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  • Trends and latest findings

    The large super funds tax gap has been relatively steady over the years estimated. A decline in large tax adjustments along with improved industry compliance with capital gains tax (CGT) provisions has led to a reduction in the gap for 2017–18.

    Over the years estimated, we have seen the following key drivers of tax adjustments:

    • incorrect reporting of foreign income and overclaiming of the foreign income tax offset
    • overclaiming of franking credits
    • the incorrect use of the CGT discount and the capital losses offset provision for gains from non-taxable Australian property of a foreign trust. These are often contingent on market and taxpayer specific conditions.

    The incorrect use of the CGT discount was the subject of Taxation Determination TD 2017/24. Industry wide compliance with the approach outlined in the determination has contributed to reducing the tax gap in this area.

    Overall, the net income tax gap has ranged from 2.7% to 1.2% over the six years we have estimated.

    Table 1 shows the tax reported, adjustments, gross and net gaps from 2012–13 to 2017–18.

    Table 1: Income tax gap – large super funds, 2012–13 to 2017–18

    Element

    2012–13

    2013–14

    2014–15

    2015–16

    2016–17

    2017–18

    Population

    385

    349

    315

    303

    288

    261

    Gross gap ($m)

    174

    219

    198

    257

    331

    186

    Amendments ($m)

    17

    36

    28

    53

    84

    37

    Net gap ($m)

    157

    183

    170

    204

    247

    149

    Tax paid ($m)

    7,173

    6,710

    7,201

    8,613

    11,095

    11,945

    Theoretical liability ($m)

    7,329

    6,893

    7,371

    8,817

    11,342

    12,094

    Gross gap (%)

    2.4

    3.2

    2.7

    2.9

    2.9

    1.5

    Net gap (%)

    2.1

    2.7

    2.3

    2.3

    2.2

    1.2

    Figure 1 displays a trend of the gross and net income tax gap percentages over the same period.

    Figure 1: Gross and net income tax gap percentage – large super funds, 2012–13 to 2017–18

    Figure 1: Chart showing the gross and net gap in percentage terms as outlined in Table 1.

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      Last modified: 19 Oct 2020QC 56335