• The GST gap results

    The ATO calculate the GST gap using a top-down approach, complemented by bottom-up analysis to validate the reasonableness of the estimates.

    The top-down approach uses an external economic benchmark (for example ABS national accounts data) to calculate the total theoretical GST liability in the Australian economy. The theoretical GST liability is compared to actual GST accrual revenue. The difference is assumed to represent the GST gap.

    There has been no change to the GST rate since its inception in 2000. Nor have there been any significant changes to the GST regime, apart from initial transitional measures.

    Growth in GST revenue has therefore been largely driven by growth in consumption subject to GST in the economy, and changes in compliance levels.

    Table 2.1 below shows the estimated GST gap for the periods 2001-02 to 2009-10. ABS data was used to derive the GST gap estimate. The ABS routinely makes adjustments to their statistical series, necessitating further revision to the GST gap estimates over time. Therefore the estimates are based on current information and are subject to change if additional information becomes available.

    Table 2.1: GST gap as a percentage of GST accrual revenue

    Year

    GST gap $m (excluding debt)

    GST gap excluding debt as a percentage of accrual revenue

    GST gap including debt as a percentage of accrual revenue

    2001-02

    2,510

    8.90%

    9.60%

    2002-03

    2,588

    8.30%

    9.20%

    2003-04

    2,243

    6.60%

    7.50%

    2004-05

    2,596

    7.30%

    8.30%

    2005-06

    2,035

    5.40%

    6.40%

    2006-07

    2,295

    5.70%

    6.70%

    2007-08

    2,975

    7.00%

    8.10%

    2008-09

    3,172

    7.60%

    9.10%

    2009-10

    1,498

    3.30%

    4.90%

    Chart 2.1 GST gap over time

    Chart 2.1 GST gap over time

    Transitional issues and concessions granted for financial years between 2000-01 and 2004-05 heighten the variability and uncertainty of these estimates. This may have contributed to the larger GST gap estimate in the earlier years.

    In 2008-09 the GST gap was 7.6% of accrual revenue. However, this fell to 3.3% in 2009-10. The GST gap result for 2009-10 of 3.3% is substantially lower than the average GST gap percentage for the last eight years. A fall in non-compliance of such magnitude is highly unlikely.

    However, the ATO believes that the movement is more likely a reflection of the relationship between ABS national accounts data and taxation data during that period (such as timing differences in the recognition of dwelling investment in national accounts data and taxation data).

    The ATO have combined the two periods 2008-09 and 2009-10 to reflect a more conservative trend. Over the following year, the taxation data set returned to growth at a similar rate to the ABS national accounts.

    The size of the GST gap could have been at least 10.7% - compared to approximately 5.4% - had it not been for our active compliance interventions.

    The average GST gap, excluding debt, over the period 2001-02 to 2009-10 is 6.7%.

    Chart 2.2: GST gap 2001-10 - GST moving average gap, GST average gap and GST actual gap

    Chart 2.2 GST gap 2001-10 - GST moving average gap, GST average gap and GST actual gap

      Last modified: 13 Nov 2015QC 26611