GST Administration Performance Agreement (from 1 July 2023)

• PREAMBLE
• SCHEDULE A – PERFORMANCE OUTCOME MEASURES
• SCHEDULE B – GST BUDGET AND ADMINISTRATION ACTIVITIES
• SCHEDULE C – MONITORING AND REVIEW ARRANGEMENTS
• SCHEDULE D – 2023–24 BUDGET MEASURE: GST COMPLIANCE PROGRAM – FOUR-YEAR EXTENSION

PREAMBLE

1. The Intergovernmental Agreement on Federal Financial Relations (the Intergovernmental Agreement)External Link requires accountability and performance arrangements to be established between the Australian Taxation Office (ATO) and the Council on Federal Financial Relations (CFFR). These accountability arrangements require a GST Administration Performance Agreement to be established between the ATO and the CFFR.

PART 1 – FORMALITIES

Parties to the Agreement

2. The Agreement is between the:  
   1. Commissioner of Taxation, and
   2. CFFR, comprising the Treasurers of
      • The Commonwealth of Australia
      • The state of New South Wales
      • The state of Victoria
      • The state of Queensland
      • The state of Western Australia
      • The state of South Australia
      • The state of Tasmania
      • The Australian Capital Territory
      • The Northern Territory of Australia.
       
    
3. Parties to the Agreement are the Commissioner of Taxation and the CFFR listed above (the Parties).

Terms of the Agreement

4. The Agreement will be implemented in accordance with the terms of the Intergovernmental Agreement, including that the GST Administration Sub-Committee (GSTAS) will monitor all aspects of the operation and administration of the GST and this Agreement. GSTAS has delegated aspects of that role to the GST Policy and Administration Sub-group (GPAS).
5. The Agreement will commence operation once all Parties have endorsed it and continue until the Parties agree to its termination. It supersedes all previous GST administration agreements.
6. GSTAS (through GPAS) will conduct triennial reviews of the body of the Agreement. The CFFR will be provided with a report from GSTAS on the outcome of each review, with the eighth review to be completed by 30 June 2026.

PART 2 – OBJECTIVES AND CONTEXT OF THE AGREEMENT

Purpose of the Agreement

7. The purpose of the Agreement is to provide:
   1. accountability between the ATO and the CFFR on GST administration, and
   2. an agreed basis for GSTAS (through GPAS) to monitor the administration of the GST by the ATO and its agents in return for the agreed GST administration costs being paid by the states and territories.
    

Context of the Agreement

8. The Parties to the Agreement are committed to:
   1. achieving world’s best practice for GST administration in Australia
   2. a cost-effective and transparent GST administration
   3. digital transformation that improves the efficiency and effectiveness of the administration of the GST system, and
   4. a cooperative relationship between the Parties.
    
9. The Parties to the Agreement recognise that:
   1. the achievement of world’s best practice GST administration, including in respect of cost effectiveness, is dependent on the GST policy and economic framework and integrated administrative design
   2. the GST is administered as part of Australia’s integrated tax system and its administrative framework
   3. the Commissioner of Taxation has the general administration of the GST law, and
   4. the Agreement does not impede the ATO from  
      1. its accountability to the Commonwealth Government and Parliament for its revenue collection and taxation administration responsibilities
      2. reporting on GST matters to the Commonwealth Government, and
      3. complying with statutory and other obligations imposed on the ATO by the Commonwealth Government, or Parliament, or both.
       
    

PART 3 – PERFORMANCE OUTCOME

10. The Parties agree that the outcome to be achieved by the ATO in GST administration is to collect GST revenue effectively, including through optimising voluntary compliance by effectively and efficiently managing the administrative and compliance risks to the GST system.
11. The ATO is accountable to the CFFR for achieving the above stated performance outcome, the achievement of which will be measured by the agreed measures outlined in Schedule A (Performance Outcome Measures).

Interpreting performance

12. In evaluating the performance of the ATO against the agreed measures stipulated in Schedule A, the Parties will take into consideration such factors as economic conditions and the context of GST administration as outlined in Part 2 — Objectives and Context of the Agreement.
13. Where possible, the ATO will provide an enhanced narrative on the drivers of the trends in the performance indicators in this Agreement and report 5 years’ worth of data to allow trend analysis to occur, giving meaning and context to the performance indicators.

PART 4 – COST OF ADMINISTRATION

GST administration activities

14. The administration activities which are GST-related for the purpose of agreeing the GST administration budget and costs are outlined in Schedule B (GST Budget and Administration Activities).
15. In the context of Australia’s integrated taxation system and its administrative framework, the Parties agree that Schedule B will include the activities which are solely GST-related or partly GST-related.
16. The Parties recognise the requirement on the states and territories to fully compensate the Commonwealth for the costs of administering the GST.

PART 5 – PROCESS FOR DEVELOPING AND MODIFYING BUDGETS AND BUSINESS PLANS

17. The Parties agree to the planning and budget processes specified in Schedule B. These processes are designed to broadly accord with Commonwealth arrangements for funding agency operations.
18. Schedules A and B will be adjusted as necessary to ensure they are consistent with the level of funding provided to the ATO to administer the GST.
19. Schedule B outlines the ATO GST-related activities that form the GST administration budget. The Parties agree the ATO will have flexibility to reallocate resourcing within the agreed budget as required to achieve agreed outcomes.
20. The ATO undertakes to advise GSTAS (through GPAS) of any material resource reallocations and the associated reasons. In the event of such a reallocation, the Parties agree that the reallocated resources will be considered through the ex-post adjustment process specified in Schedule B.

PART 6 – MONITORING AND REVIEW

Reporting arrangements

21. The Parties agree to the monitoring and review arrangements outlined in Schedule C (Monitoring and Review Arrangements). These arrangements have been designed to ensure appropriate alignment of ATO Parliamentary reporting responsibilities and reporting responsibilities under the Agreement.

Audit arrangements

22. The ATO will arrange, subject to the agreement of the Commonwealth Auditor-General, for the Australian National Audit Office (ANAO) to conduct an annual special purpose audit of GST costs and the systems for control of GST costs. This audit, where practical, will align with the ANAO’s annual audit program of ATO financial statements.
23. The Parties agree to the special purpose audit arrangements outlined in Schedule C.
24. GSTAS (through GPAS) will be consulted on the audit engagement terms of reference, which will be consistent with the relevant clauses contained in Schedule C.
25. The arrangements for the special purpose audit will take into account the broader financial management and accountability framework within which GST administration operates in order to avoid duplication or inconsistency with other annual ANAO audits or other financial management arrangements of the ATO.

PART 7 – MANAGEMENT OF THE AGREEMENT

Relationship management

26. The Parties agree that a cooperative relationship between them will be achieved through commitment to:  
    1. communicating on matters relevant to this Agreement outside of the formal reporting arrangements, and
    2. consultation processes which promote openness and provide opportunities for input into strategic planning and informal avenues for problem resolution.
     

Amendment processes

27. Schedules to the Agreement will be reviewed annually by GSTAS (through GPAS). GSTAS may agree to revise the Schedules at any time, subject to endorsement by the CFFR, without terminating the existing Agreement or creating a new Agreement.
28. Amendments to the performance measures (including targets or benchmarks) outlined in Schedule A to this Agreement will take account of (but not be limited to):      
    1. alignment with the stated outcomes to be achieved by the ATO and its agents outlined in Part 3
    2. alignment with ATO’s performance measures as reported to Parliament
    3. the level of agreed investment and funding in GST administration
    4. consideration of results of relevant benchmarking activities
    5. consideration of economic conditions and the context of GST administration as outlined in Part 2 – Objectives and Context of the Agreement, and
    6. a manageable set of performance indicators focusing on key outcomes.
     
29. Changes to the body of the Agreement will require the agreement of the CFFR. Any proposals for a new Agreement will initially be prepared by the Parties for review by GSTAS (through GPAS). Consistent with the provisions of the Intergovernmental Agreement any new Performance Agreement is to be endorsed by the CFFR prior to being endorsed by the Parties.

Dispute resolution

30. Disputes over the operation of the Agreement which cannot be resolved by GPAS or GSTAS in accordance with this Agreement’s relationship management arrangements may be referred by any Party to the CFFR.
31. The Parties agree that the ATO will have the opportunity to provide direct advice to the CFFR on any matter related to this Agreement submitted for consideration by the CFFR.

The Parties have confirmed their commitment to this Agreement, to take effect from 1 July 2023, as follows:

• Treasurer of the Commonwealth of Australia – The Honourable Dr Jim Chalmers MP
• Commissioner of Taxation – Mr Chris Jordan AO
• Treasurer of New South Wales – The Honourable Matt Kean MP
• Treasurer of Victoria – The Honourable Tim Pallas MP
• Treasurer Queensland – The Honourable Cameron Dick MP
• Treasurer of Western Australia – The Honourable Mark McGowan BA LLB MLA
• Treasurer of the Australian Capital Territory – Mr Andrew Barr MLA
• Treasurer of Tasmania – The Honourable Michael Ferguson MP
• Treasurer of the Northern Territory – The Honourable Eva Lawler MLA
• Treasurer of South Australia – The Honourable Stephen Mullighan MP