H : Other Information

This section includes additional financial information which is considered relevant to assist users in understanding the financial statements.

H2 : Other policy and disclosures

This section of the report provides additional information in relation to line items in the primary statements that do not have specific disclosures in the preceding notes. They are additional disclosures directed at the interests of particular users and their needs.

Centralised procurement

Finance develops and manages procurement arrangements for common goods and services to maximise market benefits for Commonwealth entities. The largest arrangements are VSA and IBNCS.

VSA

Finance manages a number of Volume Sourcing Arrangements and a number of custom support agreements with Microsoft to provide software licensing and custom support benefits to related Commonwealth entities. The arrangements are funded on a user pays basis and includes an administration fee.

IBNCS

Finance manages telecommunications services to related Commonwealth entities. This arrangement is funded on a user pays basis. These services include Network Carriage Services, Virtual Connection Management Services, Internet Protocol Carriage Services and Major Internet Connection Services.

Other activities

Finance manages other centralised procurement arrangements including WoAG travel, fleet monitoring, campaign advertising and major office machines. The Coordinated Procurement Contracting Special Account is detailed at Note F3.1. VSA, IBNCS and Strategic Sourcing functions of the Centralised Procurement Contracting Special Account has transferred to DTA post 30 June as a result of Machinery of Government changes, further information is detailed in the Restructuring Note at C4.

Competitive neutrality (including income tax expense)

Finance is exempt from all forms of taxation except Fringe Benefits Tax and GST.

Finance applies the Australian Government's Competitive Neutrality Policy Statement (June 1996) to properties in the portfolio that are leased and managed in a competitive environment. The taxation equivalent regime is applied as a competitive neutrality charge (shown as competitive neutrality and income tax expense in the Statement of Comprehensive Income) and a notional payment is calculated quarterly to cover indirect taxes such as payroll tax, council rates, stamp duty and land tax and income tax based upon accounting income; as if they have been applied to these properties. These amounts have been paid or are payable by Finance to the OPA.

Rental income

Rental income includes rent received from tenants occupying buildings that are part of the Australian Government’s non-Defence property portfolio. It also includes revenue received from sub-leasing arrangements with other entities for non-Commonwealth owned properties.

Resources received free of charge

Resources free of charge are recognised as revenue when, and only when, a fair value can be reliably determined and the services would be purchased if they had not been donated. Use of the resources is recognised as an expense. Resources received free of charge are recorded as either revenue or gains depending on their nature. Resources received free of charge predominantly relate to Australian National Audit Office audit fees for Finance’s financial statements and WoAG financial statements (2017: $1.4 million). Resources received free of charge also includes a small portion for the recognition of land transferred from the NSW Government in the current year.

Resources provided free of charge

As outlined in the Restructuring Note at C4, IPEA was established effective 3 April 2017, with some functions from Finance transferring. Finance has continued to provide corporate services to IPEA free of charge. No separate disclosures are required.

Resources provided free of charge

As outlined in the Restructuring Note at C4, IPEA was established effective 3 April 2017, with some functions from Finance transferring. Finance has continued to provide corporate services to IPEA free of charge. No separate disclosures are required.

Cash and cash equivalents

Cash and cash equivalents include cash on hand, cash held with outsiders, cash in special accounts and demand deposits in bank accounts with an original maturity of three months or less that are readily convertible to known amounts of cash and subject to an insignificant risk of changes in value. Cash is recognised at its nominal amount. Cash or cash equivalent balances that are held for investment purposes are classified as investments.

Unearned revenue

Mainly relates to amounts received in advance for goods and services yet to be rendered by Finance to related Commonwealth entities for centralised procurement and domestic property and construction activities. Revenues are recognised in relation to these items when the relevant good or service has been provided.

Return of equity - special accounts

A provision is raised annually for the estimated balance of surplus funds to be returned to the OPA in the following year for the Property Special Account. In any year, the level of this provision reflects the estimated surplus funds arising from Finance’s property operations and gross divestment proceeds. The variance to budget for the cash return is due to the budget being based on the 2014-15 provision.