and public sector experts).

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In 2013, we initiated a review of our consultative arrangements to establish a more targeted framework to ensure our forums now focus at the highest level of stewardship of the tax and superannuation systems. The new arrangements commenced on 1 July 2013.

Figure 3.2 Key management committees and forums, at 30 June 2013

Commissioner SECOND COMMISSIONErS

AuDIT COMMITTEE ATO ExECuTIvE COMMITTEE PEOPLE COMMITTEE Sub-PLAN COMMITTEES KEy COrPOrATE COMMITTEES ExTErNAL COMMITTEES, _{fOruMS AND PANELS}

Compliance Executive

Business Continuity Management

Steering Committee Peak Consultative Forums

(External stakeholder forums) Communication & Research Committee

Corporate Services and Law Executive

Corporate Design Forum _{Tax technical panels}

(including private sector experts) Law Interpretation Strategy Committee

Enterprise Solutions and Technology Executive

National Consultative Forum Tax Policy Coordination Committee (with Treasury) Plenary Governance Forum

Operations Executive Whole‑of‑government

committees Policy Implementation Forum

Resource Forum Security Committee Service Improvement Steering Committee

The ATO Executive Committee assists the Commissioner in setting the strategic direction and responsibilities to:

n administer Australia’s tax system and aspects of its superannuation system n deliver on our commitments to government

n manage the ATO as an agency head consistent with the requirements of the Public Service Act 1999, the Financial Management and Accountability Act 1997 and the Financial Management and

Accountability Regulations 1997.

members of the committee at 30 June 2013 were:

n Commissioner – Chris Jordan

n Second Commissioners – Bruce Quigley, Geoff Leeper and Neil Olesen

n Chief Finance Officer – Frances Cawthra n first Assistant Commissioner ATO People

– Shane Reardon

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The Audit Committee, chaired by Second Commissioner Corporate Services and Law, provides assurance and assistance on our risk management, control and compliance frameworks, external accountability and requirements, legislative compliance, and internal and external audit. To ensure our Audit Committee is free to act in an objective, impartial manner and free from any conflict of interest, a minimum of three independent private sector members are appointed.

During 2012–13, independent members were:

n mark Sullivan AO – managing Director, ACTEW Corporation

n Jennifer Clark – member and chair of various Australian Government audit committees

n margaret Gibson (until may 2013) – professional director and former partner and board member of PricewaterhouseCoopers

n John Brown (from may 2013) – member and chair of various Australian Government and state government audit committees.

The People Committee, chaired by the Commissioner, provides guidance on our people system. The committee convened quarterly and met with key senior attendees from other Commonwealth or territory agencies and expert consultants, as well as ATO employees. This year, discussions focused on integrity frameworks, productivity, engagement and trust, leadership types and cultural models, values‑based leadership, complaints and feedback.

Planning and reporting

Our planning and reporting uses a risk‑based approach, and harnesses intelligence to identify opportunities or threats to our administration.

Our annual plan sets our direction and strategies for the year, as well as accountability and performance measures. Using this plan as our foundation, our operational plans cascade through the ATO to translate the strategic direction and allow employees to see how their efforts contribute. following the release of our annual plan in 2012, senior leaders engaged with employees on our strategic direction through a series of corporate conversations.

Our Annual plan 2013–14, released in June, includes a Commissioners’ statement. We are also working towards a statement of strategic intent with a vision for 2020, a mission and enterprise strategies to achieve the intent.

During the year, we reviewed and revised our program key performance indicators to have a greater focus on measuring our effectiveness. These indicators are intended to provide a balanced view across the four pillars of compliance, as well as public opinion indicators. They are included in our Annual plan 2013–14 and Portfolio Budget Statements, and will be reported over the next 12 months.

Throughout the year, our performance against the plan is monitored and reported through our senior management committees. Performance is also scrutinised by a range of external stakeholders.

Risk management

Our Enterprise Risk Management Framework provides a holistic view of our risks, threats and vulnerabilities across our administrative and operational areas. Our Audit Committee reviews the work program and risk information biannually.

Through a set of risk categories, the framework provides an end‑to‑end view of our risk and encourages different areas to work together to manage and treat risks.

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We participate in Comcover’s annual Risk management Benchmarking Survey which benchmarks our framework and capabilities against other participating agencies. We achieved improvements in eight out of the 10 elements that comprise the survey, resulting in an 8.8% reduction in our 2013–14 Comcover premiums.

Our approach to risk management has again been recognised by Comcover with an award for our business continuity approach and a commendation for our Tax Practitioner Risk Differentiation framework.

Progress in risk management will be assessed against an action plan and further improvements in the Comcover Risk management Benchmarking Survey.

Our award winning Business Continuity Management capability ensures our

essential services are maintained during a crisis, allowing us to better support

the community.

Internal audit

Under the oversight of the Audit Committee, our internal audit function provides independent and objective assurance to evaluate and improve the effectiveness of risk management, control and governance processes.

Our internal audit function is aligned to the Institute of Internal Auditors’ International Professional Practices Framework as confirmed by an independent quality assurance review, which is performed on the function at least once every five years.

This year, 46 internal audit reports were tabled. These reports contained 77 recommendations to improve our governance, risk management and controls. This is a decrease of 33 recommendations from the previous year. In addition the function reviewed the evidence to support the closure of 161 external scrutineer and internal audit recommendations during the year, including those carried over from previous years.

Integrity

Our integrity framework outlines our commitment to being an open, accountable and integrity‑based organisation. We also have an independent Integrity Adviser (Damian Bugg Am QC) who reviews our performance in relation to integrity and provides advice on how we can improve.

Fraud prevention and internal investigations

To meet our obligations under the Commonwealth Fraud Control Guidelines 2011 and the Financial Management and Accountability Act 1997, we completed a cycle of fraud risk assessments which underpin our fraud and corruption control plan. Our fraud and corruption control plan methodology is consistent with Australian standards and integrates fraud risks within our Enterprise Risk Management framework. The plan is available to all employees on our intranet.

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We investigate allegations of fraud, serious misconduct and other criminal activity involving our employees. We started the year with 33 open investigations and investigated a further 187 new allegations. Of these new allegations:

n 8% were substantiated after investigation n 61% were unsubstantiated (as at 30 June 2013)

n 6% were considered indeterminable or actioned in other ways.

At the end of the year, 46 cases remained open. In addition, five of our cases resulted in court convictions. Of the 187 allegations received during the year, 57% related to unauthorised access to taxpayer records. We also developed a new fraud awareness training program for all employees, with 96% of employees having completed the program at 30 June 2013.

We participated in the development of the National Anti‑Corruption Plan, examining evolving corruption threats to Australia’s national interest and ways that all levels of government can reduce corruption risks.

Security

Introduced in 2010, the Protective Security Policy framework provides controls for the Australian Government to protect its people, information and assets, at home and overseas. We have now implemented the majority of our obligations under this framework, including a new information security classification system. Work is continuing on the remaining requirements, which mostly relate to information security and risk‑management processes.

We strengthened our security infrastructure, particularly our electronic security and access control systems. We also addressed issues relating to employee safety during revenue collection activities in areas where criminal activity may be prevalent. Our challenge continues to be maintaining a balance of collecting revenue without endangering our people.

Freedom of information

We are required to publish information to the public as part of the Freedom of Information Act 1982

(fOI Act) Information Publication Scheme (IPS).This requirement is in Part II of the fOI Act and has replaced the former requirement to publish a section 8 statement in an annual report. Each agency must display a plan on its website showing what information it publishes in accordance with the IPS requirements. Our agency IPS plan can be found on our website, in accordance with the IPS requirements.

During 2012–13, we received 877 requests for documents to be processed under Part III of the fOI Act.

Ethics and values

Information on ethics and values is available to our employees on our intranet and we promote a continued high level of fraud awareness and ethical behaviour.

Our ethics and values are embedded in development programs and are included in mandatory training for all employees. We have provided fraud and integrity awareness programs since 1998. Employees are required to complete our current program, Ethical Behaviour matters, every two years. In 2012–13, 24,345 employees completed this training.

Work is underway to transition to the Australian Public Service ICARE values to be impartial, committed to service, accountable, respectful and ethical. Communication of the new values will start from July 2013.

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Workforce management

Our workforce is managed nationally and follows corporate and site

leadership‑driven strategies. This assists us to attract, engage and

retain a workforce that is skilled, diverse and professional.

Highlights

n Implemented our People strategy 2012–15 which sets the vision and priorities for our people system

n Streamlined the process from recruitment, through security vetting, to appointment n Installed WorkPace software on all ATO

computers to assist our employees to better manage their computer usage and minimise the likelihood of musculoskeletal injuries n Received award for Best Graduate

Development Program (large organisation) 2012 from the Australian Association of Graduate Employers

Looking ahead

n Develop the skills and knowledge profile of ATO employees – to better match industry standards and professional private practice n Deliver an ATO leadership and management

program

n Build on employee engagement by implementing strategies to take advantage of opportunities identified from the Australian Public Service census n Develop and consult on a new enterprise

agreement and improve our collaborative partnership with employee representatives

Workforce

At 30 June 2013, we employed 25,093 ongoing, non‑ongoing and casual employees under the Public Service Act 1999. A series of tables in appendix 8 shows the size, location and make‑up of our workforce.

44%

male

56%

female

88%

full‑time

69%

full time

3%

part‑time

16%

part time

9%

irregular/ intermittent

15%

irregular/ intermittent

new employees recruited

2,777

Total workforce

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Engaging our workforce

During the year, we implemented our People strategy 2012–15 which sets the vision and priorities for our people system. Our people system ensures we have the right people, right capabilities, right leadership and right culture in place to meet our obligations to the community and government. Since the 2011 Employee Engagement survey, we have seen an improvement in employee engagement. Change management and leadership perceptions were two areas identified for improvement. We worked on increasing engagement between employees and senior leaders by providing more opportunities for discussion and interaction.

More than 850 engagement‑improvement initiatives were identified and implemented in 2012–13, including: n a nationwide learning and development expo to address career development focus areas

n a job enrichment guide to support employees in their career development and to help managers support and develop their employees

n site‑focused initiatives to enhance work relationships and strengthen connections across business areas. Workforce absence rates remain a focus area. Analysis has confirmed the close connection between low levels of employee engagement and unplanned leave. This year, we developed attendance management guidelines and worked with areas with the highest workplace absence rates. We began using analytics to help understand attendance patterns, guide individuals and managers on early intervention, and provide opportunities for support, taking into account individual circumstances. We are starting to see some impact with an initial reduction in unplanned leave from 15.5 days per fTE in 2011–12 to 15.3 days per fTE in 2012–13 (equivalent to 9,041 fTE days).

Learning and development initiatives

The capability of our workforce has improved through a range of activities:

n formal learning, with over 19,000 people completing around 116,300 courses (excluding mandatory training)

n new mandatory training courses were completed, including Work Health and Safety – Workers which was completed by 94.0% of employees

n our advancement and education programs, including the Graduate Development Program, which had almost 240 participants enrolled in 2013 who are due to complete the program in January 2014 n a pilot to evaluate the ability of our learning and development model to effectively identify and resolve

capability gaps

n a review of our Site Leadership Program, which highlighted the role leaders could take in providing development opportunities to managers and other positive contributions to social, business and community outcomes

n providing training for employees in human resource roles to enhance our effectiveness in this area.

Training undertaken in 2012–13

72%

24%

Over 82,000 Online training Over 28,000 Internal classroom training Over 4,000

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Workplace diversity

Workplace diversity provides a work environment that is engaging and inclusive, recognising and valuing individual and cultural differences. A diverse workforce provides a broader range of skills and experiences which can lead to better outcomes for the community.

Social inclusion outcomes

We supported the social inclusion agenda through our suite of diversity employment programs. These programs provided work experience to disadvantaged youth, skilled migrants, young mothers and youth.

We refreshed our programs to provide entry‑level employment opportunities to people who are seeking work in a corporate environment for the first time and have limited education or work experience. We reflect the diversity of the community through recruitment strategies that focused on the Indigenous community, including the intake of 32 recruits through the Evergreen Indigenous Program. As a result, representation of Aboriginal and Torres Strait Islanders increased from 0.6% to 0.8% this year.

Disability

Our representation of employees with disability has remained constant at approximately 2.0% of our workforce. This trend is broadly in line with the trend occurring across the Australian Public Service. We centralised management and funding arrangements for providing reasonable adjustment for people with disability. This has seen an increased demand for reasonable adjustment for employees with disability this year as managers are not required to make decisions about reasonable adjustments or to fund these adjustments.

Processes within our recruitment system ensure that successful job applicants are provided with reasonable adjustment when they commence with us. We entered into an agreement with the National Disability Recruitment Coordinator to promote our employment opportunities to Disability Employment Service providers. In June 2012, we completed a pilot of ‘site‑based disability advisors’ in our Parramatta and Box Hill sites. We continued to provide a forum for feedback from employees with disability through our National Disability Network.

Health and safety

Work health and safety is a priority and 94.0% employees have completed training and understand their responsibilities under the Work Health and Safety Act 2011. During 2012–13, we were also involved in a number of initiatives and two major Comcare reviews.

Like other government agencies, we were early implementers of recommendations from the Rehabilitation management System Review, and we also contributed significantly to the Comcare Scheme Operational Review. Both reviews will have a significant impact on how the health of our employees is managed.

In consultation with employees and using data to identify workplace health risks, we updated our wellbeing program to reflect the top four organisational and top five personal health risks to our employees. We installed WorkPace software on all ATO computers to assist our employees to better manage their computer use by encouraging regular breaks. By installing WorkPace we are aiming to minimise the likelihood of musculoskeletal injuries.

We used alternative dispute resolution techniques (such as mediation) to resolve 71.0% of workplace conflicts in an effective and efficient way, and to build the skills of managers and employees to engage

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The Safety, Rehabilitation and Compensation Commission encourages continuous improvement in achieving lower rates of injury, better return to work outcomes and effective management of claims. Early intensive case management activities have been applied to psychological injuries since 2010 to minimise incapacity and achieve early and safe returns to work. Similar case‑management techniques are applied to musculoskeletal disorders, which have been identified as one of the drivers of the rise in the Comcare premium rate. We are working with Comcare to identify the areas we need to focus on, for example, containing the cost of 2011 injuries and addressing the expected rise in the cost of injuries arising out of ‘slips, trips and falls’.

Table 3.1 Safety, Rehabilitation and Compensation Commission performance indicators,

2008–09 to 2012–13

2008–09 2009–10 2010–11 2011–12 2012–13

P1.1 Incidence of injuries with five or more days lost time

per 1,000 fTE employees 8.0 10.2 8.7 7.4 9.2

P1.2 Incidence of injuries with 30 or more days lost time

P1.3 Incidence of injuries with 60 or more days lost time

P4 Lost time injury (claims) frequency rate 5.1 6.3 5.9 5.2 5.7

C1 Average time taken (in calendar days from date of

injury to lodging claim with Comcare) 81 80 82 83 86

R1 Percentage of claims with incapacity for 10 or more

days and a return to work plan (%) 68 58 64 71 75

R2 Quality of return to work (% achieving return to work

on case closure) (%) 79 81 73 66 75

NOTE

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.

The notifiable incidents reported to Comcare reduced by 68.0% from 2012. Under the new Work Health and Safety Act 2011 that came into effect on 1 January 2012, dangerous occurrences are now called dangerous incidents and serious personal injury is now called serious injury or illness. These notifiable categories are now specifically defined by the legislation to only include incidents which occur under particular statutory circumstances.

Table 3.2 Notifiable incidents, 2008–09 to 2012–13

2008–09 2009–10 2010–11 2011–12 2012–13

Dangerous occurrences 29 95 51 48 30

Serious personal injury (a) ₉₈ ₆₇ ₆₅ ₇₇ ₁₃

Death – 1 3 6 4

Injury resulting in incapacity of more than 30 days 8 7 14 16 –

TOTAL 138 170 133 147 47

(a) The drop in serious personal injury rates is explained by the narrower and more specific definition of ‘serious personal injury’ under the Work Health and Safety Act 2011, which commenced on 1 January 2012.

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Enterprise agreement 2011

The ATO enterprise agreement 2011 continues to be the key source of terms and conditions of employment for APS1–EL2 employees. It has enabled us to remain a quality and attractive employer and a quality service provider responsive to the needs of government and the Australian community. It provides competitive pay rates and conditions, while also providing flexibility to respond to changing workforce needs.

The enterprise agreement was fully implemented during the year and employees were provided with information to help them understand their rights and obligations.

The inclusion of productivity improvement measures in the enterprise agreement brought an organisational focus to areas such as reducing recruitment timeframes, lowering the number of executive level employees and improving the timeliness of case cycle times.

Productivity gains

The ATO enterprise agreement 2011 provides for pay rises and productivity bonus payments offset by quantifiable productivity improvements.

Corporate pay rises were delivered on schedule after meeting our corporate outcome measures in June 2012 and January 2013, with standards relating to collections, service, professionalism, technical quality, people, and information security maintained. We also met productivity improvement measures in relation to workforce profile and recruitment, learning and development, workforce participation and case cycle times.

Workplace agreements

All senior executive service (SES) staff moved to refreshed and consistent individual section 24 determinations under the Public Service Act 1999 for their terms and conditions of employment. All remaining Australian workplace agreements were terminated.

At 30 June 2013, we had a total of five non‑SES individual flexibility arrangements in place, varying the effect of one or more terms of the enterprise agreement for a specified time.

Table 3.3 Individual arrangements, 2011–12 to 2012–13

2011–12 2012–13 Individual workplace arrangements No. Australian workplace agreements No. Individual workplace arrangements No. Australian workplace agreements No.

Senior executive service (SES) 117 144 255 –

EL2 and general employees 1 – 5 –

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Remuneration

Our remuneration policy operates in accordance with government parameters that apply across the Australian Public Service.

Non‑senior executive remuneration

Remuneration arrangements, including base rates of pay, are set for the majority of non‑SES employees within the enterprise agreement, with provision for salary advancement for general employees subject to performance being assessed as satisfactory.

Table 3.4 ATO salary ranges by classification, at 30 June 2013

Lower

$ Upper $

Cadets while undertaking study 15,266 24,868

Cadets while undertaking practical training in the workplace 26,981 49,697

Graduate administrative assistant 57,965 59,470

APS1 26,981 49,697 APS2 50,892 56,435 APS3 57,965 62,560 APS4 64,605 70,144 APS5 72,056 76,407 APS6 77,824 89,400 EL1 99,769 108,796 EL2 120,128 143,149

Information technology officer grade 1 62,560 72,056

Public affairs officer grade 1 66,657 76,407

Valuer in training (while undertaking study) 15,266 24,868

Valuer in training (while undertaking practical training in the workplace) 26,981 68,392

Valuer 72,056 89,400

Senior executive remuneration

The Remuneration Tribunal sets remuneration and conditions for the Commissioner, while the Commissioner determines the remuneration for Second Commissioners within a framework set by the Tribunal.

The Commissioner determines conditions for our SES based on advice from our remuneration committee. Remuneration for these senior executives is aligned with the annual remuneration survey conducted by the Australian Public Service Commission.

In 2012–13, remuneration and terms and conditions for our SES were reviewed and consolidated. One outcome was that performance pay was rolled into base salaries at the rates below, effective from 5 July 2012:

n 6.3% for SES Band 1 n 8.25% for SES Band 2.

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Total remuneration for our SES includes a notional component for the provision of a motor vehicle and parking, and for superannuation calculated at 15.4% of 101% of base salary. In 2012–13 the salary ranges, including the rolled‑in performance pay, were:

n SES Band 1: $157,045 to $185,650 (notional total remuneration $210,661 to $243,715) n SES Band 2: $204,351 to $234,675 (notional total remuneration $266,512 to $301,553).

› For more information on remuneration, see note 13 to our financial statements.

Non‑salary benefits

We provide the following non‑salary benefits to our employees:

n SES: a privately‑plated motor vehicle, which may be used for private and official use or cash in lieu of a motor vehicle; parking at work or cash in lieu of parking; a mobile phone and laptop; and airline lounge membership if eight or more return trips are planned for the year

n EL2 employees: payment of a taxable annual allowance of $1,592 in 2012, increasing to $1,640 in 2013 for purchase of items or services that maintain or increase professionalism; and airline lounge membership if eight or more return trips are planned for the year

n EL2 and general employees: a health and wellbeing taxable allowance of $300 each financial year to help meet the costs of activities or equipment that maintains health and fitness

n general employees: airline lounge membership for employees undertaking 12 or more return trips in a year.

All ongoing employees have access to salary packaging of the following items: n cars and utility vehicles, with fringe benefits tax (fBT) applicable

n car parking we provide on premises we own, lease or otherwise control, with fBT applicable n superannuation, for self only, exempt from fBT

n airline lounge membership fees, exempt from fBT

n work‑related professional association membership fees, exempt from fBT. Non‑ongoing employees can salary package superannuation only.

Salary packaging is administered by Smartsalary, with around 2,932 packages managed for our employees in 2012–13.

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Financial management

We are a large, complex and geographically diverse organisation. Within

this context we maintain a strong focus on budget management and ensure

resources are allocated to optimise our performance.

Highlights

n Achieved a modest surplus of $10.0 million for the year, comprising an ATO component of $9.2 million and AVO component of $0.8 million

n Aligned with whole‑of‑government contract management by accessing new arrangements for stationery and travel accommodation

n Led the integration of the ACNC within the ATO

Looking ahead

n Streamline internal processes to procure resources and services to meet business outcomes within Commonwealth policy boundaries

n Establish an Investment Board to oversee our strategic investment program to ensure we are positioned to deliver future outcomes n Develop a forward work program to

consolidate and enhance our corporate systems to ensure our approach remains contemporary

n Deliver better financial outcomes through continued implementation of our property strategy

Operating budget

We began 2012–13 with an operating budget of $3,453.3 million. During the year, our funding changed as a result of government decisions, including:

n an increase of $34.1 million from measures announced as part of the 2012–13 mid‑year economic and fiscal outlook:

– $24.3 million for additional investment to maintain the integrity of the tax and superannuation systems

– $5.6 million to commence implementing reforms in superannuation associated with the transfer of lost member accounts to the ATO.

n a reduction of $14.8 million related to our component of the government’s targeted public sector efficiency savings.

Overall, the result for 2012–13 was an operating surplus of $10.0 million (excludes end‑of‑year, non‑cash accounting adjustments made for our financial statements), which represents 0.3% of budget. This comprised an ATO component of $9.2 million and an AVO component of $0.8 million after income tax.

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Budget expenditure in 2012–13

3.9% 4.3%

62.9%

Labour

8.0%

Property

10.2%

Technology Depreciation Consultants and contractors 2.6% Other 2.2% Legal costs 1.5% Payment to the Australian Customs and Border Protection Service for tax administration services

1.3% Bank fees and collection charges 1.1% Travel 2.0% Printing, postage, and office operations

Capital budget

We commenced 2012–13 with a capital budget of $211.5 million which comprised: n a departmental capital budget of $110.9 million

n equity funding of $80.1 million

n funding from internal resources of $20.5 million.

Over 2012–13, our capital budget reduced by $21.1 million as a result of government decisions as well as some changes to internal resources allocated to capital expenditure.

Capital expenditure was $174.4 million, representing an underspend of $16.0 million, which was all related to equity funding.

Table 3.5 Capital budget expenditure, 2011–12 to 2012–13

2011–12

$m 2012–13 $m

Building improvements 75.0 40.1

Internally developed software 94.2 113.8

IT infrastructure and hardware 21.9 16.0

Purchased software 10.8 4.4

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Asset management

We have an asset management framework that allows us to strategically plan and maintain the optimal asset mix for the effective delivery of our programs. It includes:

n a capital management plan with information about our proposed capital expenditure, developed as part of our capital budget and corporate planning processes

n a detailed policy on the management of assets, as set out in our Chief Executive Instruction – Managing Public Property

n an asset register, subject to an annual stocktake, which records details of the assets we hold.

Administering GST

We met the outcomes agreed with the states and territories for the administration of GST under the GST Administration Performance Agreement between the Commissioner and the ministerial Council for federal financial Relations.

Our expenditure for administering GST was $705.3 million. This was $10.9 million over the

$694.4 million estimate for 2012–13 as agreed with the Council. This is an interim result and is subject to a special purpose audit by the Australian National Audit Office (ANAO).

following the ANAO’s special purpose audit of our 2011–12 expenditure for administering GST, an unqualified audit report was issued confirming that our expenditure in 2011–12 was a fair representation of our costs.

Procurement

In 2012–13 we spent 32.5% of our operating budget on goods and services, which is comparable to 2011–12.

We exceeded the government’s target to pay at least 90% of invoices to small businesses within 30 days, achieving 95% for the year.

We improved our procurement and contract management processes by deploying an enterprise procurement system for purchasing goods and services, which has reduced paper‑based work, increased transparency and provided greater assurance of spending approvals. We also implemented our integrated quality framework to review procurement quality management processes, procedures and decisions and to identify, prioritise and plan improvement opportunities.

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Consultants

We engage consultants where we require specialist expertise or independent research, review or assessment to assist in our decision making. We select providers of consultancy services through either open tender, pre‑qualified tender, limited tender or from an established panel arrangement. The decision to engage a consultant is made in accordance with the Financial Management and Accountability Act 1997 and related regulations, including the Commonwealth Procurement Rules and relevant internal policies.

During 2012–13, we negotiated 243 new consultancy contracts involving total actual expenditure of approximately $6.6 million (including GST). Of these:

n 173 were entered into by the ATO n 65 were entered into by the AVO n 5 were entered into by the ACNC n 147 had a value of greater than $10,000.

In addition, 53 ongoing consultancy contracts were active during the year, involving total actual expenditure of around $1.8 million (including GST).

Since 2008–09, we have reduced consultancy expenditure by 70.3%. Table 3.6 Consultancy contracts expenditure, 2008–09 to 2012–13

2008–09 $ 2009–10 $ 2010–11 $ 2011–12 $ 2012–13 $

Total value of new consultancy contracts awarded 22,895,119 11,010,308 12,988,833 8,866,924 13,256,882 Expenditure against contracts awarded in prior years 10,682,968 3,662,171 1,803,401 4,056,106 1,798,766 Expenditure against contracts awarded in the current year 17,434,220 8,142,062 9,707,862 5,728,162 6,557,525 TOTAL 28,117,188 11,804,233 11,511,263 9,784,269 8,356,291 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 tenders.gov.au. There have been no requests for exemption or exemptions given by the Commissioner from publishing a contract on AusTender.

All our contracts provide for the Auditor‑General to have access to the contractor’s premises.

Grants

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Property and environmental

management

We provide our employees with high‑quality, cost‑effective, safe and

sustainable office accommodation and facilities to meet business needs.

Highlights

n Developed a property management plan to deliver fit‑for‑purpose, sustainable accommodation

n Completed new building projects in Adelaide, Albury, Brisbane and Melbourne n Managed three refurbishments for our

Canberra, Moonee Ponds and Townsville sites n Contributed to whole‑of‑government efforts to

manage the Commonwealth property portfolio

Looking ahead

n Implement changes to meet government targets for the management of space and ongoing environmental considerations n Consider alternative strategies to reduce

our accommodation as limited opportunities exist for reduction outside of future lease renewals

n Implement our new long‑term environmental strategy to ensure we are environmentally responsible now and into the future

Accommodation

We are implementing a national property strategy to deliver consolidation of sites, a more cost effective management of the portfolio and a reduction of work point holdings. This assists us to meet Commonwealth targets for space management and environmental sustainability and has helped us to reduce our vacancy rate from 21% in 2009 to 14% as at 30 June 2013.

We base our accommodation supply on workforce planning data and future business requirements. Accordingly, we have made significant changes to our accommodation this year, with a number of new and renegotiated leases and new buildings.

Working closely with the Department of Finance and Deregulation and the Australian National Audit Office, we contributed to the effort to manage and generate efficiencies across the Commonwealth property portfolio. for example, we consolidated a number of sites and made better use of space in order to meet Commonwealth targets.

We currently have 63 properties in our portfolio, comprised of:

n 11 central business district offices – in Canberra, Sydney, Brisbane, melbourne, Hobart, Adelaide and Perth n 8 suburban offices – Hurstville, Parramatta, Penrith, Chermside, Upper mt Gravatt, Box Hill, moonee

Ponds, Dandenong

n 9 regional offices – Newcastle, Wollongong, Albury, Townsville, Southport, Geelong, Burnie, Launceston, Darwin

n 18 outposts – offices are across all states and territories n 2 shopfronts – Canberra and Sydney

n 4 store sites – Mitchell, Prospect, Eagle Farm and Campbellfield n 3 subleased sites – Canberra, Melbourne and Perth

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03

Management and accountability Property and environmental management

Workforce by location, as at 30 June 2013

3,105 12% 5,855 23% 7,542 30% 4,174 17% 30 0.1% 2,154 9% 965 3.9% 1,268 5%

Environmental performance

We focus on our environmental impact and have identified categories of greenhouse gas emissions which we will aim to reduce in the coming years.

Our Environmental Management Committee ensures a consistent and integrated approach to our environmental management. The committee has established an action plan with strategies designed to reduce our environmental impact, including reviewing and amending processes that contribute significantly to our greenhouse gas emissions and informing employees about their environmental responsibilities while at work. Our ‘green team’ volunteers also run site‑specific awareness and education campaigns.

We report on our greenhouse gas emissions annually with mandatory reporting of electricity, gas and vehicle fuel consumption via the online system for comprehensive activity reporting (OSCAR). In 2011–12, we expanded our internal reporting of our carbon footprint to include emissions resulting from business travel and paper usage and have set this as our base year.

Analysis of 2011–12 base year data indicates that our total greenhouse gas emissions of approximately 66,000 tonnes CO2 consisted of:

n electricity (79.5%) n air travel (12.4%) n paper (2.6%)

n other activities (5.5%).

The base year data and methodology used was assessed and verified by the external provider, DTZ. In commencing our expanded reporting on greenhouse gas emissions, we have followed the guidance provided in the Greenhouse Gas Protocol: Corporate accounting and reporting standard (World Resources Institute and World Business Council on Sustainable Development, 2004).

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Our long term environment vision is to minimise impact now, for future generations. By 2017, we aim to achieve six key targets, based on the 2011–12 base year:

n 25% reduction in emission levels n 25% reduction in flight kilometres

n 50% reduction in paper sent externally by the ATO n 30% reduction in paper used within the ATO per fTE

n all sites to have recycling waste storage to facilitate a minimum of recyclables, organics and landfill n increase staff awareness and engagement about environmental management at work

Our plan in achieving these targets includes short term, long term and ongoing actions which consider our people (a workforce which is environmentally conscious), our place (an organisation which uses its resources more wisely) and our partnerships (relationships with clients and the community which encourage positive environmental outcomes).

The National Australian Built Environment Rating System (NABERS) measures the energy efficiency, water usage, waste management and indoor environment quality of a building or tenancy and its impact on the environment.

Table 3.7 NAbErS ratings by location, at 30 June 2013

Base building

star rating star ratingTenancy Whole building star rating star ratingWater

moore St, Canberra (ACT) 4 4

Genge St, Canberra (ACT) 4.5

Narellan St, Canberra (ACT) 5

Woniora St, Hurstville (NSW) 5 macquarie St, Parramatta (NSW) 5.5 3.5 Henry St, Penrith (NSW) 4.5 King St, Newcastle (NSW) 5 4.5 Goulburn St, Sydney (NSW) 5.5 5 4 Burelli St, Wollongong (NSW) 2.5 Creek St, Brisbane (QLD) 5.5 4 4.5 Banfield St, Chermside (QLD) 3

mcGregor St, Upper mt Gravatt (QLD) 5

Stanley St, Townsville (QLD) 5

Little Ryrie St, Geelong (VIC) 5 3.5

mason St, Dandenong (VIC) 4

Gladstone St, moonee Ponds (VIC) 4 4

Collins St, Hobart (TAS) 4.5

francis St, Northbridge (WA) 5 5 2.5

NOTES

Some sites above have been vacated.

The following NABERS ratings are not included as they expired before 30 June 2013:

n Narellan St, Canberra (ACT) tenacy (4.5), expired April 2013 n_{Burelli St, Wollongong (NSW) whole building (3), expired October 2012} n_{Whitehorse Rd, Box Hill (VIC) whole building (3.5) and water (3), expired may 2013.}

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03

Management and accountability Property and environmental management

Minimising consumption

We improved our online services to support paperless interactions with taxpayers and their agents, as a means of minimising our paper usage. To minimise our waste to landfill, we maintained a national secure‑waste contract for removing and recycling documents up to the ‘protected’ security level and implemented three‑stream waste management in many sites.

All of our sites use 50% recycled‑content paper. Our paper usage in 2012–13 was approximately 3,750 sheets of paper per person, a decrease of 14.6% compared to last year. Our paper consumption has reduced by 27.5% since 2008–09, from around 260,000 reams to approximately 188,000 reams in 2012–13. This means we used 7.5 reams per person, well under the Australian Government ICT Sustainability Plan (2010–15) 2015 target of 9 reams per person per year. As our online services improve, we expect to see a further reduction in paper usage.

Figure 3.3 Paper use per person, 2008–09 to 2012–13

0 2 4 6 8 10 12 2012–13 2011–12 2010–11 2009–10 2008–09 Number of r eams

The Energy Efficiency in Government Operations (EEGO) Policy emphasises reduction in building energy consumption in government operations. We contribute to the achievement of this policy through implementing energy efficient practices such as enabling power‑management features when installing office equipment. We expect the downward trend in our energy use to continue with plans to reduce our tenant light and power use below the 2011–12 average of 5,681 megajoules per person.

Table 3.8 Energy intensity 2008–09 to 2011–12 (EEGO) target

2008–09 2009–10 2010–11 2011–12 targetEEGO

Tenant light and power(a)_mJ/pp _6,344 _6,052 _5,666 _5,681 _7,500

Central services (b)_mJ/m2 ₅₃₇ ₅₁₀ ₄₇₅ ₄₆₄ ₄₀₀

Energy intensity is reported a year behind due to availability of reliable data.

(a) Tenant light and power – a measurement of energy used for tenant operations in office space, including lighting, office equipment, and supplementary air conditioning and boiling water units.

(b) Central services – a measurement of energy used providing services, common to all tenants in office building, including building air conditioning, lifts, security and lobby lighting and domestic hot water.

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In line with government policy, our vehicle fleet includes hybrid vehicles and we encourage fleet users to purchase e10 fuel for other vehicles where possible. Our level of consumption of e10 increased from 176,639 litres in 2010–11 to 249,000 litres in 2011–12.

Video conferencing facilities are available in our major sites and provide an alternative to air travel, assisting us to reduce our greenhouse gas emissions.

Table 3.9 Air travel, greenhouse gas emissions and video conferences by quarter, 2012–13 2012–13 Q1 2012–13 Q2 2012–13 Q3 2012–13 Q4

Air travel (km) 11,352,485 10,017,035 10,859,604 16,163,826

Air travel (CO2 kg) 1,880,480 1,695,686 1,804,127 2,692,511