Overview of total revenue effects
Total revenue effects is one indicator we use to monitor and understand how our engagement activities impact the performance and operation of the tax and superannuation systems. It's a measure of the impact our activities have on improving taxpayer compliance and securing the correct amount of revenue.
Total revenue effects comprises the following 3 key components:
- Lodgment
- Lodgment interventions are designed to encourage on-time lodgment, secure outstanding lodgments and maintain ongoing lodgment compliance. Revenue associated with these interventions is reported under
- lodgment received after action – revenue resulting from interventions that secure outstanding lodgments
- sustained lodgment compliance – revenue associated with taxpayers continuing to lodge on time due to previous interventions and engagement activities.
- Lodgment interventions are designed to encourage on-time lodgment, secure outstanding lodgments and maintain ongoing lodgment compliance. Revenue associated with these interventions is reported under
- Correct reporting
- Correct reporting interventions focus on ensuring taxpayers report accurately, correct misreporting where it occurs, and encourage ongoing compliance behaviour to support the correct amount of revenue being reported and paid. Revenue from these interventions is reported under
- preventative actions – revenue obtained at lodgment through interventions designed to prompt taxpayers to correctly report and prevent errors or non-compliance before they occur
- incorrect claims stopped – revenue secured by identifying and stopping incorrect claims for credits or refunds
- audit activities – revenue resulting from compliance activities that identify and correct reporting inaccuracies or prompt taxpayers to make related voluntary disclosures
- sustained compliance – revenue resulting from taxpayers maintaining compliant behaviours over time following previous compliance and engagement activities.
- Correct reporting interventions focus on ensuring taxpayers report accurately, correct misreporting where it occurs, and encourage ongoing compliance behaviour to support the correct amount of revenue being reported and paid. Revenue from these interventions is reported under
- Balancing adjustments
- Balancing adjustments reflect changes to previously reported compliance outcomes and help ensure total revenue effects accurately represent the long-term impact of our compliance and engagement interventions. Revenue associated with these interventions is reported under
- significant refunds – represent the value of amounts repaid to taxpayers during the reporting period that relate to revenue effects reported in a prior year.
- Balancing adjustments reflect changes to previously reported compliance outcomes and help ensure total revenue effects accurately represent the long-term impact of our compliance and engagement interventions. Revenue associated with these interventions is reported under
Lodgment
Lodgment is revenue associated with a range of lodgment engagement and compliance activities. We undertake these activities to encourage on-time lodgment, improve or enforce the lodgment of overdue returns and statements and subsequently maintain ongoing compliance. We have a range of support options to help taxpayers manage their responsibilities, and keep taxpayers engaged with the tax and superannuation systems.
Lodgments received after action
We measure the revenue associated with a range of lodgment activities, including:
- engagement activities designed to prompt taxpayers to lodge outstanding tax returns and activity statements
- firmer compliance activities that are designed to secure lodgment. We have programs aimed towards compliance that are designed to protect public revenue and maintain community confidence in the integrity of the tax and superannuation systems. The objectives of these programs are to secure lodgment outcomes from taxpayers, such as the Child support lodgment enforcement program.
Sustained lodgment compliance
We then measure the revenue associated with compliance actions that have successfully re-engaged the taxpayer, who continues to meet their lodgment obligations without further intervention. We estimate the revenue collected from these future lodgments as 'sustained compliance'.
Correct reporting
We measure revenue associated with a range of activities we undertake that are designed to encourage and secure the correct amount of revenue. These actions are aimed at improving reporting accuracy, correcting misreporting when it occurs, and encouraging taxpayers to maintain compliant reporting behaviours over time. The main components follow.
Preventative actions
Revenue from preventative actions is the estimated additional tax paid voluntarily by clients as a result of our preventative activities to improve compliance without corrective action. For example, prompts we make to clients to help them understand and meet their reporting obligations before lodgment.
When we measure the impact of preventative actions, we ensure there is a clear connection between our activity and the change in taxpayer behaviour. We only measure revenue effects when this connection, the assumptions and measurement that underpin it are reasonable and defensible.
Audit actions and incorrect claims stopped
The collection of liabilities, including penalties and interest, from adjustments we make through our audit actions after the client has lodged ensures the right amount of tax and superannuation is assessed and paid.
Incorrect claims stopped is the value of overpayments that we stopped or reduced through our audit activities after a client has lodged, and before the return is processed and a refund is issued.
Sustained compliance
Sustained compliance is the estimated additional tax paid voluntarily by clients in the reporting periods following an initial correct reporting compliance action (that occurs after the client has lodged). This additional tax paid is due to improvements in voluntary compliance.
When measuring sustained compliance, we ensure there is a clear connection between our activity and the change in taxpayer behaviour. This connection and our assumptions that underpin it must be reasonable and defensible.
For more details on the range of activities designed to encourage and secure the correct amount of revenue, see Our three tier model.
Balancing adjustments
Balancing adjustments reflect changes to previously reported compliance revenue outcomes and help to ensure total revenue effects accurately represent the long-term impact of our compliance interventions.
Taxpayers have the right to dispute the outcomes of our compliance actions through formal objection and litigation pathways. These review mechanisms are an important part of the tax system and can result in previously collected liabilities being reduced or overturned.
Significant refunds
Significant refunds represent the total amount of outcomes repaid to taxpayers from resolution of significant (large value) disputes, in the reporting period. These refunds relate to revenue previously collected, through compliance actions, and reported as revenue effects in a prior year.
We subtract from the annual overall total revenue effects figure for any significant refunds paid during the year because of the resolution of litigation or objection activity, where:
- it was in the client's favour
- it can be linked to a prior year specific compliance outcome
- the revenue effect was counted within total revenue effects in a previous year.
Reporting these amounts as a balancing adjustment ensures total revenue effects outcomes continue to reflect the final and sustained impact of compliance interventions after disputes have been resolved. This ensures transparency and provides a more accurate representation of the net revenue impact of compliance and engagement activities over time.
Note: All revenue categories are reported on a cash rather than accrual basis. This recognises the impact of our activity when the additional revenue is paid by, or in the event of the refund, refunded to the taxpayer.
For more information about dispute pathways, see Dispute a decision.
Method used to measure total revenue effects
Our current methods are designed to:
- estimate the revenue effects of improvements to compliance over time
- follow our engagement with taxpayers and their registered tax or BAS agents (including corrective and preventative work)
- exclude some outlier cases, particularly mistakes or deliberate fraud of such high value that automated processes will always stop them – these figures are excluded to avoid distorting the true impact of our discretionary action.
When measuring, we ensure there is a clear connection between our activity and the change in taxpayer behaviour. This connection and our assumptions that underpin it must be reasonable and defensible.
Results of our compliance activities
In 2025–26, total revenue effects from compliance activities was $18.4 billion, against our target of $16.3 billion. We refunded around $230 million that was reported as a revenue effect in a previous year, resulting in a net total revenue effect of $18.2 billion.
Additional revenue commitments of $57.3 million for the 2025–26 financial year were announced after the total revenue effects target had been set at $16.3 billion. With these additional commitments the target would have been $16.4 billion. Our revenue estimate has exceeded this increased target.
|
All taxes |
2022–23 |
2023–24 |
2024–25 |
2025–26 |
|---|---|---|---|---|
|
Total revenue effects target ($ b) |
$15.0 |
$15.0 |
$16.0 |
16.3* |
|
Total revenue effects result ($ b) |
$20.3 |
$18.5 |
$18.5 |
$18.9 |
|
Lodgments received after action ($ b) |
$4.4 |
$4.8 |
$4.7 |
$6.1 |
|
Sustained lodgment compliance ($ b) |
$2.2 |
$1.9 |
$2.2 |
$1.0^ |
|
Preventative actions ($ b) |
$0.6 |
$0.7 |
$0.9 |
$0.6 |
|
Audit actions and incorrect claims stopped ($ b) |
$7.7 |
$8.6 |
$8.3 |
$8.9 |
|
Sustained compliance ($ b) |
$6.0 |
$2.6 |
$2.4 |
$2.4 |
|
Significant refunds due to objections or litigation ($ b) |
-$0.5 |
-$0.1 |
-$0.1 |
-$0.2 |
*PBS published target is $16.3 billion. Additional revenue commitments of $57.3 million were announced after the target was published.
^ From 2025–26 the method for estimating the revenue effect from sustained compliance will be strictly limited to only include revenue effects from lodgments received within one year of lodgment compliance action.
Limitations of measuring total revenue effects
Measuring total revenue effects is complicated. There are technical limitations involved in establishing defensible causal connections between our engagements with taxpayers and improvements in compliance behaviour leading to additional revenue collections.
Even when we establish a causal connection, it can be difficult to identify the extent to which our activities or unrelated external factors led to the revenue outcome.
Some of our estimates rely on the use of statistical methods which have inherent variability, and we work to improve the reliability of our methods over time.
We do not estimate a revenue effect for several compliance strategies and activities where we are yet to develop reliable methods.
Changes to our methods
We are continuing to enhance the total revenue effects (TRE) measure so it more comprehensively captures the full value of compliance activities. Our work includes recognising a broader range of revenue protection outcomes and refining how revenue effects are attributed to our interventions.
To round out the suite of measures, we will continue to develop the measure across the following categories:
- System resilience (new category)
- Lodgment
- Correct reporting*
- Payment (new category)
- Balancing items*
* Improvements in these areas are generally incremental and may be made throughout the year as part of ongoing process and methodology refinement.
System resilience
As more compliance activity is delivered through system-based integrity controls, we are developing a new system resilience category for inclusion in TRE from 2026–27. This category will recognise the value of interventions that prevent revenue leakage before it occurs by blocking, disrupting or removing fraudulent, unauthorised or invalid activity across the tax and superannuation systems.
In 2025–26, we identified more than 8,200 such interventions with an estimated revenue impact of $53.8 million. Examples include blocking fraudulent tax returns from being lodged, removing ineligible GST and fuel tax credit claims, and stopping fraudulent PAYG withholding data from being used to support false claims.
Improved measurement of lodgment actions
We have developed an alternative behavioural approach to measure the impact of lodgment compliance activities. The current method reports revenue collected after taxpayers lodge following our actions, while the new approach estimates the proportion of lodgments that are secured because of our action, recognising that some taxpayers may have lodged without our prompting.
The alternative method provides a stronger measure of behavioural impact and will help identify which interventions are most effective in improving lodgment compliance.
In 2025–26, we undertook around 3.5 million lodgment actions, resulting in approximately 1.6 million lodgments. Under the current approach, these actions generated $7.8 billion in liabilities, compared with $3.5 billion attributable to our intervention under the alternative behavioural method.
Developing payment action measures
We are also developing a new payment actions category to better recognise the value of interventions that influence taxpayers to pay outstanding debts. Potential measures include payments received following reminders, debt collection activities, director penalty notices and garnishee actions.
These enhancements will provide a more complete picture of our contribution to revenue collection, system integrity and voluntary compliance.