About the payment gap
Most taxpayers meet their payment obligations voluntarily, with around 90% of tax liabilities paid on time and in full, increasing to more than 96% within the following 12 months. The payment gap reflects amounts we expect to collect and provides insight into where support, engagement and compliance activities can improve payment outcomes.
The payment gap is concentrated in a small number of tax products and taxpayer groups. Goods and services tax (GST), pay as you go (PAYG) withholding, and income tax account for the majority of unpaid collectable debt, with small businesses representing a significant proportion of the payment gap. Consistent with our 2026–30 strategy, we focus on strengthening payment performance, supporting timely payment and reducing avoidable debt before it arises.
How we are reducing the gap
We take a balanced approach to reducing the payment gap by making it easier for taxpayers to pay, supporting those experiencing genuine financial difficulty, and taking firmer action where taxpayers choose not to engage. The payment strategy (implemented in August 2024) formalises and builds on activities already underway during the 2023–24 period, recognising that different taxpayers require different interventions to achieve better payment outcomes.
To prevent new debt from arising, we provide a range of digital and self-service payment options, encourage early engagement when taxpayers experience difficulty meeting their obligations, and offer payment plans where appropriate. We also work with tax professionals to help their clients understand and meet their payment obligations.
We use data and analytics to better understand the drivers of non-payment, identify emerging risks and tailor treatments to different taxpayer groups and tax products. This supports earlier intervention, helps prevent debt from escalating and enables resources to be directed to areas of greatest risk.
Debt recovery actions
For taxpayers who are able to pay but choose not to engage, we apply progressively firmer recovery actions to encourage payment and maintain community confidence in the tax and superannuation systems. Our debt recovery actions prioritise high-risk and high-value debts using data-driven approaches, so we can focus our efforts where non-payment poses the greatest risk to revenue and system fairness.
Some debt is inherently more difficult to recover. Liabilities raised through compliance activities or related to fraud activity may be subject to objection, review or other dispute processes, which can delay payment and reduce collection rates. Insolvency is another significant driver of the payment gap, as tax debts may become irrecoverable under law when individuals or businesses enter formal insolvency arrangements.
Improving payment performance
Through a combination of prevention, early engagement, tailored support and targeted recovery action, we seek to improve payment performance, reduce debt and maintain high levels of voluntary compliance across the tax and superannuation systems. These principles underpin our payment strategy, which formalises and strengthens approaches already being applied to reduce the payment gap.