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  • Definitions

    Top-down approaches

    Top-down approaches use externally-provided aggregated data sources to estimate the size of the tax base. From this we estimate theoretical tax liability. The difference between the theoretical tax liability and the amount we receive is the estimated tax gap. A top-down approach is typically used for indirect taxes.

    Bottom-up approaches

    Bottom-up approaches involve a detailed examination of data sources. These include tax returns, audit results, risk registers or third-party data-matching information. We then extrapolate the results to establish the extent of non-compliance across the whole population. From this we estimate the tax gap. This approach generally involves applying statistical techniques to estimate the incidence and value of non-compliance. A bottom-up approach is typically used for direct taxes.

    Economic transaction method (ETM)

    Economic transaction method (ETM) is the method we use to determine compliance outcomes by taking our compliance case results and allocating these amounts to the financial years in which the underlying economic transaction has occurred.

    Fuel excise

    Fuel excise is a tax on fuel products produced or manufactured in Australia (excisable goods). Note for the purposes of this document, fuel excise will include both excise and customs duty.

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      Last modified: 17 Oct 2019QC 57193