Notes to the Crown financial schedules

for the year ended 30 June 2006

Note 1: Direct Taxation
Actual 2005 $000		Actual 2006 $000
	Income tax
	Individuals:
17,781,481	Source deductions	19,225,149
4,103,286	Other persons	4,324,518
0	Change in provisional tax estimation (other persons)	615,000
(876,284)	Other persons refunds	(952,933)
440,800	Fringe benefit tax	449,829
21,449,283	Sub-total individuals	23,661,563
	Companies:
7,821,903	Gross company tax – other	8,050,038
311,120	Gross company tax – state-owned enterprises	399,420
2,080	Gross company tax – Crown entities	61,688
211,200	Gross company tax – NZS fund	362,312
0	Change in provisional tax estimation	1,194,000
(232,287)	Company refunds	(269,967)
8,114,016	Sub-total companies	9,797,491
	Withholding tax:
1,500,792	Residents’ interest	1,878,508
58,897	Residents’ dividends	73,517
188,438	Foreign source dividends	160,132
926,728	Non-residents’ income	1,095,641
542,422	Specified superannuation tax	710,970
3,217,277	Sub-total withholding tax	3,918,768
32,780,576	Total income tax	37,377,822
	Other direct taxation:
2,325	Estate and gift duties	2,960
2,325	Sub-total other direct taxation	2,960
32,782,901	Total direct taxation	37,380,782

Note 2: Indirect taxation
Actual 2005 $000		Actual 2006 $000
	Goods and services tax:
16,018,263	Gross goods and services tax (Inland Revenue)	16,718,246
(7,179,624)	Goods and services tax (refunds)	(7,663,864)
8,838,639	Sub-total goods and services tax	9,054,382
	Other indirect taxation:
9,234	Stamp and cheque duties	7,678
55,947	Approved issuer levy	74,824
315,902	Gaming duties	300,598
0	Other indirect taxation	14,278
381,083	Sub-total other indirect taxation	397,378
9,219,722	Total indirect taxation	9,451,760

Note 3: Benefits and other unrequited expenses
Actual 2005 $000		Actual 2006 $000
	Benefits and other unrequited expenses
32,859	Family support tax credit	1,280,349
12,771	Family tax credit	4,944
141,331	Child tax credit	153,998
13,909	Parental tax credit	15,895
0	In-work payment	70,003
76,186	Paid parental leave	96,354
1,077,056	Total benefits and other unrequited expenses	1,621,543

Note 4: Borrowing expenses
Actual 2005 $000		Actual 2006 $000
	Borrowing expenses
5,783	Income equalisation reserve interest	3,551
(11)	Adverse event income equalisation interest	(1)
5,772	Total borrowing expenses	3,550

Note 5: Change in debt provision and fair value write-down
Actual 2005 $000		Actual 2006 $000
356,970	General tax provision	(12,229)
189,378	Student loan impairment	0
119,907	Child support provision	88,549
666,255	Change in debt provision	76,320
226,459	Interest write-offs	0
0	Initial fair value write-down and subsequent impairment	1,249,551
0	Other impairment	12,823
226,459	Change in fair value write-down	1,262,374
892,714	Total change in debt provision and fair value write-down	1,338,694

Note 6: Receivables and advances - current
Actual 2005 $000		Actual 2006 $000
587,920	Student loans short-term	369,355
5,898,241	Tax receivables (general)*	8,824,722
557,957	Receivables child support	644,905
133,812	GST debtors (intra-Crown)**	102,706
7,177,930	Gross receivables and advances	9,941,688
(911,615)	Provisions for doubtful debts (general)	(899,385)
(79,993)	Student loan provision for doubtful debts	0
(528,385)	Provision for doubtful debts child support	(616,934)
(1,519,993)	Total provisions for doubtful debts	(1,516,319)
5,657,937	Total current receivables and advances	8,425,369
* Tax receivables have increased by $2,767 million due to a change in estimation methodology for provisional tax where revenue is recognised in the period in which it is earned.
** This balance is eliminated upon consolidation of the Crown accounts.

Note 7: Receivables and advances - non-current
Actual 2005 $000		Actual 2006 $000
6,086,654	Student loans long-term	4,608,711
(828,160)	Student loans provisions for doubtful debts	0
5,258,494	Total non-current receivables and advances	4,608,711

Note 8: Payables and provisions
Actual 2005 $000		Actual 2006 $000
4,550,631	Student loan capital*	0
8,658	Payables child support	18,142
2,656,389	Taxes refundable**	3,479,291
7,215,678	Total payables and provisions	3,497,433
* This balance is eliminated upon consolidation of the Crown accounts.
** Taxes refundable have increased by $283 million since June 2005 as a result of the impact of structured finance cases.

Note 9: Provision for doubtful debts
Actual 2005 $000		Actual 2006 $000
911,615	General tax provision*	899,385
908,153	Student loan provision**	0
528,385	Child support provision***	616,934
2,348,153	Total provision for doubtful debts	1,516,319
* Refer to Note 6 current receivables and advances - provisions for doubtful debts.
** The student loan doubtful provision has been replaced by the fair value methodology to better reflect the value of student loans under the interest-free policy.
*** Unpaid child support provisions attract penalties which accrue to the Crown. A provision for the non-recovery of penalties owing is calculated, based on the age of outstanding penalty debts.

Note 10: Contingent liabilities
Actual 2005 $000		Actual 2006 $000
344,740	Tax in dispute	784,313
37,162	Unclaimed monies	35,990
381,902	Total quantifiable contingent liabilities	820,303
When a taxpayer disagrees with an assessment issued following the disputes process, the taxpayer may challenge that decision by filing proceedings with the Taxation Review Authority or the High Court. Contingent liabilities have increased by $438 million since June 2005 as a result of the increase in cases currently under dispute.

Note 11: Income equalisation and adverse event schemes
Actual 2005 $000		Actual 2006 $000
166,805	Income equalisation reserve account	143,027
84	Adverse event income equalisation reserve account	8
166,889	Total value of the reserve accounts	143,035
Income equalisation is a scheme where taxpayers in the farming, fishing and forestry industries can elect to make payments during the year by way of income equalisation deposits. Interest at a rate of 3% is paid, provided that no withdrawals are made within 12 months of the date of the deposit.
The adverse event income equalisation scheme operates in addition to the ordinary income equalisation scheme. Interest at a rate of 6.5% is paid on deposits. Deposits can be withdrawn immediately, but are transferred to the main income equalisation account, if not withdrawn within 12 months of the deposit.

Note 12: Fair value write-down and subsequent impairment
Actual 2005 $000		Actual 2006 $000
0	Inland Revenue	1,249,551
0	Ministry of Social Development	165,135
0	Total fair value write-down and subsequent impairment	1,414,686