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  • Tax and small business

    By measuring the income tax performance of small business in Australia, we see that they voluntarily contribute over $76 billion in income tax – this is around 87.5% of the revenue we expect from them. The ATO has a research program that measures tax performance across all market segments. This research helps us measure the effectiveness of the tax system.

    As part of our research program, we also measure the tax gap. The gap is an estimate of the difference between the tax collected and the amount that would have been collected if everyone was fully compliant with tax law.

    We estimate the income tax gap for the small business sector to be approximately 12.5%, or $11.1 billion. We have worked out this estimate using the results of research we performed on a random sample of small business taxpayers – we call this the 'random enquiry program'.

    The random enquiry program helps us:

    • identify the support businesses need to get their tax right
    • devise strategies to increase willing participation in the tax system
    • target our resources to most effectively combat tax crime
    • evaluate how the tax system is performing.

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    Last modified: 27 Aug 2019QC 59955