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  • Measuring the gap

    We calculated the fuel tax credits gap estimate using a bottom-up approach with input from a random enquiry program (REP).

    We used a REP to review the 2014–15 claims of 271 randomly selected fuel tax credit claimants. The results of the REP informed the gap estimate.

    The fuel tax credit gap reflects only the compliance gap and does not include the impact of tax concessions or other legislated benefits. This means it does not measure the policy gap.

    We have not made an allowance for the impact of the black economy, as fuel tax credits require taxpayers to participate and engage with the taxation system to claim their entitlements, rather than operate outside the taxation system. Fraud and evasion was not observed during the REP.

    An independent expert panel provides advice on the suitability of our gap estimates and methodologies. Further information regarding the panel can be found at the Australian tax gaps – overview.

    We have assessed the reliability of this estimate as medium.

    Random enquiry program

    To undertake our REP, we randomly select for profiling a sample of taxpayers that have claimed fuel tax credits. Taxpayers in this sample identified as low risk are not investigated further. The remainder of the sample progress to a review.

    Once we have gathered information from the REP, we extrapolate the results across the wider population. We use the incidence rate of adjustments and mean value of amendments resulting from non-compliance. Adjustments are the changes we make to items on an activity statement to correct identified errors as part of the review process. We then compare the extrapolated amount to total amendments to obtain a ratio which we apply to each year.

    The fuel tax credits gap reflects the compliance gap. That is, it is an estimate of either an overpayment or an underpayment as a result of taxpayers failing to comply with the law at the time, whether in error or intentionally.

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      Last modified: 17 Oct 2019QC 57176