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  • GST voluntary compliance ratio

    The voluntary compliance ratio (VCR) complements the GST gap by measuring the proportion of taxpayers fully compliant with all four pillars of compliance (registration, lodgment, reporting and payment). To be fully compliant, the taxpayer must do all of the following:

    • be correctly registered
    • lodge by the due date
    • report the correct amount of GST
    • pay the correct amount on time.

    The proportion of taxpayers voluntarily complying with their obligations and the value of GST remitted voluntarily are important indicators of the health of, and community confidence in, the GST system.

    Measuring the VCR

    The GST VCR is measured at two levels:

    • taxpayer level – the number of taxpayers who completely meet all their obligations for the financial year
    • GST-value level – the amount of GST, by value, that is voluntarily provided to us in accordance with the law.

    VCR trends and latest findings

    The VCR is built on the assumption of strict administrative compliance with obligations, especially as it relates to lodgment. The analysis identified that the VCR has been stable over recent years and that 44% of taxpayers voluntarily comply by lodging and paying the correct amount of GST on time. This does not give any consideration to minor unintentional late payments or lodgments.

    When we take into account one BAS lodged late or one late payment, along with taxpayers that lodge a nil BAS, the level of voluntary compliance at the taxpayer level increases to 80%. While we aim for full compliance, allowing for these adjustments recognises that there is a significant proportion of taxpayers who aim to do the right thing but are late with a single lodgment or payment.

    At the GST-value level, the amount of revenue received voluntarily (that is, paid on time and without enforcement action) has progressively improved over the last six years. In 2017–18, this was equivalent to 82% of theoretical GST revenue. The VCR has remained steady over recent years within the theoretical GST revenue.

    Figure 3: GST voluntary compliance ratio

    Figure 3: This graph is a visual representation of the GST compliance ratio, from 2013–14 to 2017–18. It shows two trends, the first trend is VCR by GST value. This trend is stable over the period, being roughly between 78% and 84%. The second trend, VCR by Taxpayers, shows a downwards trend over the period between 42% and 49%.

    Notes:Previously published figures updated with latest GST gap data.Data source: ATO.

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      Last modified: 17 Oct 2019QC 57175