Tax performance
Our tax performance research program monitors the health of the system and our performance in managing it through a broad suite of measures including tax gap estimates and tax assured, which estimates the amount of tax that we are highly confident has been reported correctly. This provides insights into the operation of the tax and superannuation systems.
Addressing non-compliance through audits and other correction activities will always be an important part of our compliance approach. Our real success lies in ensuring taxpayers get things right from the start, locking in future compliance after we have made a correction and maintaining confidence that the right amount of taxes continue to be paid. This approach sustainably reduces the tax gap and our overall impact is measured as total revenue effects.
In this section
Excise and other indirect taxes
Working holiday maker framework
Tax gap estimates
Tax gaps estimate the difference between what the ATO collects and the amount that would have been collected if every taxpayer was fully compliant with the law.
We separate our gap estimates into those relating to transactional-based taxes, income-based taxes and administered programs. The ATO aims to identify, manage and sustainably reduce tax gaps over time and maximise voluntary compliance. We engage with a range of stakeholders to understand the risks and drivers and how we can collaboratively address the issues.
Recognising the importance of having reliable and credible tax gap estimates, we engage an independent expert panel to provide advice on the suitability of our gap methodologies and the reliability of the estimates.
An explanation of our methodologies and an analysis of each of the gaps are available at ato.gov.au/taxgap.
|
Tax type |
Reliability assessment |
Unit |
2013–14 |
2014–15 |
2015–16 |
2016–17 |
2017–18 |
2018–19 |
|---|---|---|---|---|---|---|---|---|
|
Taxes on goods and services |
||||||||
|
GST |
Medium |
% |
7.3 |
7.1 |
8.2 |
7.2 |
7.3 |
– |
|
$m |
4,059 |
4,239 |
5,156 |
4,712 |
4,995 |
– |
||
|
Wine equalisation tax |
Medium |
% |
5.3 |
3.0 |
2.6 |
2.5 |
– |
– |
|
$m |
42 |
24 |
22 |
21 |
– |
– |
||
|
Excise and customs duties |
||||||||
|
Fuel excise |
Medium |
% |
2.1 |
1.0 |
1.9 |
1.9 |
1.3 |
– |
|
$m |
350 |
168 |
325 |
330 |
239 |
– |
||
|
Tobacco duty |
Medium |
% |
– |
– |
5.5 |
5.0 |
5.0 |
– |
|
$m |
– |
– |
584 |
579 |
647 |
– |
||
– = Results are not available for the given year.
NOTES
(a) All estimates are rounded to the nearest $1 million.
(b) Due to data lags several estimates for years 2017–18 and beyond are not yet available.
(c) Changes from previously published estimates occur for a variety of reasons, including improvements in methodology, revisions to data and additional information becoming available.
|
Tax on income |
Reliability assessment |
Unit |
2013–14 |
2014–15 |
2015–16 |
2016–17 |
2017–18 |
2018–19 |
|---|---|---|---|---|---|---|---|---|
|
Large corporate groups |
High |
% |
5.2 |
5.0 |
4.7 |
4.0 |
– |
– |
|
$m |
2,356 |
2,375 |
1,958 |
1,977 |
– |
– |
||
|
Individuals not in business |
High |
% |
5.6 |
6.2 |
6.4 |
– |
– |
– |
|
$m |
6,752 |
7,854 |
8,444 |
– |
– |
– |
||
|
Large superannuation funds |
Medium |
% |
2.5 |
2.0 |
1.6 |
1.6 |
– |
– |
|
$m |
172 |
146 |
136 |
182 |
– |
– |
||
|
Small superannuation funds(d) |
Low |
% |
– |
1.1 |
1.5 |
2.0 |
– |
– |
|
$m |
– |
17 |
20 |
28 |
– |
– |
||
|
Small business |
Medium |
% |
– |
– |
12.5 |
– |
– |
– |
|
$m |
– |
– |
11,087 |
– |
– |
– |
||
|
Petroleum resource rent tax |
High |
% |
3.2 |
3.1 |
2.1 |
2.1 |
– |
– |
|
$m |
60 |
39 |
20 |
22 |
– |
– |
– = Results are not available for the given year.
NOTES
(a) All estimates are rounded to the nearest $1 million.
(b) Due to data lags several estimates for years 2016–17 and beyond are not yet available.
(c) Changes from previously published estimates occur for a variety of reasons, including improvements in methodology, revisions to data and additional information becoming available.
(d) The reliability rating for this estimate has been revised down from medium. The expert panel have assessed the estimate as remaining credible and reliable for reporting this year.
|
Administered programs |
Reliability assessment |
Unit |
2013–14 |
2014–15 |
2015–16 |
2016–17 |
2017–18 |
2018–19 |
|---|---|---|---|---|---|---|---|---|
|
Superannuation guarantee |
Medium |
% |
5.3 |
5.1 |
4.8 |
3.9 |
– |
– |
|
$m |
2,824 |
2,867 |
2,745 |
2,298 |
– |
– |
||
|
Pay as you go (PAYG) withholding |
Medium |
% |
2.8 |
2.7 |
2.2 |
1.7 |
– |
– |
|
$m |
4,550 |
4,568 |
3,871 |
3,046 |
– |
– |
||
|
Fuel tax credits |
Medium |
% |
–0.1 |
–0.0(d) |
–0.1 |
–0.1 |
–0.1 |
– |
|
$m |
–7 |
–3 |
–9 |
–7 |
–6 |
– |
– = Results are not available for the given year.
NOTES
(a) All estimates are rounded to the nearest $1 million.
(b) Due to data lags several estimates for years 2017–18 and beyond are not yet available.
(c) Changes from previously published estimates occur for a variety of reasons, including improvements in methodology, revisions to data and additional information becoming available.
(d) Figure less than zero when not rounded.
Tax assured
Tax assured is an estimate of the proportion of tax that we are highly confident is correctly reported.
This measure is based on the concept of ‘justified trust’. We achieve justified trust and consider tax to be assured when we have evidence that the reporting of taxable income, deductions and offsets is complete and accurate.
We collect evidence to assure tax from a range of sources. Where possible we collect evidence from third-parties to match against information reported to us.
For individuals, our primary approach is to assure tax by matching information on taxpayers’ income tax returns with third-party data such as:
- salary and wage information received from employers through the PAYG withholding system
- interest and dividend data from financial institutions and public companies
- pensions and allowances from government departments.
For businesses, particularly larger businesses, we primarily assure tax through one-to-one engagements.
Under our justified trust program, we undertake specific tax assurance engagements with:
- the top 100 and next 1,000 public and multinational businesses
- the top 320 private groups.
We also assure indirect tax through our ongoing relationships with large excise clients.
At 30 June 2019 we estimated that 45.6% of total tax reported for the 2016–17 tax year could be assured. During 2018–19 we also assured an additional 1.9% for the 2015–16 tax year, bringing the total tax assured estimate for that year to 47.4%.
In practice, we cannot gather third party data or other evidence to compare against all tax returns. As such our tax assured estimates will always be lower than the real amount of tax that is correctly reported.
Where we cannot gather evidence to assure tax, we rely on our broader risk management approaches to provide us with confidence with respect to tax reporting. Our risk management approaches help us identify and deal with non-compliance through real-time analytics, benchmarking and sophisticated risk detection algorithms. This is supported by various administrative systems and tools including the Taxable Payments Reporting System.
When considered together with our total revenue effects measure and tax gap estimates, tax assured gives us confidence and valuable insight into the integrity of the revenue system.
For more information, refer to ato.gov.au/taxassured.
Total revenue effects
Total revenue effects measures the impact our activities have on improving taxpayer compliance. These activities ultimately improve levels of willing participation with the tax and superannuation systems. By understanding and measuring the impact of our activities, it helps us to develop and improve effective strategies.
Total revenue effects is an estimate of the additional tax revenue that comes from our client engagement activities and interventions. It measures:
- the estimated additional tax paid voluntarily by clients we influence where there is a clear causal connection with our engagements (wider revenue)
- the collection of liabilities, including penalties and interest, directly connected to adjustments we make as a result of our ‘downstream’ interventions (audit yield).
The figure below shows how the wider revenue effects and audit yield combine with our other activities to add to the total tax base.
Total revenue effects
As part of our compliance program of work, in 2018–19, we completed approximately 4.3 million interventions with taxpayers to improve compliance.
Some interventions undertaken by the ATO are designed to obtain lodgment or correct a return after it has been lodged. This supports a level playing field and acts as a deterrent where needed. Through these interventions we raised a total of $15.3 billion in liabilities and $10.5 billion in audit yield (some relating to liabilities raised in previous years). This is compared to total liabilities of $15.6 and $16.9 billion raised and audit yield of $10.2 and $11.8 billion in 2016–17 and 2017–18 respectively.
The ATO is continuing to invest more effort and focus on supporting clients to get it right prior to lodging or even when they are first starting out in business. These are complemented by our deliberate efforts to improve future behaviour wherever we engage with clients. We estimate the impact of our pre-emptive strategies and of sustained compliance following our engagements in prior periods, known as wider revenue effects. In 2018–19, we estimated the impact of these interventions to be $4.8 billion.
The total revenue effects for 2018–19 from all of our interventions totalled $15.3 billion.
Total revenue effects, 2016–17 to 2018–19
NOTES
Audit yield is a combination of actual cash collections and estimates of collections based on sampling.
Collections also include collections on tax, penalties and interest raised in prior years.
Results also include our activities to prevent incorrect refunds or payments being issued.
Cash collections include cash paid on disputed amended assessments raised.
Data is available in the Table of total revenue effects, 2016–17 to 2018–19, provided in the appendixes as an alternative the above chart.
For more information on total revenue effects, see ato.gov.au/totalrevenueeffects.
Income tax
We delivered on our income tax revenue measures and other compliance activities, with cash collections from our direct and wider revenue activities being $11.4 billion.
|
Compliance plans and results |
2016–17 |
2017–18 |
2018–19 |
|---|---|---|---|
|
Liabilities plans (including measures) (a) |
10,198 |
13,368 |
12,111 |
|
Liabilities raised(a) |
13,636 |
14,072 |
13,058 |
|
Cash plans (including measures) (a) |
7,182 |
9,746 |
9,340 |
|
Estimated direct audit yield |
7,286 |
8,680 |
7,545 |
|
Estimated wider revenue effects linked to measures |
1,935 |
1,602 |
1,969 |
|
Additional wider revenue effects outcomes |
1,275 |
1,803 |
1,896 |
|
Estimated total revenue effects |
10,496 |
12,085 |
11,410 |
NOTE
(a) Includes both direct and some wider revenue effects (where linked to measures) plans or outcomes.
Goods and services tax
We delivered on our GST revenue measures to government and the states and territories, with cash collections from our direct and wider revenue activities being $3.6 billion.
|
Compliance GST plans and results |
2016–17 |
2017–18 |
2018–19 |
|---|---|---|---|
|
Liabilities plans (including measures)(a) |
2,654 |
3,011 |
2,863 |
|
Liabilities raised(a) |
3,548 |
3,652 |
3,531 |
|
Cash plans (including measures) (a) |
2,113 |
2,454 |
2,716 |
|
Estimated direct audit yield |
2,749 |
2,821 |
2,652 |
|
Estimated wider revenue effects linked to measures |
134 |
142 |
146 |
|
Additional wider revenue effects outcomes |
640 |
719 |
814 |
|
Estimated total revenue effects |
3,523 |
3,682 |
3,612 |
NOTE
(a) Includes both direct and some wider revenue effects (where linked to measures) plans or outcomes.
Excise and other indirect taxes
We raised excise liabilities of $122 million from compliance activities and collected almost $21 million in cash (including collections from liabilities raised in previous years).
For excise transfers (predominantly fuel tax credits), our compliance activities resulted in adjustments in favour of taxpayers of almost $88 million, and adjustments in favour of the revenue of $17 million. Of adjustments in favour of the revenue, we collected around $12 million this year and a further $4 million from liabilities raised in previous years.
As a result of undertaking activities aimed at improving levels of willing participation within the tax and superannuation systems, it is estimated that an additional $50 million in fuel tax credits has been claimed by taxpayers.
Voluntary disclosures
Where people identify that they have made a mistake or omission in a previously lodged tax return or activity statement, we encourage them to disclose this and work with us to fix the problem.
We raised $1.0 billion in liabilities as a result of such voluntary disclosures. This included around $146 million in GST liabilities, with cash collections of $131 million, as a result of voluntary disclosures from large businesses in 2018–19.
Penalties and interest
Interest is charged on unpaid tax liabilities to ensure fairness for taxpayers who do pay on time and the community as a whole. The penalty provisions encourage taxpayers to take reasonable care in complying with their tax obligations. We can generally remit (reduce or cancel) interest charges and penalties where this is fair and reasonable.
The next table shows the penalties and interest for 2016–17 to 2018–19.
|
Penalties and interest |
2016–17 |
2017–18 |
2018–19 |
|
|---|---|---|---|---|
|
Penalties |
Applicable |
1,529 |
2,692 |
1,387 |
|
Remitted |
399 |
473 |
375 |
|
|
Collected |
1,139 |
685 |
562 |
|
|
Interest |
Applicable |
688 |
4,728 |
3,871 |
|
Remitted |
725 |
1,504 |
832 |
|
|
Collected |
2,450 |
2,098 |
1,628 |
|
Working holiday maker framework
Working holiday makers (WHM) are subject to a different rate of income tax, including amounts of income tax withholding, regardless of their residency status.
Employers are required to register with us to allow them to apply the different rates of pay as you go (PAYG) withholding to the payments they make to working holiday makers. At 30 June 2019, there were over 46,800 employers registered.
The next table shows updated figures for tax returns that were lodged by 30 June 2019 where an amount of WHM net income was declared.
|
Results |
2016–17 tax returns(a) |
2017–18 tax returns |
2018–19 tax returns(b) |
|---|---|---|---|
|
Number of tax returns lodged by WHMs |
75,614 |
93,040 |
2,205 |
|
Average taxable income |
$18,630 |
$21,098 |
$17,407 |
|
Average income tax withheld |
$3,259 |
$3,646 |
$2,983 |
|
Average income tax assessed as payable |
$2,800 |
$3,458 |
$2,860 |
NOTES
(a) The scheme commenced from 1 January 2017. Average income tax calculations made using the whole 2016–17 income year.
(b) These statistics are associated with 2018–19 tax returns lodged by 30 June 2019 and reflect early lodged tax returns.
Visit
https://www.transparency.gov.au/annual-reports/australian-taxation-office/reporting-year/2018-2019-19