Special Appropriations: Special Accounts


A special account is a limited special appropriation that notionally sets aside an amount that can be expended for listed purposes. The amount of appropriation that may be drawn from the CRF by means of a special account is limited to the balance of each special account at any given time. Special accounts are not bank accounts. Amounts forming part of the balance of a special account may be held in various ways, such as in the Official Public Account, an entity's official bank account, or partly in both.

A special account can be established either by the Finance Minister making a determination under section 78 of the PGPA Act, or by legislation as recognised under section 80 of the PGPA Act. A special account determination made by the Finance Minister is a legislative instrument. Both a determination (for a section 78 special account) and legislation (for a section 80 special account) are considered by parliament before becoming law. The appropriation authority to draw money from the CRF is section 78 or 80 of the PGPA Act, as relevant – rather than the determination or the legislation. Special accounts may be established when it is clear that other types of appropriations are not suitable. For example, there may be a need for specific transparency, including where activities are jointly funded with other governments. The determination or Act that establishes a special account specifies the purposes for which the special account may be debited. The establishing determination, and in most cases the establishing Act, also identifies the types of receipts that may be credited to increase the balance of the special account.

Depending on its purpose, a special account may be credited with amounts from annual appropriations, special appropriations, from third parties, by direct legislative provision, or in limited circumstances with investment income.

Some special accounts sunset (i.e., cease in effect) after a set period of time after their establishment. Officials are recommended to familiarise themselves with the sunset dates (if any) of all appropriation legislation that provides funding to their entity. At the time a special account ceases, any unspent balance is no longer available to the Commonwealth entity to spend. There can be no 'negative' special account balances.

The Department of Finance has issued the following Estimates Memorandum to assist officials to manage amounts related to a special account, and record transactions in the Central Budget Management System. To obtain a copy, contact your Chief Financial Officer (CFO) area or Agency Advice Unit (AAU) in Finance:

  • EM 2017/47 – Special Accounts: Policy, Guidance and the Central Budget Management System (CBMS).

Chart of Special Accounts

The Chart of Special Accounts lists all special accounts managed by portfolio departments. The Chart is intended to assist officials in the effective management and reporting of special accounts. Each special account listed on the Chart is hyperlinked to its most recent legal instrument on the Commonwealth's legislation database . The Chart is updated whenever a new special account is created, an old one is abolished, or when the administration of a special account changes.

Overview on special accounts

Understanding special accounts is assisted by understanding the appropriation of Commonwealth money. The requirement to appropriate money is specified in the Australian Constitution; sections 81, 82 and 83 refer:

  • All money held by the Commonwealth, collectively forms the Consolidated Revenue Fund (CRF).
  • Money in the CRF must be used for Commonwealth expenditure.
  • Spending Commonwealth money requires an appropriation in law.

In law, there are two types of appropriations: annual appropriations (made in Appropriation Acts) and special appropriations (made in other Acts).

What is a special account?

A special account is:

  • an appropriation mechanism;
  • used to set aside an amount of money in the CRF for specific Commonwealth payments.

The word 'mechanism' is used to describe that a special account itself is not an appropriation, instead it is a mechanism to increase or decrease an existing special appropriation. That existing special appropriation is provided in section 78 or section 80 of the PGPA Act.

  • All payments made against a special account are authorised by the special appropriation in either section 78 or section 80. Therefore, special accounts are managed as a subset of special appropriations.

Setting aside money in the CRF is known as hypothecating revenue or ring‑fencing money. An example is levies collected and set aside to fund services to an industry. No policy or law compels using a special account to implement initiatives. The type of appropriation used to fund an initiative is a government decision. The Chart of Special Accounts identifies the number of special accounts in existence and the entity that manages each.

Which entities can manage a special account?

An NCE can manage a special account and the accountable authority of the NCE is accountable for that special account (accountable authority is defined in the PGPA Act section 11 refers). A CCE can manage a special account for and on behalf of an NCE. However, a CCE cannot manage a special account used to make payments to that CCE. This is because a special account appropriates Commonwealth money and “a CCE is legally separate from the Commonwealth” (PGPA Act section 11 refers).

Why use a special account?

Special accounts are established on a case-by-case basis, as considered by the Finance Minister. The advantage of using a special account in one circumstance can be a disadvantage in another, as shown below.

Advantages of a special account

  1. Longer lasting appropriation - A special account remains available until the establishing legislation is repealed. Annual appropriations cease after three years.
  2. Narrower spending purposesPayment purposes are specified in legislation that establishes a special account. Whereas, the purposes for annual appropriations are broader and based on Outcomes stated in each NCE's PBS.

Disadvantages of a special account

  1. More administration and reporting - estimated and actual spending is administered and reported by both the NCE and by Finance in consolidated whole-of-government reporting.
  2. Narrower spending purposes - Expenditure is limited to specific payment purposes set out in legislation. Whereas the payment purposes for annual appropriations are based on broad entity functional Outcome statements.

Myths about special accounts

The legislated provisions for a special account do not authorise an NCE to:

  1. manage non-Commonwealth money
    Consistent with the Australian Constitution, all money held by the Commonwealth, forms part of the CRF and that money is used for Commonwealth expenditure.
  2. establish an entity
    A special account does not provide legal or financial independence from the managing NCE.
  3. transfer accountability for spending
    Special accounts used for expenditure on statutory office holders, advisory boards and advisory committees must be managed by the accountable NCE. The expenditure is consolidated in the managing NCE's financial statements.
  4. operate a departmental loss
    An operating loss occurs if an NCE's departmental expenses are more than departmental revenue in the same financial year. As special accounts are designed to allow a balance to increase over years, special accounts used for departmental expenditure increase the risk of a departmental operating loss. Government approval is required to report an operating loss. For more guidance, consult the relevant AAU or the Budget Process Operating Rules (BPORs).
  5. spend more than agreed estimates 
    Government approval is required to spend more than agreed estimated expenditure, even if a revised amount would remain within the balance of a special account or remain within an agreed estimated envelope across years. (In the BPORs, the latter is termed 'a movement of funds' across financial years.) Spending more than agreed estimates would increase government expenditure.
  6. recover costs by charging 
    Recovering costs by charging for goods and services requires a Government policy decision (generally a Cabinet decision). A policy to charge is legislated in an Act. Charging must be consistent with the Australian Government Charging Framework. For guidance, contact the Charging Team in Finance (ChargingPolicy@finance.gov.au).
  7. raise revenue
    Raising revenue by investing money requires authorisation in an Act or a written delegation from the Minister for Finance of authority in the PGPA Act. The legislation establishing a special account does not provide authority to invest the balance of that special account. For more information, see the section 'Interest and Investing' below.

How is a special account established?

Consistent with the PGPA Act, special accounts can be established in two ways:

  1. a determination made by the Minister for Finance being tabled in the Parliament as a disallowable legislative instrument (section 78 of the Act); and
  2. a Bill introduced in the Parliament by any Minister (section 80 of the Act).

The relevant portfolio Minister must seek written agreement from the Minister for Finance to establish, vary or revoke a special account. This requirement is consistent with the Legislation Handbook. Portfolio Ministers must seek agreement from the Minister for Finance to include or amend a special account in a Bill. In preparing instructions for drafting special account provisions in a Bill, the NCE must liaise with the Special Appropriations Team in Finance before drafting instructions are finalised.

If a Bill contains a special appropriation or a special account, it is standard practice of the Office of Parliamentary Counsel (OPC) to seek Finance comments before the Bill is finalised. To allow sufficient time for to review such Bills, the Special Appropriations Team in Finance will require advice from the instructing NCE on policy authority for each appropriation drafted in a Bill.

Finance officials cannot provide 'officer level' support for a policy proposal that seeks agreement to establish a special account. The appropriate order is to first seek government agreement to expenditure on initiatives. If expenditure is agreed, annual appropriations is the default method to fund initiatives. To implement the policy, if annual appropriation is not suitable, then the portfolio Minister can consult the Minister for Finance on alternative appropriation methods.

  • Draft ministerial correspondence to the Minister for Finance can be sent to Finance for review of technical accuracy. Please liaise with the Special Appropriations Team in Finance by emailing Special.Appropriations@finance.gov.au.

The legislative process to establish a special account can be lengthy. The relevant NCE is advised to contact Finance at an early stage and at least two parliamentary sitting periods in advance of when payment are required to be made using a special account. Please liaise with the Special Appropriations Team in Finance.

Establish with an Act or a Legislative Instrument?

If implementing a government function authorised in an Act requires a special account, then OPC generally advise that special account be established in the same Act. Where there is no function related Act, a determination can be made by the Minister for Finance to establish a special account. A special account determination (to establish, vary or revoke a special account) must be tabled for six days in each House of the Parliament, during which time either House may disallow the special account. If no disallowance motion is passed, on the seventh day, the determination takes effect as a legislative instrument under the Legislation Act 2003.

Questions to consider for a new special account

If considering a new special account, the NCE is encouraged to address the following questions in consultation with the Special Appropriations team in Finance:

  1. What is the portfolio function or activity for which a special account is proposed?
  2. Why is an annual appropriation not suitable to manage the activity?
  3. For a departmental activity, can it be managed using the Retainable Receipts provisions in section 74 of the PGPA Act and section 27 of the PGPA Rule?
  4. How would a special account enhance managing that activity?
  5. Would the special account be used for administered or departmental expenditure?
  6. When does the special account need to be in place?
  7. (As informed by when related receipts or payments are expected to be managed.)
  8. For how long would a special account be required?

Officials can request that Finance provide a flow chart with the steps and criteria to consider when thinking about requesting the Finance Minister establish a new special account by determination: the "Indicative Guide to the consideration of establishment of new Special Accounts". Note that a proposed special account that fulfils all the listed criteria is not guaranteed to be established, as this is entirely at the discretion of the Finance Minister.

How does a special account work?

The kinds of payments allowed to be made using a special account will be specified in the instrument or Act establishing that special account. These specifications are known as debiting clauses or expenditure purposes.

The kinds of money raised allowed to be set aside with a special account will always be specified in the instrument used to establish the special account and will usually be specified in the Act, if an Act was used to establish the special account. These specifications are known as crediting clauses or crediting provisions.

References to debits and credits for a special account refer to increases or decreases of the appropriation balance and not withdrawals or deposits to a bank account.

Legislative and policy authority is required to spend from the balance of a special account. Legislative spending authority will be in the special account establishing legislation and also in the PGPA Act, which limits spending to the special account balance. Within that balance, policy authority limits spending by up to the expenditure estimate agreed by government.

Amounts equal to government approved expenditure estimates, for the current financial year, are held as cash in the Official Public (bank) Account (OPA) and/or cash in an NCE managed bank account. The entire balance of a special account is generally not held as cash (only amounts required to make foreseeable payments).

Amending the crediting or debiting purposes of a special account requires both government policy authority and legislative amendments. The NCE should liaise with the Special Appropriations Team in Finance (Special.Appropriations@finance.gov.au).

The balance of a special account

Crediting amounts increases the balance of a special account. Debiting amounts decreases the balance. The balance increases or decreases at the time a transaction is recorded in the accounts and records of the accountable NCE; subsections 78(7) and 80(4) of the PGPA Act refer.

  • The balance of a special account is identified from the internal accounts and records of the accountable NCE.

The balance of a special account must be accurately recorded in the NCEs internal accounts and records and also in CBMS (PGPA Act section 36 refers). The timing of recording transactions is likely to result in an NCE's accounts and records being more up-to-date than data in CBMS.

  • If the balance is recorded as a negative amount in the NCE's records or in CBMS, this is likely to indicate a recording error and should be checked for accuracy.
  • Entities are reminded that if special account-related amounts are held in a bank account and are not required for immediate spending, they should be remitted back to the OPA (at least monthly). These amounts remain available for withdrawal when required.

Sources of amounts for crediting to a special account balance (subject to related legislation) include:

  1. Receipts collected from:
    • outside the Commonwealth;
    • other NCEs;
    • CCEs.

Annual or special appropriations managed by the NCE that manages the special account, for example refer to:

  • annual Appropriation Acts Nos. 1 & 2, section 11;
  • the Act establishing the purposes of a special appropriation.
  1. An initial or subsequent credit to a special account (if specified in the instrument or Act that established the special account);
  2. If authorised in an Act, a Ministerial determination or direction, examples are:

If a special account was credited or debited by a clerical mistake (inconsistent with the spending purposes), the transaction can be reversed in records, so that the balance is not changed by virtue of a clerical mistake. The NCE is advised to hold relevant supporting documentation and discuss such cases with its internal auditors. If a special account is debited and payments are made that are inconsistent with the legislated debiting purposes, this would breach section 83 of the Constitution.

Know your obligations!

To manage a special account, officials will require a thorough understanding of related government policies and legal provisions. For further assistance with:

  1. appropriation payment purposes, consult the legislation;
  2. policy authority to spend, consult the relevant AAU in Finance;
  3. government policies for managing expenditure estimates and Budget processes, consult EMs (available in CBMS) or the relevant AAU.
  4. NCE procedures and protocols, consult internal delegations, directions, approved business processes such as Accountable Authority Instructions and the Chief Financial Officer.
  5. special accounts or special appropriations policies, contact the Special Appropriations Team at special.appropriations@finance.gov.au.

Entities are encouraged to contact the Australian Government Solicitor for legal advice on special accounts. The Legal Services Directions applicable to all NCEs, require that Finance must be consulted before, during and after seeking legal advice on appropriations. For special accounts liaise with the Special Appropriations Team.

Machinery of government (MoG) changes

Administrative Arrangement Orders (AAOs) are used to allocate responsibilities to Ministers. When an AAO lists 'matters dealt with by the Department' and a special account is involved, the Chief Executive Officer of the receiving NCE becomes responsible for managing the special account, effective as of the AAO date. This applies to special accounts established by an Act or an instrument.

To continue operations when MoG changes occur, an option for the receiving NCE is to request the former NCE to continue managing related receipts and payments on its behalf (including on an interim basis). In such cases, the receiving NCE must provide the former NCE with appropriate delegations and authorisations.

If a MoG change results in the one special account supporting 'matters dealt with by' more than one NCE, an immediate option is for the special account to be managed across NCEs.

  • Each NCE can manage its portion of the special account expenditure estimates and financial statement reporting. This is consistent with the longstanding approach of several NCEs using the same special appropriation - e.g. the special appropriation in section 77 of the PGPA Act, that is used to make repayments.
  • If ministers decide that separate special accounts be established for the NCEs involved, this can be progressed at the next available parliamentary sitting period.

Instruments that establish special accounts specify the accountable authority of the responsible NCE. When a special account is transferred to implement MoG changes, it is not necessary to amend the establishing instrument to name the new responsible NCE. This is because Part 5 of the Acts Interpretation Act 1901 provides for the establishing instrument to continue and to be read in the name of the receiving NCE.

How long does a special account last?

A special account lasts until its provisions (in an instrument or Act) are repealed.

  1. Please note that instrument-established special accounts sunset automatically after ten years – please see the Sunsetting for special accounts section below for further information.

Entities are encouraged to revoke special accounts that have fulfilled their use or that can be replaced with annual appropriations. For example, if a special account is reported with a zero balance or no receipts and payments for two or more financial years, this could signal a need to review the special account and the managing NCE should liaise with the Special Appropriations Team (Special.Appropriations@finance.gov.au).

Sunsetting for special accounts

Sunsetting is a term to describe the automatic repeal of legislative instruments; the Legislation Act 2003, section 50 refers. Instruments that establish or amend special accounts are subject to sunsetting. A list of instruments that are scheduled to sunset is tabled in the Parliament by Attorney‑General, 18 months ahead.

A legislative instrument sunsets on the earlier of 1 April or 1 October in the tenth year after being registered on the Federal Register of Legislation (a public database). The sunset date for an instrument can be identified by viewing the instrument on the Federal Register of Legislation.

Instruments used to revoke a special account are exempt from sunsetting because as soon as the revocation has taken effect, the instrument is self-repealing under section 48A of the Legislation Act 2003.

In limited circumstances, the sunset date for an instrument can be deferred by the Attorney‑General issuing a deferral certificate under section 51 of the Legislation Act 2003. Section 51 provides two bases for a deferral; both recognise if other legislative processes are unlikely to conclude before the sunset date. Deferrals are limited to either 6 or 12 months and must be requested by the Minister for Finance. If an NCE anticipates requiring a deferral, it must liaise with the Special Appropriations team in Finance.

Six months before a special account instrument is scheduled to sunset, in consultation the managing NCE, Finance assesses if a new special account is necessary for the ongoing management of the related activity. For further advice on this, please email the Special Appropriations Team (Special.Appropriations@finance.gov.au). If Finance and the managing NCE agree that a new special account is appropriate to manage the activity, then at least two parliamentary sittings before the sunset date, the portfolio Minister must write to the Minister for Finance to request a new special account.

This lead time is required to ensure sufficient time for determinations to be made by the Minister for Finance, registered on the Federal Register of Legislation and tabled in each House of the Parliament for a six-day disallowance period after which the determination takes effect. At times, the disallowance period spans across parliamentary periods. Furthermore, after taking effect and before the sunset date, the managing NCE must transfer the balance from the sunsetting special account to the new special account, in order to ensure the appropriation is not extinguished.

If a sunsetting special account is used to manage an ongoing departmental activity, it may be appropriate to transfer the special account balance to annual departmental appropriation and no longer use a special account. This can be done by the portfolio Minister writing to seek the Finance Minister's agreement (under section 74 of the PGPA Act and section 27 of the PGPA Rule) to transfer the special account balance before it sunsets to the NCE's annual departmental item appropriation. For further guidance on this, consult the Special Appropriations Team.

For a special account established by a legislative instrument, expenditure estimates cannot go beyond 10 years. If the related activity is ongoing beyond 10 years, the forward estimates will need to be recorded against another appropriation.

Funds or Foundations

The terms fund and foundation are financial concepts and are not defined in the PGPA Act. These terms are used to implement initiatives involving money being set aside and in some cases, money being raised by investing. Special accounts are often used to give effect to initiatives that involve such concepts, for example the Future Fund Special Account.

Investment and Interest

It is not a standard operation for most NCEs to raise revenue by investing money or earning interest on money held in bank accounts. NCEs that are required to invest or earn revenue are authorised to do so in:

  1. function enabling legislation, such as the Future Fund Management Agency (Future Fund Act 2006) and the Australian Financial Security Authority (Bankruptcy Act 1966); or
  2. written delegation by the Minister for Finance.

Spending any revenue raised requires an appropriation. While a special account provides an appropriation, the legislation establishing a special account does not authorise investing money or earning bank account interest. Such authorisation must be sought by the portfolio Minister writing to the Minister for Finance.

  1. Investment authority is provided to the Minister for Finance in section 58 of the PGPA Act. This authority may be delegated if required.
  2. Authority to maintain bank accounts is provided to the Minister for Finance in section 53 of the PGPA Act. This authority has been delegated to each NCE, with accompanying directions that require interest on bank accounts to be earned by the Commonwealth at a central level. The directions can be amended if required.

For further advice on investing and earning interest contact the Finance AAU or Governance Team (PGPA@finance.gov.au).

If an NCE manages a special account and it is required to raise revenue on the balance of that special account, the portfolio Minister must write to Minister for Finance to seek a delegation of the investment authority in section 58 or an amendment to the banking direction for the delegation of section 53.

Where a special account has been established, instead of providing investing or banking authorities, in some cases the government has approved supplementary annual funding to credit to the special account. Such supplementation is called an Interest Equivalency Payment (IEP). IEP amounts are provided in annual Appropriation Acts. Receiving supplementary appropriation is not a reason to establish a special account.

  • For further advice on IEPs, consult EM 2017/47 – Special Accounts: Policy, Guidance and the Central Budget Management System (CBMS). The Special Appropriations Team is also available to answer queries (Special.Appropriations@finance.gov.au).

Trust-like arrangements

Before entering into a trust or trust-like arrangement, it is important to understand the legal, financial and other implications for the Commonwealth. NCEs are encouraged to obtain policy authority (a decision of Cabinet or the Prime Minister) before entering into such an arrangement. If an NCE holds money on trust for a non-Commonwealth entity (such as an individual, company or non-government organisation), that money forms part of the CRF. Therefore, an appropriation is required to spend the money, including repaying a trust benefactor.

A special account is not necessary to manage money held on trust. For example, money held on trust to undertake departmental activities can be managed using departmental appropriation and the provisions in section 74 of the PGPA Act and section 27 of the PGPA Rule (see guidance on Retained receipts).

Entities are discouraged from establishing a trust (under a trust deed or a trust instrument) or accepting trust-like responsibilities unless it is expressly in the Commonwealth's interest to do so. For further advice and in particular before entering a trust relationship that obliges investing money, it is recommended that the NCE consult its AAU and the Public Governance, Performance and Accountability Team in Finance (PGPA@finance.gov.au).

Legal trusts are established under state and territory laws and usually require money to be held 'separately'. This separation can be satisfied by an NCE maintaining a separate bank account to manage money held on trust as part of its annual departmental appropriation. Additional transparency can be provided in the NCE's annual report.

Financial reporting

Annual financial reporting for a special account is as follows:

  1. estimated expenditure is reported in NCE Portfolio Budget Statements (PBS);
  2. estimated expenditure is reported in Budget Paper No. 4 (BP4);
  3. actual expenditure is reported in NCE Financial Statements and the government Consolidated Financial Statements (CFS).

NCE's must maintain special account expenditure estimates, transactions and balances in internal accounts and records, and also in CBMS (PGPA Act section 36 refers). To ensure central government records are correct, CBMS is to be updated as soon as is practicable to reflect the NCE's internal accounts and records. This is important because CBMS data is used to prepare government Budget Papers and the CFS.

For guidance to prepare the PBS, refer to the Finance website page entitled Portfolio Budget Statements. For guidance to maintain financial records and prepare financial statements, refer to the Finance website page entitled Financial reporting and accounting policy, the PGPA Financial Reporting Rule and associated guidance, Australian Accounting Standards and your CFO and support staff.

The estimated balances and cash flows for special accounts, across all Commonwealth entities, for the upcoming financial year, are included in Budget Paper No. 4 – Agency Resourcing. The final balances and cash flows for special accounts, across all Commonwealth entities, for the financial year ended 30 June, are provided in the report entitled Special Accounts Balances and Cash Flows Report. There is an important distinction in the way receipts into special accounts are displayed in the Table of Estimated Cash Flows and Balances for Special Accounts and in the Agency Resourcing Table. The former distinguishes between appropriated and non-appropriated receipts into special accounts, while the Agency Resourcing Table shows only estimates of receipts from sources external to the relevant entity. The Table of Estimated Cash Flows and Balances for Special Accounts and the Agency Resourcing Table both include estimates of public money that is not held on account of the Commonwealth or for the use or benefit of the Commonwealth.

Transactions that are made by individual Commonwealth entities, using special accounts, are disclosed in the relevant entity's annual financial statements. These statements are available on the relevant entity's website. The transactions of the whole Australian Government are consolidated and disclosed in Finance's Consolidated Financial Statements.

Budget Paper No. 4

Special Accounts Balances and Cash Flows Report


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