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  • Large corporate groups income tax gap 2015-16

    The large corporate groups income tax gap is the difference between the total amount of income tax collected and the amount we estimate would have been collected if every one of these taxpayers was fully compliant.

    A large corporate group is defined as a corporate group with gross income of over $250 million in a given income year.

    In 2015-16, large corporate groups reported $1.7 trillion in gross income and paid approximately $40 billion in tax.

    Our estimate of the net gap for large corporate groups covers a seven-year period from 2009-10 to 2015-16. For 2015-16, we estimate the net income tax gap to be $1.8 billion or 4.4% of tax payable for this group. The gap primarily reflects differences in the interpretation of complex areas of tax law.

    The large corporate groups income tax gap has been decreasing in recent years, coinciding with improvements we've made to our methodology to increase the accuracy of our estimates.

    For our current estimates undertaken in 2018, we made two significant improvements to our estimation methods:

    • The first involves incorporating information about the large corporates in which we have justified trust. Increasingly, more of this information becomes available through our assurance activities, allowing us to produce estimates we have greater confidence in.
    • The second is in the way we project the tax gap. While our latter year estimates were previously made up entirely of projections, we now use additional information that we currently have to inform these estimates. Combining this information with projections allows us to more accurately estimate the tax gap for years where we do not yet have complete information.

    The refined methodology has now been applied across the full data series, resulting in changes to previously published gross and net gap estimates for 2009-10 to 2014-15. This is a standard practice in gap estimation.

    In this document, we discuss the large corporate groups population, how we measure their income tax gap, and the action we're taking to sustainably reduce the gap.

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      Last modified: 10 Jan 2020QC 61085