Show download pdf controls
  • Measuring the gap

    Estimating the fuel excise tax gap requires first estimating the total theoretical excise liability. This involves calculating the volume of fuel sales subject to excise during the year. We then apply an estimated average excise rate to those sales.

    We then compare the theoretical liability to the actual revenue reported and adjust for ATO compliance results to derive the gap. We estimate the combined petrol fuels and combined diesel fuels gaps separately. We then combine them to form the overall fuel excise gap.

    The combined petrol fuels include unblended and blended petrol and denatured ethanol. The combined diesel fuels include unblended and blended diesel, and biodiesel.

    There is a high concentration of participants in the fuel production and importing industry. This means that a small number of clients account for the majority of excise and duty collections. Monitoring strategies identify large-scale compliance errors, which helps to keep the gap small.

    Changes in policy (such as the reintroduction of excise on ethanol and biodiesel) are unlikely to significantly affect revenue or the gap. And there are no known administrative or policy challenges that will affect the gap in a material way.

    We engage an independent expert panel to advise on the methodology used in our gap estimates. Information regarding the panel, including its members, is in Australian tax gaps – overview.

    We have assessed the reliability of this estimate as medium.

    Return to:

      Last modified: 17 Oct 2019QC 57193