Australian Tax Office XBRL Adoption Process & Recommendations

1. Australian Tax OfficeXBRL Adoption Process & Recommendations Keith Finkelde - bREX keith.finkelde@brex.com.au +61 403 167 24 With approval of the ATO Interface Standards Team May 2004 Full documentation available at: www.ato.gov.au/rsf then Consultative Forums and Interface Standards Prepared bREX – Keith Finkelde

2. Presentation Overview The Australian Tax Office has many interchanges with clients and intermediaries to satisfy regulatory requirements. A range of interface technologies are continuously being evaluated for suitability – including the full Web Services Stack, other XML specifications and XBRL as a candidate for financial information exchange. This presentation covers the process used by the ATO to evaluate and progress XBRL Adoption and includes: • Business & Regulatory Context • ATO process for stakeholder involvement. • Expected benefits to the ATO Clients and the ATO for XBRL Adoption. • Patterns of ATO interaction with clients. • Analysis of the XBRL Technical specification and available Taxonomies. • Mapping of the patterns to the available XBRL components. • Recommendations for documentation of the XBRL reference material. • Publication options for the ATO Adoption Report and ATO XBRL Taxonomies Prepared bREX – Keith Finkelde

3. Process Overview • ATO Business Context • ATO XBRL Objectives & Findings • XBRL Taxonomies • XBRL ‘Componentry’ • ATO Direction & Alternatives • Client Software Lifecycle view & Release Kits • Recommendations Prepared bREX – Keith Finkelde

4. ATO Business Context • Legislation administered: • income tax • PAYG WHT and instalments • Australian Business Number (ABN) and Australian Business Register (ABR) • GST • fringe benefits tax • excise duty • Superannuation • + other cross-agency duties • Individual Tax Payers (10M) • Corporates & Others (3M) • SuperFunds (250K) Client Agent Intermediary ATO 2002-03 Client Accounts (16M) RevenueTotal B$185 PAYG B$85 Individual B$17 Company B$33 GST B$30 … Refunds B$23 • Phone Calls (12M p.a.) • Refunds (11M p.a.) • BAS (3M p.q.) • ITR (13M p.a.) • Bank & Investment Accounts (>30M p.a.) Prepared bREX – Keith Finkelde

5. eAS (electronic Activity Statements) Context Prepared bREX – Keith Finkelde

6. Business Context • Field Definitions • Integrity Rules • eBusiness Agreement eBusiness Aspects • Transport ATO Specs Client Agent Intermediary eGateway eGateway ATO • Encryption • Envelope • Content • Security Utilities • Validating Parsers • Mappers • Application Integration • Workflow Dialogue (External) Prepared bREX – Keith Finkelde

7. ATO Objectives • General • Change Program : ‘Easier, Cheaper, More Personalised” • To align with ‘natural’ business systems • To use Industry Standards where available • XBRL Evaluation • determine suitability for use • determine market awareness and availability • consider business and technical issues • recommend adoption path Prepared bREX – Keith Finkelde

8. ATO XBRL Findings • Taxonomies • different styles & depth of declaration • considerable variation in how to record hierarchies/rules… • inconsistent use of the documentation features • few examples of non-trivial use • no method proposed for development • Specification • specification 2.1 still maturing and subject to interpretation • large reliance on deep XML knowledge • implied meta-model and structural rules • Tools • Vendors attempting catch-up with the specification Prepared bREX – Keith Finkelde

9. ATO XBRL Stakeholder Involvement • XBRL Awareness: 2002-2003 • eAS Project Commencement: 7/2003 • Industry Workshops: 8-12/2003 • XBRL Adopter discussions: Q4/2003 • BAS Vendor Discussions: Ongoing • eAS specification: 1/2004 • Awareness & market evaluation: Ongoing • Intent was to ensure a broad based business & technology standard for interchange (including AS4590, ISO15022, XBRL…) - ‘fit for purpose’ with BAS Vendors Prepared bREX – Keith Finkelde

10. XBRL Taxonomy ‘Levels’ - Observed Disclosure Statements Explanatory Notes Some XBRL Current Taxonomies – to this level Big 4 Proforma /Sample/Best Practice ATO eBAS Requirements • Facets Include: • Income / Expense • Balance Sheet • Cash Flow Prepared bREX – Keith Finkelde

11. Reporting Reference ‘Layers’ Tax Aus Tax Acts Accounting Int Acct’g Standards Aus Acct’g Standards Legislation Alignment References References XBRL Taxonomy Alignment SJE( Shared Juris’n Extension) IAS PFS/C&I ‘Inherits’ AUS PFS/C&I IAS PFS EDAP ATO XBRL Prepared bREX – Keith Finkelde

12. ATO Reporting Documents - Characteristics • Single Event & Bulk Submission • Many 3rd Parties (Agents, Auditors, Administrators..) • Many Corporate Structures • Many Document Types • Cyclic & Ad-Hoc frequencies • Frequent Content Variation (New Annual Forms) • Conditional Validation / Calculation Prepared bREX – Keith Finkelde

13. A sample ATO Form – BAS Form A Prepared bREX – Keith Finkelde

14. ATO XBRL Alternatives • Use Architecture & XBRL Reference Taxonomies • Continue ‘Explosion’ of Available Taxonomies to the detailed level required by ATO • Use Architecture Only • Develop ATO Taxonomy • Reference to TAX Acts • Evolve Tax Act concepts to Aus Accounting Standard XBRL ‘Architecture’ Usage Benefits • Element Validation & Documentation Support • Calculation Validation? • Conditional Validation? • ….. Prepared bREX – Keith Finkelde

15. ATO XBRL – ‘Componentry’/Architecture Availability • Schema Data Dictionary Tags for Elements/Items/Tuples • XLinks • Reference Point to Standards Document Sections • Label Alternate ‘spellings’ • Presentation Recommended Hierarchy/Assembly • Calculation InterElement Calculations • Definition Qualified InterElement relations • Namespaces Inclusion of other Taxonomies.. Prepared bREX – Keith Finkelde

16. Activity Statement BAS – Some Assemblies & Calculations …. GST ----------------- G1 Total Sales (G1 GST Included?) G2 Export Sales G3 Oth GST-free Sales G10 Cap Purchases G11 Non-Cap Purchases PAYG IT Instal Summary/Payment ----------------------- 1A GST On Sales 4 PAYG Withheld 5A PAYG IT Instalment 7 Deferred Instalment 8A You Owe ATO 1B GST on Purchases 5B PAYG Instalment 8B ATO Owes You 8A > 8B ? 9 Pay/Refund Amount …. sum PAYG IT I (Opt2) ----------------- Opt2: PAYGI Calc? T1 PAYG Instal Income T2 Rate T3 Varied Rate T11 PAYG Instal Amt T4 Variation Reason sum net T1 * T2/100 OR T1 * T3/100 (if T3 =/= 0)

17. Activity Statement BAS – Some Embedded Patterns Business Data …. GST ----------------- G1 Total Sales (G1 GST Included?) G2 Export Sales G3 Oth GST-free Sales G10 Cap Purchases G11 Non-Cap Purchases PAYG IT Instal Indicator Summary/Payment ----------------------- 1A GST On Sales 4 PAYG Withheld 5A PAYG IT Instalment 7 Deferred Instalment 8A You Owe ATO 1B GST on Purchases 5B PAYG Instalment 8B ATO Owes You 8A > 8B ? 9 Pay/Refund Amount …. Transferred Amount sum Indicator PAYG IT I (Opt2) ----------------- Opt2: PAYGI Calc? T1 PAYG Instal Income T2 Rate T3 Varied Rate T11 PAYG Instal Amt T4 Variation Reason sum Calculation Optional Varied Rate net Optional Business Text (Domain: Change in investments 21 Current bus continuing 22…) Decision on +ve/-ve Net T1 * T2/100 OR T1 * T3/100 (if T3 =/= 0)

18. ATO XBRL – Architecture Fit to eBAS Patterns • Schema Business Data, Indicators, Rates • XLinks • Reference Legislation ‘Pointers’ • Label Full Text / Other Alias • Presentation Hierarchy of Obligation/Blocks • Calculation Summing/Multiply/Netting… • Definition Alias-Essence (Implicit Transfer) Prepared bREX – Keith Finkelde

19. ATO XBRL – Possible Componentry Use ATO Generic Taxonomy – ‘ATO Master’ Label 1/2/3 1–Ref (‘8A’),2–ECI XML,3-Narrative Element GSTSales Reference GST Act Sec 27.1.1 Presentation 2 Level: Obligation & Ob Elements Common Sum, Net, Mult (T11= T1*T2) Calculation Definition Implied Transfer ( 5A = T11) BAS (A,BC…) Label Form A – GST Form Presentation Specific Sequence Specific Document Definition Calculation Specific Sum, Net, Multiply Definition Form Elements Prepared bREX – Keith Finkelde

20. ATO XBRL – Schema Design Options We have choice, either being a generic Schema incorporating logic or an XBRL style schema set. Schema Path ‘XBRL Style’ Path Option 1: Generic Schema + XBRL taxonomy Option 2: Vanilla XBRL Schema set Option 3: XBRL Form based Schema set (APRA) Prepared bREX – Keith Finkelde

21. Some Client End Process Paths Life Cycle View of ATO Changes ATO Specification/Design ATO XBRL AS ‘Pack’ Write Specs Build / Test Code Deploy / Configure Release Code Runtime App Generate Message Validate Message Assemble … Send to ATO Prepared bREX – Keith Finkelde

22. ATO XBRL Adoption – Recommendation Summary • Develop a method for identifying Message Models and then transformation to technology • Client Interchanges will be hybrid XML + XBRL • Full compliance with XBRL item/taxonomy structure • Develop Stand-Alone XBRL Taxonomy of ATO Concepts • Use XBRL data types • Use XLink – Reference, Label, Presentation for documentation purposes • Use market supplied XBRL Taxonomy & Instance editors Prepared bREX – Keith Finkelde

23. ATO XBRL Adoption – Status • Recommendations have been reviewed • Initial eAS release has used full XML version • ATO XBRL Taxonomy prepared and being evaluated • XBRL Tools to be evaluated and selected • Ongoing review of XBRL demand from client/vendor base • Other ATO needs (eg Corporate tax filings) to be modelled for XBRL consideration • Continued review of appropriate XML/WS standards for adoption - including TaxXML Prepared bREX – Keith Finkelde

24. Questions please? Prepared bREX – Keith Finkelde