Advance to the Finance Minister – section 11 of Appropriation Act (No. 1) 2007-2008 (No. 1 of 2007-2008)

Explanatory Statement

Appropriation Act (No. 1) 2007-2008, Section 11 – Advance to the Finance Minister

The instrument to which this explanatory statement relates

This explanatory statement relates to an instrument (the instrument) entitled “Advance to the Finance Minister – Section 11 of Appropriation Act (No. 1) 2007-2008”, dated 5 July 2007 and numbered 1 of 2007-2008.

The legislative authority under which the instrument is made

The Advance to the Finance Minister is a provision authorised by the annual Appropriation Acts and made available to the Finance Minister as a central contingency fund to provide urgent funding to agencies throughout the financial year.

In Appropriation Act (No. 1) 2007-2008, the Advance to the Finance Minister is provided for under section 11. This section indicates that amounts can be issued from the Advance to the Finance Minister, up to a limit of $175 million, if the Finance Minister is satisfied that:

(a)   There is an urgent need for expenditure, in the current year, that is not provided for, or is insufficiently provided for, in Schedule 1 (which sets out the amounts appropriated); and

(b)   The additional expenditure is not provided for, or is insufficiently provided for, in Schedule 1:

(i)               Because of an erroneous omission or understatement; or

(ii)               Because the additional expenditure was unforeseen until after the last day on which it was practicable to provide for it in the Bill for this Act before that Bill was introduced into the House of Representatives.

Exercise of the provision via the issue of a determination, has effect as if Schedule 1 of Appropriation Act (No. 1) 2007-2008 were amended to make provision for the additional expenditure specified in the determination.

In an instrument dated 12 February 2003, the Finance Minister has authorised the person holding the position of SES Band 2, Financial Reporting and Cash Management Division in the Department of Finance and Administration to exercise the power provided for under section 11 of Appropriation Act (No. 1) 2007-2008.

Purpose of the instrument

The instrument determines that the Administered Expenses – Outcome 1 appropriation for the Australian Taxation Office in Appropriation Act (No. 1) 2007-2008 be increased by $800,000.

Background

The background to the instrument is provided in the application made by the Australian Taxation Office for funding from the Advance to the Finance Minister.  The application is reproduced below.

APPLICATION FOR FUNDS - ADVANCE TO THE FINANCE MINISTER 2007-2008

Agency:  Australian Taxation Office 

Appropriation: Appropriation Act (No. 1) 2007-2008

Description: Administered Expenses – Outcome 1

Description of Outcome:  Effectively managed and shaped systems that support and fund services for Australians and give effect to social and economic policy through the tax, superannuation, excise and other related systems

Funds Required:   $800,000

Funds Currently Unspent:  -

Amount required from AFM:  $800,000

AFM Category:  Appropriation Act (No. 1) 2007-2008 Part 3 11 (1) (b) (i)

Explanation of requirements from AFM:

The Government announced in the 2007-08 Budget the revenue measure titled ‘Superannuation – taxation of lump sum superannuation death benefit payments to non-dependants of defence personnel and police’ to allow concessional tax treatment for lump sum superannuation death benefits for non-dependants of Australian Defence Force personnel and Australian police force members (including Australian Protective Service Officers) killed in the line of duty.

The Australian Taxation Office require funds to be made available for ex gratia payments to those eligible  non-dependants of Australian Defence Force personnel and Australian police force members (including Australian Protective Service Officers) killed in the line of duty over the period from 1 January 1999 to
30 June 2007.

Urgent:

The Department is required to make approximately $800,000 in ex gratia payments to eligible recipients commencing 12 July 2007.  No provision for annual administered funding for the Department is made within Appropriation Act (No. 1) 2007-2008. 

Waiting for the 2007-08 Additional Estimates process to correct this error would impose a significant delay to the delivery of the ex gratia payments to eligible recipients.  Accordingly, an Advance to the Finance Minister of $800,000 is required in order to facilitate the immediate delivery of ex gratia payments to eligible recipients.

Erroneous Omission:  

This item was announced as a revenue measure in the 2007-08 Budget.  Due to an erroneous omission, no provision was made for these payments in Appropriation Bill (No. 1) 2007-2008 during preparations for the 2007-08 Budget.