Non-reciprocal transfers include:

• transfers that occur as a result of State Service restructuring following an Administrative Arrangements Order; and
• voluntary transfers between agencies.

This Instruction has been prepared in accordance with the provisions of Urgent Issues Group Abstract UIG 38 Contributions by Owners Made to Wholly-Owned Public Sector Entities (UIG 38). UIG 38 sets out the provisions for classifying a transfer of net assets between State Sector entities.

How a transfer is classified has implications for reporting of the Headline Budget Measures. It is important that there is a clear basis for classification of all transfers for budget and outcomes reporting.

Paragraph (3) of Treasurer’s Instruction 1002 Goods and Services Tax explains the Goods and Services Tax (GST) implications of transfers arising from State Service restructuring following an Administrative Arrangements Order, or from voluntary transfers between agencies.

Transfers as a result of an administrative restructure will generally not have an equity instrument or formal agreement to provide evidence of an equity transfer. Paragraph (1) provides a formal designation for all future agency restructures, which satisfies UIG 38 requirements. As a result, all transfers must be treated as a contribution by owner.

Administrative restructures have been designated as contribution by owners as they are non-discretionary in nature and result from the decisions of the Government as owner. The Government has the right to sell, transfer or redeem the net assets of agencies at any time. Accordingly, it is appropriate to designate such transfers as a contribution by owners and record the transfer directly to accumulated funds within equity in the Balance Sheet.

AAS 29 Financial Reporting by Government Departments states that, where activities are transferred from one agency to another agency, the transferee agency should not recognise expenses and revenues which arose prior to the transfer. This is because those expenses and revenues did not arise as a result of activities conducted by the transferee agency.

For practical reporting purposes it may be appropriate to adopt an alternative effective date for the transfer of net assets, such as 1 July. For example, where the restructure occurs early in the financial year, or the transfer involves an immaterial level of revenue, expenses and net assets, the adoption of 1 July may have no material impact on financial reporting for the affected agencies and simplify the transfer process. The Secretary of the Department of Treasury and Financemay approve an alternative date, such as 1 July, in consultation with the Auditor-General, where it can be demonstrated that there is no material impact on financial reporting.

Under the TFRS Mandatory Data requirements, agencies must submit summary accrual files by midnight of the fifth working day following the end of a reporting month. Reporting months are: September, November, December, February, March, May and June. A PARS accrual file will be required from all agencies in the month following a restructure, based on the original agency structure, regardless of whether it is a reporting month.

The financial information provided to PARS in accordance with paragraph (9) must contain the finalised transactions and balances. Treasury will use this information to assist in the transfer process between agencies.

The transition to the new agency structures may take some time, depending on the size and nature of the restructure. Therefore, Treasury will liaise with the affected agencies and advise of the timing requirements for submission of PARS files in accordance with the new agency structures.

Agencies may also enter into voluntary agreements to transfer net assets or assume responsibility for the provision of a service. Transfers of assets and liabilities as a result of a voluntary transfer of net assets will generally not represent a contribution by owner. The transfer is occurring at the discretion of the agencies and does not reflect an explicit decision of the Government. As a result, the transfers are not equity in nature and have not been designated as a “contribution by owner”.

The transfer will be recorded in the Income Statement against assets assumed (liabilities transferred) and liabilities assumed (assets transferred). The disclosure requirements for these items are set out in the model statements presented in Treasurer's Instruction 206 Presentation of Annual Financial Statements.