ato logo
Search Suggestion:

Why we measure the tax gap

Last updated 29 October 2023

Australians all benefit from healthy tax and super systems that support our society and economy. We contribute to this by fostering willing participation in the tax and super systems. Some of the ways we achieve this are through the 8 strategic objectives and 8 key focus areas that are outlined in our ATO corporate plan 2023–24.

One of our objectives is to build community confidence by sustainably reducing the tax gap and providing assurance across the tax and superannuation systems. Tax gap estimates allow us to better understand levels of compliance and risk in the tax and superannuation systems.

The insights gained from this work can guide us in determining priority risks and developing strategies (including administrative design, help and education, and audit), which aim to sustainably reduce the tax gap and improve voluntary compliance.

Our gap measurement methods draw on the experience of other contemporary tax administrations. This ensures our estimates are based on best practice. We share our tax gap information with our counterparts who also publish an annual tax gap program, such as His Majesty's Revenue and Customs (HMRC) in the United Kingdom.

We also participate in international forums and communities of practice, such as the OECD's Tax Gap Community of Interest. This was established in February 2023 for all OECD member countries and expands on the Community of Practice that had been in existence since 2019, of which Australia is a founding member.

Addressing the gap

Our primary strategy is to make it as easy as possible for Australians to comply with their tax and super obligations.

We approach this from many perspectives, including:

  • continuing to implement the ATO Digital Strategy key initiatives to deliver trusted and effective digital services and ecosystems
  • taking firm action on areas of suspected tax fraud, including intentional overclaiming of deductions and incorrect reporting of income
  • improving our processes and technology, including our data-matching capability
  • encouraging small businesses to adopt accounting software and other technology
  • addressing key risks to the corporate tax base and close tax loopholes so that the community has confidence that public and multinational businesses are paying the right amount of tax in Australia
  • applying differentiated strategies and targeted interventions to address collectable debt
  • encouraging taxpayers to obtain high-quality professional tax advice
  • providing advice to government, via the Treasury, where we see law reform options
  • working with partner agencies and stakeholders to improve the tax and superannuation systems
  • providing guidance and advice to clarify areas of uncertainty, including issuing taxpayer alerts if we see potential risks
  • dealing with non-compliance, including investigating aggressive tax planning.

These types of approaches help us achieve our desired future state. This is where the community is confident that our administration of the tax and super systems supports collection of the right tax, at the right time for the wellbeing of all Australians.