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Latest estimate and trends

Last updated 30 October 2022

For 2019–20, we estimate that large corporate groups pay more than 92% of the tax they should voluntarily, and more than 95% after including the impacts of engagement and compliance actions.

Large corporate groups population

A large corporate group has a gross income of over $250 million in a given financial year. In 2019–20, large corporate groups:

  • reported $2.1 trillion in gross income
  • generated $210 billion in taxable income
  • paid around $58 billion in income tax.

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

Overview of the latest estimate

For 2019–20, we estimate a gross gap of 7.4% or $4.6 billion, which is the gap prior to considering the impact of engagement with the ATO. We estimate a net gap of 4.2% or $2.6 billion which reflects the final amount uncollected after accounting for the impacts of our compliance actions.

In other words, this means that large corporate groups paid nearly 96% of the theoretical total amount of income tax payable by them in 2019–20.

The gross tax gap continues to trend downward. The 2019–20 estimate is the lowest gross tax gap since the tax gap program commenced. It means that large corporates are now voluntarily paying more than 92% or around $57 billion.

The net tax gap estimate is 4.2% and has remained steady over the past three years. This means that large corporate groups continue to pay more than 95% of the tax they should after amendments. These amendments average around $2.1 billion each year, excluding interest and penalties.

A suite of legislative reforms and operational changes have enabled us to continue reducing the large corporate groups tax gap over the last 6 years. We discuss some of these measures in Tax and Corporate Australia, including:

  • enhancements made to the general anti-avoidance rule and transfer pricing provisions
  • the adoption of transparency measures
  • the expansion of our justified trust program.

The tax gap can be viewed in net and gross terms to show the impact of amendments. Table 1 shows the tax paid, adjustments, and net and gross income estimates for the period 2013–14 to 2019–20.

Table 1: Income tax gap – large corporate groups, 2013–14 to 2019–20

Element

2014–15

2015–16

2016–17

2017–18

2018–19

2019–20

Population

6,423

6,468

6,630

6,927

7,227

6,980

Gross gap ($m)

4,764

4,033

3,932

4,595

4,985

4,561

Amendments ($m)

1,849

1,991

2,283

2,273

2,316

1,981

Net gap ($m)

2,916

2,042

1,649

2,322

2,669

2,580

Tax paid ($m)

43,871

40,279

47,765

53,760

58,723

59,355

Theoretical liability ($m)

46,787

42,321

49,414

56,082

61,392

61,935

Gross gap (%)

10.2%

9.5%

8.0%

8.2%

8.1%

7.4%

Net gap (%)

6.2%

4.8%

3.3%

4.1%

4.3%

4.2%

Figure 1 displays the trend in the gross and net income tax gap over the same period.

Figure 1: Gross and net income tax gap (percentage) – large corporate groups, 2013–14 to 2018–19

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

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