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Note 12: Receivables

2017 Forecast Actual
Budget
2016
$m
Budget 2017
$m
30 June
2017
$m
30 June
2016
$m
9,263 9,513 Tax receivables 10,313 9,161
2,477 2,437 ACC levy receivables 2,225 2,294
604 726 Social benefit receivables 736 704
285 286 Other levies, fines and penalty receivables 350 288
12,629 12,962 Sovereign receivables 13,624 12,447
149 202 Reinsurance receivables 222 534
4,706 3,476 Trade and other receivables 4,683 3,808
17,484 16,640 Total receivables 18,529 16,789
By maturity  
16,175 15,141 Expected to be realised within one year 16,898 14,822
1,309 1,499 Expected to be outstanding for more than one year 1,631 1,967
17,484 16,640 Total receivables 18,529 16,789

Receivables arising from sovereign revenue will be initially recognised at fair value.  These receivables are subsequently adjusted for penalties and interest as they are charged, and as they are tested for impairment.  Interest and penalties charged on tax receivables are presented as tax revenue in the statement of financial performance.

Reinsurance and other recoveries receivable on paid claims and outstanding claims, are recognised as revenue in the statement of financial performance. Recoveries receivable are assessed in a manner similar to the assessment of outstanding claims and are measured as the present value of the expected future receipts.

Receivables from taxes, levies and fines (and any penalties associated with these activities) as well as social benefit receivables which do not arise out of a contract are collectively referred to as sovereign receivables.

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 actively managed.

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

Tax receivables, ACC levy receivables and social benefit receivables are considered to be short term, so their carrying value represents a reasonable approximation of their fair value.

Other levies, fines and penalty receivables comprise debtor portfolios administered by Ministry of Justice (ie, court fines) and Inland Revenue (ie, child support). These receivables are recorded at fair value, which on initial recognition represent the face value of the amount owed to the Crown, adjusted to reflect the amount expected to be recoverable. For the current year the initial adjustment from face value to fair value of these receivables was $201 million (2016: $312 million), with $129 million (2016: $252 million) of the adjustment relating to child support debt administered by Inland Revenue.

Social benefit receivables comprise benefit overpayments, advances on benefits and recoverable special needs grants primarily administered by the Ministry of Social Development.

Trade and other receivables are relatively short term, with $4,567 million (2016: $3,454 million) expected to be settled in the next year. Their carrying amount provides a reasonable approximation of their fair value.

30 June 2017 Gross receivable
$m
Impairment
$m
Net receivable
$m
Tax receivables 12,348 (2,035) 10,313
ACC levy receivables 2,341 (116) 2,225
Social benefit receivables 1,506 (770) 736
Other levies, fines and penalty receivables 2,891 (2,541) 350
Reinsurance receivables 222 222
Trade and other receivables 4,782 (99) 4,683
Total receivables 24,090 (5,561) 18,529
30 June 2016 Gross receivable
$m
Impairment
$m
Net receivable
$m
Tax receivables 12,927 (3,766) 9,161
ACC levy receivables 2,398 (104) 2,294
Social benefit receivables 1,395 (691) 704
Other levies, fines and penalty receivables 2,800 (2,512) 288
Reinsurance receivables 534 534
Trade and other receivables 3,895 (87) 3,808
Total receivables 23,949 (7,160) 16,789

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 of 5.0% (2016: 6.0%).

If the recoverable amount of the portfolio is less than the carrying amount, the carrying amount is reduced to the recoverable amount. Alternatively, if the recoverable amount is more, the carrying amount is increased.

Tax receivables are classified as past due when any outstanding tax is not paid by the taxpayer's due date. IRD has debt management policies and procedures to actively manage the collection of past due debt.

Actual
30 June
2017
$m
30 June
2016
$m

Gross Tax Receivable

   
Current 9,357 8,247
Past due 2,991 4,680
Total gross tax receivable 12,348 12,927
% past due 24.2% 36.2%

Impairment of Tax Receivables

   
Opening balance 3,766 4,215
Impairment losses recognised during the year 498 683
Amounts written off as uncollectible (2,229) (1,132)
Closing balance 2,035 3,766

Tax Receivable Net of Impairment

   
Current 9,302 8,192
Past due 1,011 969
Total tax receivable net of impairment 10,313 9,161
% past due 9.8% 10.6%

Ageing of Tax Receivables Past Due (Gross)

   
Less than six months 707 738
Between six months and one year 447 398
Between one year and two years 561 662
Greater than two years 1,276 2,882
Total tax receivables past due (Gross) 2,991 4,680
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