Why we measure the tax gap
Australians all benefit from healthy tax and super systems that support our society and economy. We contribute to this by fostering willing participation in the tax and super systems. Some of the ways we achieve this are through the 8 strategic objectives that are outlined in our ATO corporate plan 2022–23.
One of our objectives is to build community confidence by sustainably reducing the tax gap and providing assurance across the tax and superannuation systems. Tax gap estimates allow us to better understand levels of compliance and risk in the tax and superannuation systems.
The insights gained from this work can guide us in determining priority risks and developing strategies (including administrative design, help and education, and audit), which aim to sustainably reduce the tax gap and improve voluntary compliance.
Our gap measurement methods draw on the experience of other contemporary tax administrations. This ensures our estimates are best practice. We share our tax gap information with our counterparts who also publish an annual tax gap program, such as His Majesty's Revenue and Customs (HMRC) in the United Kingdom.
We also participate in international forums and communities of practice, such as the OECD Advanced Tax Gap Analysis Community of Practice. This was established in March 2019 for OECD member countries that have significant experience in tax gap estimation.
Addressing the gap
Our primary strategy is to make it as easy as possible for Australians to comply with their tax and super obligations.
We approach this from many perspectives, including:
- enhancing our digital services
- improving our processes and technology, including our data-matching capability
- encouraging small businesses to adopt accounting software and other technology
- encouraging taxpayers to obtain high quality professional tax advice
- providing advice to government, via the Treasury, where we see law reform options
- working with partner agencies and stakeholders to improve the tax and superannuation systems
- providing guidance and advice to clarify areas of uncertainty, including issuing taxpayer alerts if we see potential risks
- dealing with non-compliance, including investigating aggressive tax planning.
These types of approaches help us achieve our desired future state. This is where the community is confident that our administration of the tax and super systems supports collection of the right tax, at the right time for the wellbeing of all Australians.