Tax gap perspectives
We update and refresh our tax gap estimates in the ATO annual report each year. This year we are publishing estimates for 18 different gaps.
The tax gap can be viewed from 2 perspectives:
- The gross tax gap, which is the difference between the estimate of the amount we expect to collect (which includes what is voluntarily reported and paid) to the estimate of the amount of tax we theoretically would collect. We do not publish the gross gap for petroleum resource rent tax (PRRT) and product stewardship for oil (PSO) due to the small number of participants.
- The net tax gap, which reduces the gross gap by the amount of amendments in that financial year, where amendments represent the outcomes from ATO compliance actions plus any amendments made by the taxpayer.
Transaction-based tax gap estimates
Table 1 shows our gross and net gap estimates for 2022–23 (both as a dollar value and percentage of theoretical tax) for the transaction-based tax gaps. It also contains the current reliability assessment ratings for the estimation approaches for all estimates. While some gaps also have an estimate for 2023–24 (see Table 4 for more details), all gaps have estimates for 2022–23.
Tax gap estimate | Reliability assessment rating | Financial year | Gross gap ($m) | Net gap($m) | Gross gap (%) | Net gap(%) |
|---|---|---|---|---|---|---|
Alcohol tax | Medium | 2022–23 | 800 | 798 | 9.6 | 9.6 |
Fuel excise | Reliable | 2022–23 | 812 | 812 | 3.9 | 3.9 |
Goods and services tax | Medium | 2022–23 | 11,310 | 8,113 | 12.7 | 9.1 |
Luxury car tax | Medium | 2022–23 | 57 | 43 | 4.9 | 3.7 |
Wine equalisation tax | High | 2022–23 | 58 | 51 | 5.0 | 4.3 |
Gross and net gap estimates
Table 2 shows our 2022–23 gross and net gap estimates (both as a dollar value and as a percentage) and their reliability assessment ratings for the income-based taxes.
Tax gap estimate | Reliability assessment rating | Financial year | Gross gap ($m) | Net gap ($m) | Gross gap (%) | Net gap (%) |
|---|---|---|---|---|---|---|
Fringe benefits tax | Medium | 2022–23 | 1,844 | 1,815 | 30.9 | 30.4 |
High wealth income tax | Medium | 2022–23 | 1,440 | 1,205 | 8.6 | 7.2 |
Individuals not in business income tax | High | 2022–23 | 14,125 | 12,515 | 7.0 | 6.2 |
Large corporate groups income tax | High | 2022–23 | 5,987 | 3,720 | 5.9 | 3.7 |
Large super funds income tax | High | 2022–23 | 287 | 174 | 2.2 | 1.4 |
Medium business income tax | Medium | 2022–23 | 1,811 | 1,689 | 9.0 | 8.4 |
Petroleum resource rent tax | Reliable | 2022–23 | n/a | 51 | n/a | 2.7 |
Small business income tax | Medium | 2022–23 | 28,085 | 27,171 | 18.0 | 17.4 |
Small super funds income tax | Medium | 2022–23 | 92 | 79 | 4.4 | 3.8 |
Other tax gaps estimates
In additional to transactional and income tax based gaps, we also estimate the gap for programs that are administered by us on behalf of the community as well as PAYG withholding (other tax gaps). Table 3 shows the gross and net gap (both as a dollar value and percentage of theoretical tax), as well as reliability assessment rating, for each of our gap estimates for selected administered programs for 2022–23 and PAYG withholding.
Gap estimate | Reliability assessment rating | Financial year | Gross gap ($m) | Net gap ($m) | Gross gap (%) | Net gap (%) |
|---|---|---|---|---|---|---|
Fuel tax credits | Low | 2022–23 | 321 | 290 | 4.3 | 3.9 |
PAYG withholding | Medium | 2022–23 | 7,082 | 4,734 | 2.6 | 1.7 |
Product stewardship for oil | High | 2022–23 | n/a | 1.2 | n/a | 0.9 |
Superannuation guarantee | Medium | 2022–23 | 7,620 | 6,245 | 7.3 | 6.0 |
GST and excise gaps
For GST and excise gaps, we have more contemporaneous data which allows us to estimate their tax gaps for 2023–24 as well – see Table 4.
Gap estimate | Gap program | Reliability assessment rating | Financial year | Gross gap ($m) | Net gap ($m) | Gross gap (%) | Net gap (%) |
|---|---|---|---|---|---|---|---|
Alcohol tax | Transaction-based | Medium | 2023–24 | 864 | 861 | 9.8 | 9.7 |
Fuel excise | Transaction-based | Reliable | 2023–24 | 446 | 446 | 1.8 | 1.8 |
Fuel tax credits | Administered | Medium | 2023–24 | 370 | 345 | 4.0 | 3.7 |
Goods and services tax | Transaction-based | Medium | 2023–24 | 11,640 | 8,722 | 12.5 | 9.4 |
Product stewardship for oil | Administered | High | 2023–24 | n/a | 2.0 | n/a | 1.1 |