Show download pdf controls
  • Australian tax gaps: overview

    The tax gap is an estimate of the difference between the amounts the ATO collects and what we would have collected if every taxpayer was fully compliant. Tax gaps exist in all countries to some extent. The gaps are driven by cultural and human factors, global forces, complexity in business and legal systems, those who take aggressive tax positions, and genuine errors.

    Estimating tax gaps is a challenging task for any jurisdiction. Tax gaps are, in effect, about measuring what is not visible – what people have not told us about their compliance, whether through misunderstanding, by choice, or by taking a tax position that differs from the ATO view of the law. As a result, all tax gap estimates are subject to a degree of error, and can change from year to year due to improvements in the methodologies used and revisions of underlying data.

    Tax gap estimates and their trends over time provide useful insights into the longer-term operation of the tax and superannuation systems. Along with other performance measures, they tell a story about the performance and integrity of the system, including levels of willing participation and significant shifts in compliance. They guide us in determining priority risks and opportunities, and where to invest our resources.

    Because of rapid changes in the economy, society and technology, the issues driving tax gaps continue to evolve. No tax system can eliminate tax gaps; the cost of doing so would be excessive.

    Instead, we aim to identify, manage and sustainably reduce tax gaps over time. Effective tax gap management requires engagement with all stakeholders on the size of the gaps, the risks and drivers, and how we can collaboratively address these issues.

    In the main, the estimates we have published reflect a system that is operating well. The estimates are backed by methodologies we have confidence in. As we develop new improved methodologies, we will release more estimates covering more taxes and revenue streams.

    This document provides an overview of tax gaps in Australia, how and why we measure them, our approach and a summary of the latest available data.

    Find out about:

    See also:

      Last modified: 06 Sep 2018QC 53161