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  • Managing revenue

    Revenue collection

    As Australia’s principal revenue agency, the ATO facilitates the collection of revenue to fund public goods and services for the community. We do this through a range of collection systems, including income tax, goods and services tax (GST), and excise duty.

    Net tax collections in 2016–17 were $359.3 billion, up $16.7 billion (4.9%) over the previous year, but $4.2 billion (1.2%) below the amount expected at the time of the Budget 2016–17. While collections were below Budget expectations, the shortfall was much lower than in recent years (for example, in 2015–16 the shortfall was $14.5 billion). Indeed, it was the smallest variation from Budget expectations since 2009–10.

    Subdued wage growth continues to have an impact on individuals tax collections. In contrast, company profits grew solidly in 2016–17, particularly in the mining sector, supporting company tax collections.

    Total individuals tax collections in 2016–17 were up $6.8 billion (3.6%) over the previous year, but below Budget expectations by $3.1 billion. This is consistent with lower wage growth than anticipated, with growth in average wages remaining at historical lows. However, employment growth has remained solid.

    GST collections were $2.5 billion (4.3%) higher than the previous year, but $0.9 billion (1.5%) below the Budget 2016–17 expectations, reflecting softer consumption growth and lower consumer price inflation than anticipated.

    Company tax receipts were $5.8 billion (9.2%) higher than the previous year. This reflected higher commodity prices flowing on to stronger growth in company profits.

    Excise collections were very close to Budget expectations. The offshoring of tobacco production is now complete, and there has been a corresponding increase in duty collected by the Department of Immigration and Border Protection on tobacco excise equivalent goods.

    TABLE 2.7 ATO net tax collections, 2014–15 to 2016–17(a)

    ATO collections

    2014–15$m

    2015–16$m

    2016–17$m

    Gross PAYG withholding(b)

    166,352

    173,436

    179,355

    Gross other individuals

    38,541

    41,746

    42,871

    Individual refunds

    −27,033

    −28,081

    −28,364

    Total individuals

    177,860

    187,101

    193,863

    Companies

    66,946

    62,648

    68,408

    Superannuation funds(c)

    5,873

    6,834

    8,218

    Resources rent taxes(d)

    1,870

    741

    981

    Fringe benefits tax(e)

    4,347

    4,368

    4,046

    Total income tax

    256,896

    261,692

    275,515

    Excise

    23,663

    21,492

    21,800

    Goods and services tax(f)

    54,579

    57,536

    60,022

    Other indirect taxes(g)

    1,312

    1,456

    1,506

    Total indirect taxes

    79,555

    80,485

    83,328

    Superannuation guarantee charge

    379

    341

    283

    Foreign investment application fees(h)

    na

    78

    134

    Total net tax collections

    336,830

    342,596

    359,259

    Self-managed superannuation fund levy

    181

    155

    122

    Other revenue – unclaimed monies(i)

    253

    604

    602

    Total collections

    337,264

    343,355

    359,983

    HELP/SFSS(j)

    1,751

    1,907

    2,129

    Notes:
    (a) The collections data presented in this table has been adjusted to exclude administered expenses and better align with our financial statements and the Final Budget Outcome. Totals may differ from the sum of components due to rounding.
    (b) Includes amounts withheld from salaries and wages, TFN and ABN withholdings, dividend, interest, royalty, and mining withholding taxes.
    (c) Includes income tax for superannuation funds and superannuation surcharge, and no TFN contributions tax.
    (d) For 2014–15 and 2016–17, resource rent taxes includes both petroleum resource rent tax and minerals resource rent tax.
    (e) Includes Australian Government departments and authorities.
    (f) Includes some collections by the Department of Immigration and Border Protection. In 2016–17, these were $3.5 billion. Includes GST non-general interest charge penalties, which are not distributed to the state and territory governments under the intergovernmental agreement.
    (g) Includes wine equalisation tax and luxury car tax, of which a small amount was collected by the Department of Immigration and Border Protection.
    (h) Started 1 December 2015.
    (i) The majority of 'other revenue – unclaimed monies' is unclaimed superannuation monies.
    (j) Higher Education Loan Program (HELP) and Student Financial Supplement Scheme (SFSS) collections.
    TABLE 2.8 Expected revenue – Variation between Budget forecast and actual net collections in 2016–17

    Variation from Budget forecast

    Collections$m

    Budget$m

    Variance$m

    Total individuals

    193,863

    196,950

    −3,087

    Companies

    68,408

    69,000

    −592

    GST

    60,022

    60,930

    −908

    Superannuation funds

    8,218

    7,380

    838

    Other

    28,749

    29,201

    −452

    Total net tax collections

    359,259

    363,461

    −4,202

    In 2016–17, we issued income tax refunds with a total value of $42.4 billion. We also issued activity statement refunds with a total value of $56.7 billion. Total refunds were $99.1 billion, up 2% from 2015–16.

    TABLE 2.9 Amount refunded, 2014–15 to 2016–17(a)
      2014–15$m   2015–16$m   2016–17$m  
    Income tax  
    Total individuals(b)   27,033 28,081 28,364
    Companies 10,001 10,474 9,550
    Superannuation funds(c)   3,431 3,941 3,674
    Resource rent taxes(d)   163 81 110
    Fringe benefits tax(e)   481 583 706
    Total income tax   41,108 43,160 42,403
    Excise 51 64 34
    Activity statements 54,297 54,169 56,700
    TOTAL   95,456 97,394 99,137

    Notes:
    (a) Refunds data presented in this table has been adjusted to exclude all administered expenses and better align with our financial statements and the Final Budget Outcome. This has reduced company and activity statement refunds by $2.0 billion and $4.6 billion respectively for 2016–17. Totals may differ from the sum of components due to rounding.
    (b) Excludes administered payments, such as private health insurance rebate, education tax benefits, and baby bonus.
    (c) Includes superannuation surcharge refunds.
    (d) For 2014–15, resource rent taxes includes both petroleum resource rent tax and minerals resource rent tax.
    (e) Includes Australian Government departments and authorities.

    Compliance liabilities and cash collections

    We completed 3.1 million compliance activities this year, raising $15.6 billion in total liabilities and collecting $10.2 billion in cash (some relating to liabilities raised in previous years). This is compared to total liabilities of $13.8 billion raised and cash collections of $9.6 billion in 2015–16.

    Figure 2.1 Compliance liabilities and collections by product, 2012–13 to 2016–17

    Bar graph showing separate trends for liabilities and estimated cash collections in millions. Data for Figure 2.1 is available via the link below.Notes:
    Collections are a combination of actual collections and estimates of collections based on sampling.
    Collections also include collections on tax, penalties and interest raised in prior years.
    Liabilities are the net value of debit and credit amendments from active compliance intervention on returns, statements and claims. The impact is a combination of tax, penalties and interest and transfer payments and covers excise, goods and services tax.
    Results also include our activities to prevent incorrect refunds or payments being issued.
    Over this period, liabilities have been higher than cash collections as a proportion of liabilities raised. This is because large audit results in dispute take time to resolve through court processes.
    Cash collections include cash paid on disputed amended assessments raised.
    Outcomes reported above do not include wider revenue effects.

     

    Data for Figure 2.1 is available as an alternative to the graph.

    Income tax

    We delivered on our income tax revenue measures and other compliance activities, with cash collections from our direct compliance and wider revenue activities being $9.2 billion, a 7.2% increase on 2015–16.

    TABLE 2.10 Compliance income tax plans and results, 2014–15 to 2016–17

    Compliance plans and results

    2014–15$m

    2015–16$m

    2016–17$m

    Liabilities plans – (including measures)

    9,705

    8,823

    10,198

    Liabilities raised

    12,047

    11,427

    13,636

    Cash plans – (including measures)

    6,777

    6,577

    7,182

    Estimated cash collected

    8,764

    8,604

    9,220

    Note:
    The plans and results include both direct and wider revenue outcomes.

    Goods and services tax

    We delivered on our GST revenue measures to government and the states and territories, with cash collections from our direct compliance and wider revenue activities being $2.9 billion.

    TABLE 2.11 Compliance GST plans and results, 2014–15 to 2016–17

    GST compliance plans and results

    2014–15$m

    2015–16$m

    2016–17$m

    Liabilities plans – (including measures)

    2,223

    2,839

    2,654

    Liabilities raised

    3,197

    3,906

    3,548

    Cash plans – (including measures)

    1,592

    2,236

    2,113

    Estimated cash collected

    2,717

    2,943

    2,883

    Note:
    The plans and results include both direct and wider revenue outcomes.

    Excise and other indirect taxes

    We raised excise liabilities of $20.0 million from compliance activities and collected $18.8 million in cash (including collections from liabilities raised in previous years). For excise transfers, (predominately fuel tax credits), our compliance activities resulted in adjustments in favour of taxpayers of $60.6 million, and adjustments in favour of revenue of $21.1 million. Of the adjustments in favour of the revenue, we collected $14.6 million and a further $8.8 million from liabilities raised in previous years.

    Voluntary disclosures

    Where people identify they have made a mistake or omission in a previously lodged tax return or activity statement, we encourage them to disclose this and work with us to fix the problem.

    We raised $776 million in liabilities as a result of voluntary disclosures. This included around $193 million in GST liabilities, with cash collections of $187 million as a result of voluntary disclosures from large businesses in 2016–17.

    TABLE 2.12 Penalties and interest, 2014–15 to 2016–17
     

    2014–15$m

    2015–16$m

    2016–17$m

    Penalties Applicable 1,633 1,362 1,529
    Remitted 549 296 399
    Collected 498 666 1,139
    Interest Applicable 3,557 1,519 688
    Remitted 884 854 725
    Collected 1,887 1,706 2,450

    Tax gap estimates

    The ATO tax gap research program seeks to estimate the tax gaps for all key taxes in the Australian system. Tax gaps estimate the difference between what the ATO collects and the amount that would have been collected if every taxpayer was fully compliant with the law. The gaps, in general, indicate that over 90% of tax paid is as a result of willing participation in the tax system.

    Tax gaps exist in all countries to some extent. They are driven by cultural and human factors, global forces, complexity in business and legal systems, those who seek aggressive tax positions, and genuine errors. No tax system can eliminate tax gaps; the cost and impost on the community and the ATO resources required would be excessive. The tax gaps compare favourably with that of similar international tax administrations.

    Tax gaps provide insights into the longer-term operation of the tax and superannuation systems. Along with other performance measures, tax gaps tell a story about levels of willing participation and significant shifts in compliance. They can guide us to the priority risks and opportunities, and where to invest our resources.

    The ATO aims to identify, manage and sustainably reduce tax gaps over time and maximise voluntary compliance. This requires engagement with stakeholders to understand the risks and drivers and how we can collaboratively address the issues.

    Recognising the importance of having reliable and credible tax gap estimates, we engage an independent expert panel to provide advice on the suitability of our gap estimates and methodologies. The expert panel also assesses each gap against ten reliability criteria to give a final reliability assessment rating. In the main, Australian gaps compare favourably with those of similar tax systems and administrations. See an explanation of our methodologies and an analysis of each of the gaps on our website at ato.gov.au/taxgap.

    TABLE 2.13 Net tax gap estimates – Transaction-based taxes, 2011–12 to 2015–16(a)(b)(c)(d)
      Reliability assessment 2011–12 2012–13 2013–14 2014–15 2015–16 2016–17
    Taxes on goods and services  
    GST(e)   Medium % 7.0 5.7 6.1 6.7 7.3 na
    $m 3,540 2,950 3,350 3,900 4,510 na
    Wine equalisation tax (WET)(f)   Low/Medium % 4.9 0.5 5.9 0.6 na na
    $m 50 5 70 5 na na
    Excise and customs duties
    Fuel excise(g) Medium % 0.6 2.5 2.1 1.1 1.9 na
    $m 90 415 350 180 325 na
    Notes:
    (a) Gap estimates for GST have been rounded to the nearest $10 million; all other smaller revenue streams rounded to the nearest $5 million.
    (b) Gap estimates for beer excise and duty and luxury car tax have been withdrawn due to issues identified with the data.
    (c) Changes from previously published estimates occur for a variety of reasons, including improvements in methodology, revisions to data and additional information becoming available.
    (d) Due to data lag, estimates for the 2016–17 tax year are not yet available.
    (e) The increase in the GST gap estimate is driven by increases in dwelling investment, exacerbated by upfront GST input credits and lagging GST receipts on sales.
    (f) Estimates for 2010–11 to 2013–14 capture WET tax payable only, not taking into account wine producer rebates, and are derived from a top-down data-matching model. Estimates for 2014–15 take into account wine producer rebates and are based on results from a random enquiry program. As a result, the estimates for 2014–15 are of medium reliability, whereas the estimates for previous years remain low.
    (g) Previously published as ‘petrol and diesel excise and duty’. The fuel excise gap has increased due to volatility in the underlying data and difficulty in accounting for the volume of aircraft fuel used for international flights.
    TABLE 2.14 Net gap estimates – Programs we administer, 2011–12 to 2016–17(a)(b)(c)
      Reliability assessment   2011–12 2012–13 2013–14 2014–15 2015–16 2016–17
    Administered programs
    Superannuation Guarantee Medium % 5.9 4.8 4.7 5.2 na na
    $m 2,780 2,360 2,480 2,850 na na
    PAYG withholding(d)   Medium % 4.1 2.9 2.7 1.9 na na
    $m 6,060 4,480 4,360 3,130 na na

    Fuel tax credits(e)

    Medium

    % 0.7 0.7 0.7 −0.5 −0.3 na
    $m 40 40 40 −30 −20 na
    Notes:
    (a) Gap estimates for superannuation guarantee and PAYG withholding have been rounded to the nearest $10 million and fuel tax credits rounded to the nearest $5 million.
    (b) Changes from previously published estimates occur for a variety of reasons, including improvements in methodology, revisions to data and additional information becoming available.
    (c) Due to data lag, estimates for the 2016–17 tax year are not yet available. Data is also not yet available to undertake gap estimation for the 2015–16 tax year for the superannuation guarantee and PAYG withholding gaps.
    (d) For PAYG withholding, the black economy estimate increases previously published results by between $1.5 billion and $2.1 billion per year.
    (e) Estimates for 2011–12 to 2013–14 are based on results from a benchmarking study undertaken on 2006–07 claims. Estimates for 2014–15 onwards are based on results from a random enquiry program of 2014–15 claims.
    TABLE 2.15 Net tax gap estimates – Income-based taxes, 2011–12 to 2016–17(a)(b)(c)
      Reliability assessment   2011–12 2012–13 2013–14 2014–15 2015–16 2016–17
    Tax on income
    Large corporate groups Medium % 5.8 5.8 5.8 5.8 na na
    $m 2,740 2,530 2,990 2,530 na na

    Notes:
    (a) Estimates have been rounded to the nearest $10 million.
    (b) From 2011–12 onwards, results are projections based on 2009–11 results. This is due to the significant time lag in commencing and completing large corporate group cases.
    (c) Due to data lag, estimates for tax years 2015–16 and 2016–17 are not yet available.

    Total revenue effects

    The total revenue effects measure is an estimate of the additional tax revenues that result from the ATO’s client engagement activities. It is the combination of audit yield and wider revenue effects.

    Audit yield is defined as the additional tax liabilities identified and collected through audit activities. It also includes interest and penalties.

    Wider revenue effects are an estimate of the additional tax revenues that result from all of the revenue body’s client engagement activities that are not already captured by audit yield. This may include:

    • preventative activities (designed to assist or encourage clients to pay the right amount of tax)
    • corrective activities (other than those captured by audit yield) designed to encourage clients to review and amend their previous reporting
    • process changes making it easier for clients to comply
    • improvements to compliance in the periods following a preventative or corrective activity (including an audit)
    • spill-over or ripple effects on the broader population as a result of broad communications or knowledge of our activities with other clients.

    We estimate that the wider effect of our activities amount to $4.8 billion collected in 2016–17. This is the first time we have published our estimate of this revenue effect.

    For more information, refer to ato.gov.au/totalrevenueeffects.

      Last modified: 30 Oct 2017QC 53758