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Note 14:  Receivables

Note 14: Receivables
Forecast Actual
Original
Budget
$m 		Estimated
Actuals
$m 		30 June 2010
$m 		30 June 2009
$m

By type

 
7,378 6,690 Tax receivables 6,864 7,649
3,483 3,545 Levies, fines and penalty receivables 3,560 3,334
509 509 Social benefit receivables 461 485
11,370 10,744 Sovereign receivables 10,885 11,468
2,723 3,069 Trade and other receivables 2,999 3,151
14,093 13,813 Total receivables 13,884 14,619

By maturity

 
13,452 12,797 Expected to be realised within one year 12,912 13,793
641 1,016 Expected to be outstanding for more than one year 972 826
14,093 13,813 Total receivables 13,884 14,619

By source

 
8,877 8,437 Core Crown 8,776 10,243
4,661 4,905 Crown entities 4,713 4,725
2,067 2,075 State-owned enterprises 1,740 1,846
(1,512) (1,604) Inter-segment eliminations (1,345) (2,195)
14,093 13,813 Total receivables 13,884 14,619

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 outcomes of 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 2010
$m 		30 June 2009
$m

Tax Receivables

 
Gross tax receivable 10,784 11,645
Impairment of tax receivables (3,920) (3,996)
Total tax receivables 6,864 7,649

Gross Tax Receivable

 
Current 5,958 6,891
Past due 4,826 4,754
Total gross tax receivable 10,784 11,645
% past due 45% 41%

Impairment of Tax Receivables

 
Opening balance 3,996 3,025
Impairment losses recognised during the year 591 1,693
Amounts written off as uncollectible (667) (722)
Closing balance 3,920 3,996

The Inland Revenue Department (IRD) administers the majority of the tax receivable portfolio. The recoverable amount of the portfolio 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 market rate. An additional 5% was added to the discount rate in 2009 to allow for the impact of the recession. This additional allowance has not been considered necessary for balances as at 30 June 2010. If the recoverable amount of the portfolio is less than the carrying amount, the carrying amount is reduced to the recoverable amount.

Note 14: Receivables (continued)
Actual
30 June 2010
$m 		30 June 2009
$m
The estimated recoverable amount of this portfolio and key
assumptions underpinning the valuation are:		  
Recoverable amount of tax receivables (current) 5,907 6,812
Recoverable amount of tax receivables (past due) 957 837
Discount rate 8.50% 13.91%
Impact on recoverable amount of a 2% increase in discount rate (15) (16)
Impact on recoverable amount of a 2% decrease in discount rate 16 17

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 (eg, 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 2010
$m 		30 June 2009
$m

Ageing of Tax Receivables Past Due (Gross)

 
Less than six months 948 1,542
Between six months and one year 601 519
Between one year and two years 1,097 954
Greater than two years 2,180 1,739
Tax receivables past due 4,826 4,754

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

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