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  • GST administration annual performance report 2019–20

    Foreword

    I am pleased to present the 2019–20 GST administration annual performance report on behalf of the Commissioner of Taxation.

    This year we applied a range of GST revenue collection strategies that optimise voluntary compliance, while effectively managing compliance risks to the GST system.

    We supported our colleagues across the ATO to adopt a mindset that embeds GST into decision-making processes across day-to-day operations and client experiences.

    As part of the GST compliance program, we raised $1.6 billion from compliance and lodgment enforcement activities in 2019–20, exceeding our planned commitment of $740 million.

    From January 2020, we supported many bushfire-affected Australians by facilitating BAS lodgment and payment deferrals to alleviate cash flow pressures. From February 2020, the ATO’s priorities and focus shifted, as the Australian Government announced stimulus measures to help the Australian community and our economy withstand the economic impact of the COVID-19 pandemic.

    Our role in the collective recovery has been to contribute to the design and implementation of the government’s economic stimulus measures – Cash Flow Boost and JobKeeper. Cash Flow Boost supported businesses to manage cash flow when eligible businesses lodged their activity statements, and JobKeeper helped businesses to retain employees.

    We are mindful that difficult times require assistance and understanding for those impacted by these events. This led us to make changes to our approach, to better support the community. We did this by:

    • permitting businesses to change their BAS reporting cycle to obtain faster access to GST refunds
    • working with affected businesses to help them pay their existing and ongoing tax liabilities
    • pausing our firmer action compliance work, except for high risk clients
    • redeploying our client engagement staff to support delivery of the government’s stimulus measures.

    Our GST cash collections this year were $60.2 billion, 7.6% lower than last year, reflecting the significant impact of COVID-19 on the economy. More telling is the difference between net GST accruals and cash collections of approximately $6.4 billion, compared with $1.6 billion in 2018–19. The most significant component of this is an increase in unpaid debt, in part due to payment deferrals granted to businesses experiencing financial hardship.

    Expenditure on GST administration for 2019–20 declined to approximately $575.8 million (unaudited actual costs), $83.2 million below 2018–19. This reflects our client engagement staff being redeployed to deliver the government’s stimulus measures for four months and responding to increased demand for our services by clients.

    Against this background we remained focused on our performance in administering the GST. In June 2020, a new GST Administration Performance Agreement was approved by the Council on Federal Financial Relations (CFFR), comprised of Treasurers of the Commonwealth, states and territories. The new agreement forms the basis for monitoring GST and is effective from 1 July 2020 for a three-year period.

    We are taking a holistic approach to our system health. We want to move away from focusing much of our efforts on audits, and we have worked collaboratively with clients to obtain better outcomes. Through products like our practical compliance guidelines issued for the financial services and insurance industry, we have focused on resolving longstanding technical issues. This provides greater consistency and clarity on the ATO’s view and what we consider to be risky behaviour, so that business can make informed decisions. The justified trust programs also allow us to provide high-quality assurance.

    This year the ATO completed a significant data migration through Activity Statements Financial Processing; one of the biggest data migrations ever undertaken in the public or private sector. This provides a single client accounting system.

    We continue to advance global consistency in the administration of consumption tax by assisting the World Bank and the Organisation for Economic Co-operation and Development (OECD), by supporting the development of a consumption tax toolkit. This toolkit will form an integral resource in the way consumption tax is administered for cross-border digital supplies.

    July 2020 marked 20 years since the introduction of the GST was introduced. We can look back with pride on what was a significant moment in the evolution of Australia’s tax system; the beginning of a new tax era to simplify and overhaul the existing sales tax system and other state and territory taxes.

    The GST was developed with consultation and community partnership and a focus on supporting business to implement the historic change. Business activity statements (BAS) changed the way taxpayers reported on a number of taxes, not just GST.

    Since the GST was introduced, we’ve collected over $900 billion on behalf of the states and territories, and over 2.9 million businesses are now registered for GST.

    Highlights over the last 20 years include:

    • introducing two cross-border measures (digital services and low value imported goods) resulting in more than $1 billion in collections to date
    • improved anti-avoidance measures
    • simplifying the BAS by making it easier for all small businesses and not-for-profits with a GST turnover of less than $10 million
    • introducing indirect tax self-assessment
    • removing irritants and fixing the basics by implementing most of the recommendations from the Board of Taxation Review into the legal framework for administration of GST
    • developing self-help tools, for example, the GST property decision tool and the food classification tool on ato.gov.au to support business to get it right
    • introducing the GST reverse charge on precious metals to shift liability to recipients
    • introducing GST at settlement to address phoenixing in the property sector
    • hosting the fifth OECD Global Forum on VAT.

    Reflecting on these achievements provides the opportunity to assess how we are positioned to tackle the challenges of the year ahead – a year that will continue to challenge the whole community. We will need to balance our traditional approach with new and resourceful ways of thinking, as we continue to deliver the ongoing stimulus measures, while ensuring GST administration is effective and efficient and delivers world’s best practice.

    I would like to thank Treasury, the states and territories representatives on the GST Administration Subcommittee and the GST Policy and Administration Subgroup, for their ongoing support and advice during the year.

    Deborah Jenkins

    Deputy Commissioner, Small Business

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    Figure 1: GST snapshot

    Revenue results $60.2 billion, GST registrants 2.9 million, activity statements lodged 84.6%, activity statements lodged on time 74%, BAS lodged electronically 88.2%, GST compliance program $1.6 billion, compliance results $2.6 billion, GST debt $10.2 billion, GST collectable debt $7.9 billion, GST gap $5.8 billion or 8.1%, actual administration costs $576 million, cost of collecting $100 GST revenue $0.92, cost per registrant $198, successful court outcomes 15, objections to new litigation 117 per 1,000, objection cases created 545.

      Last modified: 25 Feb 2021QC 64820