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Latest estimate and trends

Compare the 2020-21 GST gap to trends from previous years.

Last updated 12 April 2023

For 2020–21, we estimate a net gap of $4.1 billion or 5.9%. This means businesses paid over 94% of the total theoretical GST.

The gross gap is the gap before taxpayer compliance amendments. It was estimated to be $6.1 billion or 8.6%.

The net gap estimate has ranged between 5.9% to 8.8% of the theoretical GST liability across the years 2015–16 and 2020–21. The estimate for 2020–21 represents a decline of around $116 million from our revised 2019–20 estimate of $4.3 billion (6.3% of theoretical GST liability for that year).

This gap forms a part of our overall tax performance program. Find out more about the concept of tax gaps and the latest gaps available.

Table 1: GST gap, 2015–16 to 2020–21

Element

2015–16

2016–17

2017–18

2018–19

2019–20

2020–21

Gross gap ($m)

8,352

6,490

7,048

7,867

6,429

6,061

Amendments ($m)

2,848

2,430

2,438

2,498

2,175

1,923

Net gap ($m)

5,504

4,060

4,610

5,369

4,254

4,138

Tax paid ($m)

57,183

60,812

63,282

64,512

63,356

66,223

Theoretical liability ($m)

62,688

64,872

67,892

69,881

67,610

70,361

Gross gap (%)

13.3

10.0

10.4

11.3

9.5

8.6

Net gap (%)

8.8

6.3

6.8

7.7

6.3

5.9

Figure 1 displays the gross and net gap as a percentage of theoretical liability over the same period.

Figure 1: Gross and net GST gap percentage, 2015–16 to 2020–21

Figure 1 shows the gross and net gap in percentage terms, as outlined in Table 1.

After declining for only the second time in 2019–20, theoretical GST increased by 4.1% in 2020–21 to around $70.4 billion. The major components of the theoretical tax base that drove the increase were:

  • Overall household consumption spending increased by 1.8% in 2020–21, well below historical trend growth (4.9%) and after the first decline (since the GST began) in the previous year (2019–20).
  • Within household consumption, the long-term gradual re-direction away from GST-able towards non-GST-able components accelerated over the last 2 years. This last occurred around the global financial crisis. As a result, spending liable to the GST increased by only 0.9% whilst spending not liable increased by 2.9%. This re-direction of spending lowers the overall effective GST rate and tends to push the estimated tax gap lower in dollar terms.
  • Spending on dwelling related components of the theoretical GST base rebounded in 2020-21 as policy measures positively impacted demand for alterations and additions.
  • Spending on activities related to international travel is generally GST-free and excluded from the theoretical base. The sharp contraction in international tourism since COVID-19 significantly reduced the size of this deduction to the base and moderated the decline in the overall GST base.

GST paid was around $66.2 billion in 2020–21, up 4.5% relative to 2019–20 ($63.4 billion). Details for the components of GST paid include:

  • Tax paid voluntarily rebounded in 2020–21 (up 5.1% to $64.3 billion) after the contraction due to the impacts of COVID-19 in the previous year.
  • Amendments declined for the second consecutive year in 2020–21 (down by 11.5% to $1.9 billion) as the focus of our compliance programs shifted to support taxpayers through COVID-19.

We revised voluntary tax paid and amendment figures from 2013–14 to 2019–20 using the latest available information (see Table 1).

Australia’s GST gap estimates are in line with those of similar international tax jurisdictions, including comparable European Union member countries and the United Kingdom.

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