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  • ATO action to reduce the gap

    A range of taxpayer behaviours can affect the gap. These include non-reporting of GST, under-reporting of GST and over-claiming of refunds. Examples include simple errors, incorrect classification of transactions in accounting systems, through to deliberate actions such as creation of false tax invoices, incorrect claiming of private expenses and participation in the black economy.

    We continue our efforts to minimise the tax gap and maximise voluntary compliance through the delivery of a balanced and targeted compliance program focused on preventative early engagement and assurance activities.

    We monitor compliance through the use of third-party data holdings, analytics and risk mitigation activities. Our focus is on activities designed to prevent compliance issues before they arise. This has resulted in a significant investment shift to assurance and early engagement activities, with a view to fostering voluntary compliance by supporting those that want to do the right thing and reducing mistakes.

    We have an increased focus on those not doing the right thing and deliberately evading GST, excise and other indirect taxes. We take a firmer approach on those unwilling to meet their obligations. We have also successfully implemented initiatives designed to make it easier for clients to voluntarily comply.

    On 1 July 2017, Simpler BAS reporting became the default GST reporting method for 2.7 million small businesses with a GST turnover less than $10 million. We expanded education and support programs for new and existing small businesses. We also promoted the ATO App and voice authentication resulting in direct improvements to BAS lodgments.

    To address phoenix behaviour in the property sector, GST at settlement legislation became effective as of 1 July 2018 making it a requirement for certain purchasers to withhold the GST from the price of the supply and pay the GST directly to the ATO.

    To level the playing field between Australian businesses and non-resident businesses that provide goods and services in Australia, legislation was introduced from 1 July 2018 introducing GST on imported services and digital products. Australian GST now applies to most sales of low value goods imported by consumers into Australia.

    Legislation was enacted with effect from 1 April 2017 addressing the specific risk from some participants in the precious metals industry who chose not to account for the GST payable or claimed input tax credits (GST credits) inappropriately. The legislation amended the A New Tax System (Goods and Services Tax) Act 1999 to implement reverse charges for valuable metals.

    To strengthen confidence and provide assurance that our largest businesses are paying the right amount of tax, we are systematically engaging with them to obtain objective evidence that supports willing participation. This includes addressing the four focus areas under the justified trust program.

    We will continue to work towards closing the gap by:

    • making it easy to comply and hard not to by further streamlining, automating and integrating GST tax obligations to reduce the cost of compliance and increase assurance
    • building trust and confidence within the community, which supports willing participation and delivers government commitments including the black economy taskforce commitments.

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      Last modified: 17 Oct 2019QC 57175