Estimated GST gap utility
As a macroeconomic measure, GST gap measurement has value:
- as an indicator of the magnitude of the potential GST compliance gap
- as a trend effectiveness indicator to complement existing compliance measures in providing assurance that GST revenue outcomes are appropriate
- as it allows a tax administrator to monitor revenue and the overall tax system integrity.
Limitations with data and methodological issues restrict the detailed application of GST gap results to drive specific compliance measures. The limitations and issues include:
- the GST gap by itself cannot be used to identify GST fraud or tax avoidance measures or the sectors, industries or businesses in the economy susceptible to GST fraud
- the GST gap measurement is subject to estimation error from the data used to derive the gap
- the GST gap measurement is reliant on the timeliness of Australian Bureau of Statistics (ABS) data, including revisions to the ABS input-output tables and data.