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  • Tax and individuals – not in business

    An effective tax system supports the social benefits we all enjoy in Australia. The key to an effective tax system is a high level of willing participation by the community. Participation is built on people valuing our tax system, and having trust and confidence in the Australian Taxation Office (ATO) to administer it. We share our insights about the tax and superannuation system to improve awareness and encourage more people to participate willingly.

    Individuals are the largest community segment that interact with our tax system. In 2016–17, Australia had 9.6 million individual taxpayers who were not in business and lodged tax returns. These people earn their income from salary and wages and investments. They contribute around 47%Footnote1 of all tax we collect. We know that over 93% of the income tax we collect from individuals who are not in business is paid voluntarily or with little intervention from us. The majority of individuals who are not in business and are required to lodge, do so on time.

    While we have robust systems in place to ensure that people report the income they earn from most sources, we are concerned about non-reporting of cash wages and errors made when claiming deductions. While individual amounts of under-reported income and over-claimed deductions can be small, collectively, across a large population, they represent a significant amount of lost revenue.

    We take our responsibility to the people of Australia seriously. Here you'll find details of the challenges we face and how we are improving the tax system to help people who want to comply, while taking firm action against people who choose not to. We hope this information provides you with a better understanding of how Australia's income tax system is operating for individual taxpayers, who are not in business.

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    Footnote 1
    ATO net tax collections in 2016–17 were $359.3 billion. The individuals market segment contributed $170.5 billion. Source: unpublished ATO tax return data, 2016–17 data based on market segments.

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    Last modified: 12 Jul 2018QC 56219