By measuring the income tax performance of small business taxpayers in Australia, we see that this population contributes over $100 billion in income tax – this is around 87% of the revenue we expect from them.
We have a program that measures:
- tax performance across all taxpayer populations
- the effectiveness of the tax and superannuation systems.
As part of this, we measure tax gaps (estimates of the difference between the tax collected and the amount that would have been collected if everyone was fully compliant with tax law).
The latest estimate of the net small business income tax gap for 2020–21 is $15.1 billion or 12.8%. This is a preliminary estimate and will be revised in future years using updated data.
We work out our estimate by examining the tax returns of a random sample of small business taxpayers – we call this the random enquiry program.
The random enquiry program helps us to:
- understand the taxpayer behaviours contributing to the tax gap
- identify the support businesses need to get their tax right
- devise strategies to increase willing participation in the tax system
- target our resources to combat shadow economy behaviour most effectively.
The sample size informing this estimate is similar to that used in the preliminary 2019–20 estimate that was published in 2022, but smaller than the samples used in earlier estimates.
This reduction is the result of a redirection of resources to:
- support the community through natural disasters and the delivery of COVID-19 stimulus packages
- address emerging compliance issues.