Output expense 6

Taxpayer audit

Description

This output expense provides services to ensure that the revenue base for funding government programmes is protected. This is achieved by verifying that taxpayers are meeting their obligations through audit activity across all taxpayer groups, specifically targeting risk areas, and taking appropriate enforcement action when obligations are not being met.

Activities undertaken:

identifying risks to revenue and designing audit activities accordingly
verifying that tax obligations have been met by auditing a selection of taxpayers
managing tax litigation.

Financial performance for the year ended 30 June 2007 (GST-exclusive) $000

Revenue	Expenses	Net surplus/(deficit)
138,926	138,347	579

For all taxpayer audit outputs

Performance measure

	Budget	Actual
We will ensure that at least 85% of all cases completed meet our quality standards.	85%	95.7%

Activity forecast (demand driven)

	Budget	Actual
We expect to complete between 922,000 and 1,030,000 hours conducting all audit activities. 172,000 to 200,000 of these hours will be related to corporate audit activities.	922,000-1,030,000	1,043,184
We expect to complete between 172,000 and 200,000 hours conducting corporate audit activities.	172,000-200,000	189,566

Output 6.1 Individual and small to medium enterprise audit

Description

This output involves the audit of businesses with a turnover of up to $100 million (excluding groups in the corporates segment). It includes audits of duties, non-residents, investments and salary and wage earners.

Performance measures

	Budget	Actual
Quality
We will assess at least $580 per hour for all audit activity, including aggressive tax issues and tax evasion.	$580	$755
Timeliness
On average, we will complete:
general audits within 6 months	6 months	2.6 months
all risk audits within 12 months	12 months	13.3 months^[23]
disputed cases (excluding aggressive tax issues) within 18 months.	18 months	10.1 months
We will ensure that at least 90% of open cases (excluding aggressive tax issues) are less than 24 months old.	90%	93.3%

²³ We made changes to the classification of audit cases as part of the changeover to our new case management system, e-Case. We were unable to open any "all risk audit" cases for this standard after the changeover. These cases will be included in the risk based audit standard in 2007-08.

Output 6.2 Corporate audit

Description

This output involves auditing and providing services to large businesses with a group turnover of more than $100 million, plus other specific groups.

Performance measures

	Budget	Actual
Timeliness
On average we will complete investigations within 17 months.	17 months	8.0 months
We will ensure that at least 85% of all open cases (excluding disputed open cases) are less than 24 months old.	85%	90.1%

Output 6.3 Litigation management

This output involves the management of litigation of disputed tax cases, including the requirement to state the case through to resolution by the courts.

Performance measures

	Budget	Actual
Quality
We will report any adverse judicial comments made on the department's conduct of the litigation.	Achieved	Achieved
Timeliness
We will ensure that all timetable requirements imposed by the courts on the department's solicitors in litigation cases are met.	Achieved	Achieved

Activity forecast (demand driven)

	Budget	Actual
Quantity
We expect to finally resolve 75 to 100 litigation cases.	75-100	104

Output statement: Taxpayer audit

for the year ended 30 June 2007
2005/06 Actual $000		2006/07 Actual $000	2006/07 Main Estimates $000	2006/07 Final voted $000
	Revenue
119,842	Crown	137,166	123,428	138,759
1,123	Other	1,760	919	1,243
120,965	Total Revenue	138,926	124,347	140,002
	Expenses
118,737	Annual appropriations	138,347	124,347	140,002
-	Other appropriations	-	-	-
118,737	Total expenses	138,347	124,347	140,002
2,228	Net surplus/(deficit)	579	-	-
89,715	Output 6.1 Individual and small to medium enterprise audit	102,044	93,495	105,266
21,722	Output 6.2 Large Enterprise audit	26,624	22,581	25,424
7,300	Output 6.3 Litigation management	9,679	8,271	9,312
118,737	Output expense cost	138,347	124,347	140,002