Annual Report 2015-16

Financial Statements 2016

Noosa Shire Council

Notes to the Financial Statements
for the year ended 30 June 2016
Note 1. Summary of Significant Accounting Policies (continued)

(1.0)   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    @Stimating 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 appropriate 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:       ATO 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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