2016-17 Annual Report 2016-17 Annual Report | Page 50

Financial Statements 2017 Toowoomba Regional Council Notes to the Financial Statements for the year ended 30 June 2017 Note 1. Significant Accounting Policies (continued) Borrowing costs are expensed as they fall due for payment in line with their agreed loan repayment schedules. 1. n Restoration Provisions A provision is made for the cost of restoration in respect of refuse dumps and quarries where it is probable the Council will be liable, or required, to incur such a cost on the cessation of use of these facilities. The provision is measured at the expected cost of the work required, discounted to current day values using the interest rates attaching to Commonwealth Government guaranteed securities with a maturity date corresponding to the anticipated date of the restoration. Within each restoration provision there may be many site locations some of which can be on Council controlled land and some which are not. The following accounting treatments apply depending on the site location: Restoration on land not controlled by Council Where the restoration site is on State reserves which the Council does not control, the cost of the provisions for restoration of these sites has to be treated as an expense in the year the provision is first recognised. Changes in the provision due to either time, discount rate or expected future cost are treated as an expense or income in the reporting in which they arise. Restoration on land controlled by Council Restoration sites that are situated on Council controlled land and are classified as site improvement assets. The provision for restoration is, therefore, included as a site improvement asset. Changes in the provision not arising from the passing of time are added to or deducted from the asset revaluation surplus. If there is no available revaluation surplus, increases in the provision are treated as an expense and recovered out of future decreases (if any). The Council has the following restoration provisions: Refuse sites The provision represents the present value of the anticipated future costs associated with the closure of the refuse sites, decontamination and monitoring of historical residues and leaching on these sites. The calculation of this provision requires assumptions such as application of environmental legislation, site closure dates, available technologies and engineering cost estimates. These uncertainties may result in future actual expenditure differing from amounts currently provided. Due to the long-term nature of the liability, the most significant uncertainty in estimating the provision is the costs that will be incurred. The provision recognised for refuse sites is reviewed at least annually and updated based on the facts and circumstances available at the time. Quarry sites The provision represents the present value of the anticipated future costs associated with the closure of the quarry sites, reclamation and rehabilitation of these sites. The calculation of this provision requires assumptions such as application of environmental legislation, site closure dates, available technologies and engineering cost estimates. These uncertainties may result in future actual expenditure differing from amounts currently provided. Because of the long-term nature of the liability, the most significant uncertainty in estimating the provision is the costs that will be incurred. The provision recognised for quarry sites rehabilitation is reviewed at least annually and updated based on the facts and circumstances available at the time. 1. o National Competition Policy The Council has reviewed its activities and has identified its business activities. Details of these activities can be found in Note 25. 1. p Taxation Income of local authorities and public authorities is exempt from Commonwealth taxation except for Fringe Benefits Tax and Goods and Services Tax (‘GST’). The net amount of GST recoverable from the ATO or payable to the ATO is shown as an asset or liability respectively. The Council pays payroll tax to the Queensland Government on certain activities. page 12 50 TOOWOOMBA REGIONAL COUNCIL I Annual Report 2016 - 2017