Large corporates to voluntarily pay
For 2022–23, we expect large corporates to voluntarily pay more than 94% of what they should. We estimate this to rise to over 96% after our engagement.
Large corporate groups population
A large corporate group has a gross income of over $250 million in a financial year. In 2022–23, large corporate groups:
- reported $2.86 trillion in gross income
- generated $376 billion in taxable income
- returned around $98 billion in expected income tax.
This gap forms a part of our overall tax performance program. Find out about the concept of tax gaps and the latest gaps available.
Overview of the latest estimate
The ATO estimates that the economic activities undertaken by large corporate groups should have generated over $101 billion in income tax for 2022–23. We know that $95 billion was voluntarily reported. This leaves a gap of $6 billion, or 5.9%, and we call this the large corporate groups gross tax gap.
After ATO engagement and compliance action, the gap was reduced to $3.7 billion, or 3.7%, and we call this the large corporate groups net tax gap.
Over the past decade, we've seen steady improvements in voluntary compliance, or gross gap, and large corporate groups are now among the most compliant segments. This has largely been due to the increased focus of the Tax Avoidance Taskforce
The tax gap can be viewed in net and gross terms to show the impact of amendments. Table 1 shows the expected income tax collections, amendments, and net and gross income estimates for the period 2017–18 to 2022–23.
The large corporate group transactions are often complex, taking time to review and resolve. Historically, this has resulted in downward revisions to our current year estimate, and we expect a similar revision down to our 2022–23 tax gap estimate, shown in Table 2.
|
Element |
2017–18 |
2018–19 |
2019–20 |
2020–21 |
2021–22 |
2022–23 |
|---|---|---|---|---|---|---|
|
Population (entities) |
7,420 |
7,977 |
8,067 |
8,278 |
8,751 |
8,856 |
|
Gross gap ($m) |
3,497 |
5,165 |
3,073 |
3,891 |
6,337 |
5,987 |
|
Amendments ($m) |
1,445 |
2,749 |
1,270 |
1,532 |
2,750 |
2,267 |
|
Net gap ($m) |
2,053 |
2,416 |
1,803 |
2,359 |
3,587 |
3,720 |
|
Expected collections ($m) |
52,593 |
59,135 |
58,399 |
69,804 |
86,589 |
97,547 |
|
Theoretical liability ($m) |
54,646 |
61,550 |
60,202 |
72,163 |
90,176 |
101,267 |
|
Gross gap (%) |
6.4 |
8.4 |
5.1 |
5.4 |
7.0 |
5.9 |
|
Net gap (%) |
3.8 |
3.9 |
3.0 |
3.3 |
4.0 |
3.7 |
|
Element |
Published year |
2017–18 |
2018–19 |
2019–20 |
2020–21 |
2021–22 |
2022–23 |
|---|---|---|---|---|---|---|---|
|
Net tax gap |
Current year |
3.8% |
3.9% |
3.0% |
3.3% |
4.0% |
3.7% |
|
Net tax gap |
Last year |
3.7% |
4.0% |
3.3% |
3.7% |
4.1% |
n/a |
|
Gross tax gap |
Current year |
6.4% |
8.4% |
5.1% |
5.4% |
7.0% |
5.9% |
|
Gross tax gap |
Last year |
7.0% |
8.9% |
6.2% |
6.1% |
6.8% |
n/a |
Figure 1 displays the trend in the gross and net income tax gap over the same period.
Figure 1: Gross and net income tax gap (percentage) – large corporate groups, 2017–18 to 2022–23
For previously published tax gap figures, see Australian Tax Gaps - Data.gov.auOpens in a new window