Annual tax gap findings
We update our tax gap estimates in October each year. This year we are publishing estimates for 21 different gaps, including the once-off payment gap estimates for the COVID-19 stimulus measures of JobKeeper and cash flow boost. Payment gap estimates are for programs where the government is distributing payments or credits to taxpayers.
The tax gap can be viewed from 2 perspectives:
- the gross gap – the gap before the impact of our engagement has been considered
- the net tax gap – the final uncollected amount after the impact of our action.
The payment gap can also be viewed from 2 perspectives:
- the gross gap – the amount of incorrectly distributed payments or credits made before we have undertaken any recovery action
- the net payment gap – the amount of incorrectly distributed payments or credits that remain outstanding after our action.
Our latest gross and net gap estimates (both as a dollar value and percentage) for the transaction-based tax gaps are shown in Table 1.
We also show the tax reported and current reliability assessment for each estimate. While some gaps also have an estimate for the 2020–21 financial year, all gaps have estimates for the 2019–20 financial year. These estimates give us our first insights into the effects of COVID-19 which impacted the final quarter of the 2019–20 financial year.
Table 1: Transaction-based taxes, latest available data
Tax gap estimate
|
Reliability assessment
|
Financial year
|
Gross gap ($m)
|
Net gap
($m)
|
Gross gap (%)
|
Net gap
(%)
|
Goods and services tax
|
Medium
|
2020–21
|
6,061
|
4,138
|
8.6
|
5.9
|
Luxury car tax
|
Medium
|
2019–20
|
28
|
22
|
4.3
|
3.3
|
Wine equalisation tax
|
Medium
|
2019–20
|
35.9
|
31.6
|
3.4
|
3.0
|
Alcohol tax
|
Low
|
2019–20
|
649
|
629
|
9.7
|
9.4
|
Tobacco tax
|
Medium
|
2020–21
|
3,981
|
1,891
|
21.8
|
10.4
|
Fuel excise
|
High
|
2020–21
|
475
|
475
|
2.4
|
2.4
|
Our latest net gap estimates (both as a dollar value and percentage) for the income-based taxes are shown in Table 2. We also show the tax reported and current reliability assessment for each gap estimate.
Table 2: Income-based taxes, latest available data
Tax gap estimate
|
Reliability assessment
|
Financial year
|
Gross gap ($m)
|
Net gap
($m)
|
Gross gap (%)
|
Net gap
(%)
|
Large corporate groups income tax
|
High
|
2019–20
|
4,561
|
2,580
|
7.4
|
4.2
|
Petroleum resource rent tax
|
Reliable
|
2019–20
|
n/a
|
13
|
n/a
|
1.3
|
High wealth income tax
|
High
|
2019–20
|
812
|
737
|
7.4
|
6.7
|
Medium business income tax
|
Medium
|
2019–20
|
1,198
|
994
|
8.4
|
7.0
|
Small business income tax
|
Medium
|
2019–20
|
12,872
|
11,886
|
12.6
|
11.6
|
Fringe benefits tax
|
Medium
|
2019–20
|
1,016
|
991
|
20.8
|
20.3
|
Individuals not in business income tax
|
High
|
2019–20
|
9,673
|
9,030
|
6.0
|
5.6
|
Large super funds income tax
|
High
|
2019–20
|
378
|
230
|
3.2
|
1.9
|
Small super funds income tax
|
Low
|
2019–20
|
56
|
37
|
3.2
|
2.1
|
The administered programs summary is for programs administered by us on behalf of the community. These differ from the categories above in that they are not taxes. JobKeeper and cash flow boost were programs to support the community through COVID-19. These programs were temporary and will not be estimated again.
Table 3 shows the gross and net gap both as a dollar value and percentage for each of our gap estimates for selected administered programs, for the latest year of available data.
Table 3: Administered programs, latest available data
Gap estimate
|
Reliability assessment
|
Financial year
|
Gross gap ($m)
|
Net gap
($m)
|
Gros gap (%)
|
Net gap
(%)
|
Fuel tax credits
|
Low
|
2019–20
|
15.1
|
13.3
|
0.2
|
0.2
|
PAYG withholding
|
Medium
|
2019–20
|
5,616
|
3,371
|
2.6
|
1.5
|
Product stewardship for oil
|
High
|
2020–21
|
n/a
|
0.27
|
n/a
|
0.18
|
Superannuation guarantee
|
Medium
|
2019–20
|
4,045
|
3,374
|
5.9
|
4.9
|
JobKeeper
|
Reliable
|
April 2020 to March 2021
|
2,588
|
2,180
|
2.8
|
2.4
|
Cash flow boost
|
Reliable
|
Start of March quarter to end of June quarter 2020
|
1,040
|
943
|
2.9
|
2.7
|