2016-11-08 S&O Agenda - Item 3, Attachment 1 - Local Economic Plan

                                                                                           Financial Statements 2016



Noosa Shire Council                                                                               ~Q.A.O
                                                                                                 '-.._~rtified staten:ent~
                                                                                                      ----
Notes to the Financial Statements
for the year ended 30 June 2016

Note 1 Summary of Significant Accounting Policies (continued)


(1.o)    Borrowings and Borrowing Costs                    amounts currently provided. Because of the long-term
                                                           nature of the liability, the most significant uncertainty
Loans payable are measured at amortised cost               in estimating the provision is the costs that will be
using the effective interest rate method. The              incurred.
effective interest rate is the rate that exactly
discounts estimated future cash payments or                The provision recognised for the Eumundi Rd landfill
receipts through the expected life of the financial        sites is reviewed at least annually and updated based
instrument. Borrowing costs, which includes interest       on the facts and circumstances available at the time.
calculated using the effective interest method and         Management estimates that the site will fully close in
administration fees, are expensed in the period in         2054 and that site restoration will occur progressively
which they arise. Costs that are not settled in the        over the subsequent thirty years.
period in which they arise are added to the carrying
amount of the borrowing.                                   Quarry Sites

All borrowing costs are expensed in the period in          The provision represents the present value of the
which they are incurred.                                   anticipated future costs associated with the closure of
                                                           the Ringtail Creek quarry sites, reclamation and
Borrowings are classified as current liabilities unless    rehabilitation of the site.
Council has an unconditional right to defer
settlement of the liability for at least 12 months after   The calculation of this provision requires assumptions
the balance date.                                          such as application of environmental legislation, site
                                                           closure dates, available technologies and engineering
(1.p)    Restoration Provisions                            cost estimates. These uncertainties may result in
                                                           future actual expenditure differing from amounts
A provision is made for the cost of rehabilitation of      currently provided. Because of the long-term nature of
assets and other future restoration costs where it is      the liability, the most significant uncertainty in
probable the Council will -be liable, or required, to      estimating the provision is the costs that will be
incur such a cost on the cessation of use of the           incurred. The provision recognised for quarry sites
facility. This liability is provided in respect of         rehabilitation is reviewed at least annually and
Quarries and Landfill sites.                               updated based on the facts and circumstances
                                                           available at the time.
The provision is measured at the expected cost of
the work required discounted to current day values         (1.q)   Taxation
using an appropnate rate. The current capital market
yield bond rate is considered an appropriate rate          Income of local authorities and public authorities is
with a maturity date corresponding to the anticipated      exempt from Commonwealth taxation except for
date of restoration.                                       Fringe Benefits Tax and Goods and Services Tax
                                                           ('GST'). The net amount of GST recoverable from the
Council has the following restoration provisions:          A TO or payable to the ATO is shown as an asset or
                                                           liability respectively.
Landfill sites
                                                           Unitywater pays Council an income tax equivalent in
The provision represents the present value of the          accordance with the requirements of the Local
anticipated future costs associated with the closure       Government Act 2009. Where the activity of such an
of the Eumundi Rd landfill sites, decontamination          entity is subject to the tax equivalents regime, the
and monitoring of historical residues and leaching on      income tax expense is calculated on the operating
the site.                                                  surplus adjusted for permanent differences between
                                                           taxable and accounting income.
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


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