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  • Small super funds income tax gap 2014-15

    Small superannuation (super) funds, and in particular SMSFs, are an increasingly significant and integral component of Australia's superannuation system.

    For the purpose of the 2014-15 small super funds income tax gap estimate, small super funds:

    • consist of approximately 550,000 self-managed super funds (SMSFs) and approximately 2,200 small APRA-regulated funds (SAFs)
    • have no more than four members.

    While super funds are subject to concessional treatment for income tax purposes, it is still important that they pay the correct amount of tax within the concessional framework.

    We used a random enquiry program (REP) to provide an initial estimate of the income tax gap in the small super funds population for the 2014-15 income year. The estimated net tax gap for small super funds was relatively small.

    The small size of the gap can be largely attributed to the following reasons:

    • Superannuation is a concessionally taxed environment.
    • Super funds in accumulation phase are generally taxed at 15% while those in retirement phase generally have a zero tax rate.
    • Approximately 47% of all small super funds are in retirement phase significantly reducing the opportunity for a tax gap to be present.

    The tax payable from small super funds for the 2014-15 income year was approximately $1.2 billion.

    The small super funds 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 with the law.

    Our estimate of the net gap covers only a single year period. For the 2014-15 income year, we estimate the net income tax gap for this group to be $39.9 million, or 3.2% of the total theoretical liability.

    Overall, compliance within small super funds is very good, with most errors identified through the random enquiry program not having a tax consequence.

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      Last modified: 09 Jan 2020QC 61088