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  • Trends and latest findings

    The net high wealth income tax gap estimate has ranged between 6.5% and 8.2% over the six-year period between 2012–13 and 2017–18, as shown in Table 1.

    In the last four years, we have seen a significant increase in tax collected for this population. Overall, the net gap percentage estimates have been relatively steady.

    Table 1: Income tax gap – high wealth private groups 2012–13 to 2017–18

    Element

    2012–13

    2013–14

    2014–15

    2015–16

    2016–17

    2017–18

    Population

    5,421

    5,431

    5,425

    5,424

    5,405

    5,348

    Gross gap ($m)

    615

    742

    872

    824

    904

    949

    Amendments ($m)

    166

    155

    114

    161

    173

    141

    Net gap ($m)

    449

    588

    758

    664

    731

    808

    Tax paid ($m)

    6,412

    7,942

    8,512

    9,000

    9,619

    10,173

    Theoretical liability ($m)

    6,860

    8,530

    9,270

    9,664

    10,350

    10,981

    Gross gap (%)

    9.0

    8.7

    9.4

    8.5

    8.7

    8.6

    Net gap (%)

    6.5

    6.9

    8.2

    6.9

    7.1

    7.4

    Figure 1 shows the gross and net gap as a percentage over the same period. The data presented in these images is also available in Table 1 above.

    Figure 1: Gross and net tax gap (percentage) – high wealth private groups, 2012–13 to 2017–18

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

    Analysis

    Our analysis verifies the majority of high wealth private groups are paying the right amount of tax. Some make errors and a very small proportion deliberately avoid tax.

    Where high wealth private groups are getting their tax right, they:

    • have strong tax governance practices and system controls
    • seek advice from tax professionals when considering making changes to their business or wealth management structures
    • talk to us to gain greater certainty about the tax consequences of significant transactions or changes in structure before they happen.

    When business owners and wealthy individuals make mistakes, it is usually in how they interpret tax law or because they don't understand their tax obligations.

    The most common issues we see from taxpayers include:

    • incorrectly recording transactions or not reporting transactions that are outside the normal course of business
    • not accounting for private use of business funds or assets
    • omitting domestic or foreign-sourced income.

    A very small number of high wealth private groups seek to evade paying the right amount of tax. These groups take advantage of the closely held nature of their structures. We see this group undertaking artificial and non-commercial arrangements that are intentionally designed to evade tax. Where we detect deliberate tax evasion, we apply correction strategies such as penalties and prosecutions.

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      Last modified: 19 Oct 2020QC 61748