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Note 14:  Receivables

Note 14:  Receivables
Forecast Actual
Original
Budget
$m 		Estimated
Actuals
$m 		30 June 2009
$m 		30 June 2008
$m

By type

 
6,139 7,248 Tax receivables 7,649 7,398
3,378 3,417 Levies, fines and penalty receivables 3,334 3,106
296 449 Social benefit receivables 485 440
9,813 11,114 Sovereign receivables 11,468 10,944
2,936 2,673 Trade and other receivables 3,151 3,214
12,749 13,787 Total receivables 14,619 14,158

By maturity

 
12,266 13,270 Expected to be realised within one year 13,793 13,564
483 517 Expected to be held for more than one year 826 594
12,749 13,787 Total receivables 14,619 14,158

By source

 
7,201 8,786 Core Crown 10,243 9,031
4,437 4,514 Crown entities 4,725 4,444
1,910 2,165 State-owned enterprises 1,846 2,247
(799) (1,678) Inter-segment eliminations (2,195) (1,564)
12,749 13,787 Total receivables 14,619 14,158

In determining the recoverability of a tax or other sovereign receivables, the Government uses information about the extent to which the tax or levy payer is contesting the assessment and experience of the outcomesof such disputes, from lateness of payment, and other information obtained from credit collection actions taken.

Due to the size of the tax base, the concentration of credit risk is limited and this is not a risk that is managed.

The Government does not hold any collateral or any other credit enhancements over receivables which are past due.

All sovereign receivables are denominated in New Zealand dollars.

Note 14:  Receivables (continued)
Actual
30 June 2009
$m 		30 June 2008
$m

Tax Receivables

 
Gross tax receivable 11,645 10,423
Impairment of tax receivables (3,996) (3,025)
Total tax receivables 7,649 7,398

Gross Tax Receivable

 
Current 6,891 6,218
Past due 4,754 4,205
Total gross tax receivable 11,645 10,423
% past due 41% 40%

Impairment of Tax Receivables

 
Balance at beginning of the year 3,025 2,782
Impairment losses recognised on receivables 1,693 944
Amounts written off as uncollectible (722) (701)
Impairment losses reversed -  - 
Balance at end of the year 3,996 3,025

The Inland Revenue Department (IRD) administers the majority of the tax receivable portfolio. The recoverable amount of the portfolio administered by IRD is calculated by forecasting the expected repayments based on analysis of historical debt data, deducting an estimate of service costs and then discounting at the current use of money interest (UOMI) rate. An additional 5% has been added to the UOMI rate in 2009 to allow for recessionary impact. If the recoverable amount of the IRD portfolio is less than the carrying amount, the carrying amount is reduced to the recoverable amount.

Note 14:  Receivables (continued)
Actual
30 June 2009
$m 		30 June 2008
$m
The estimated recoverable amount of this portfolio and key
assumptions underpinning the valuation are:		  
Recoverable amount of tax receivables current 6,812 6,218
Recoverable amount of tax receivables past due 837 1,180
Discount rate 13.91% 14.24%
Impact on recoverable amount of a 2% increase in discount rate (16) (18)
Impact on recoverable amount of a 2% decrease in discount rate 17 19

Tax receivables are classified as past due when any outstanding tax is not paid by the taxpayer's due date. Due dates will vary depending on the type of tax outstanding (e.g. GST, income tax, PAYE) and the taxpayer's balance date. Past due debt includes debt collected under instalment, debt under dispute, default assessments and debts of taxpayers who are bankrupt, in receivership or in liquidation. IRD has debt management policies and procedures to actively manage the collection of past due debt.

Note 14:  Receivables (continued)
Actual
30 June 2009
$m 		30 June 2008
$m

Ageing of Tax Receivables Past Due (Gross)

 
Less than six months 1,542 1,458
Between six months and one year 519 458
Between one year and two years 954 701
Greater than two years 1,739 1,588
Tax receivables past due 4,754 4,205

The carrying amount of tax receivables provides a reasonable approximation of their fair value.

Note 14:  Receivables (continued)
Actual
30 June 2009
$m 		30 June 2008
$m

Levies, Fines and Penalty Receivables

 
Gross ACC levy receivables 3,151 2,895
Gross other levies, fines and penalty receivables 1,683 1,529
Total gross levies, fines and penalty receivables 4,834 4,424
Impairment of ACC levy receivables (72) (73)
Impairment of other levies, fines and penalty receivables (1,428) (1,245)
Total impairment of receivables (1,500) (1,318)
Total levies, fines and penalty receivables 3,334 3,106

Impairment of ACC Levy Receivables

 
Balance at beginning of the year 73 73
Impairment losses recognised on receivables -  1
Amounts written off as uncollectible -  (1)
Impairment losses reversed (1) - 
Balance at end of the year 72 73
Collective impairment allowance 72 73
Individual impairment allowance -  - 
Balance at end of the year 72 73

Impairment of other Levies, Fines and Penalty Receivables

 
Balance at beginning of the year 1,245 1,084
Impairment losses recognised on receivables 193 206
Amounts written off as uncollectible (10) (45)
Impairment losses reversed -  - 
Balance at end of the year 1,428 1,245
Collective impairment allowance 1,428 1,245
Individual impairment allowance -  - 
Balance at end of the year 1,428 1,245

Ageing of Levies, Fines and Penalty Receivables Past
Due But Not Impaired

 
Less than six months 36 20
Between six months and one year -  - 
Greater than one year -  - 
Total levies, fines and penalty receivables past due but not impaired 36 20

The ACC levy receivables are short term, so their carrying amount provides a reasonable approximation of their fair value. Of the other levy, fines and penalties receivables, the majority is in the debtor portfolio administered by the Ministry of Justice (i.e., court fines, associated court fees and enforcement fees) with a carrying value of $223 million (2008: $206 million). Their carrying amount provides a reasonable approximation of their fair value. The recoverable amount of these Justice receivables is calculated using discounted cash flows (net of estimated service costs).

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