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Total revenue effects

Total revenue effects measures the impact our activities have on improving taxpayer compliance. These activities ultimately improve levels of willing participation in the systems and programs we administer. Understanding and measuring the impact of our activities helps us to develop effective new strategies and improve existing ones.

In calculating total revenue effects, we include:

  • the collection of liabilities, including penalties and interest, directly connected to adjustments we make as a result of our interventions (audit yield)
  • the estimated additional tax paid voluntarily by clients we influence where there is a clear causal connection with our engagements (wider revenue effects)
  • the reduction and collection of overpayments from administered stimulus programs.

Total revenue effects shows how the wider revenue effects and audit yield combine with our other activities to add to the total tax base.

Total revenue effects The total revenue collected by the ATO is made up of the tax base plus penalties and interest. The total tax base is made up of voluntary revenue, the additional tax revenue raised though our compliance activities and stimulus program impacts. A component of voluntary revenue is the result of our work to influence voluntary compliance, this component is called wider revenue effects. Total revenue effects is the combination of audit yield (including penalties and interest), wider revenue effects and stimulus program impacts.

The total revenue effects for 2020–21 from all our compliance activities totalled $11.5 billion, against our target of $15 billion4. We raised a total of $12.0 billion in tax liabilities and collected $6.8 billion in audit yield (some relating to liabilities raised in previous years) from 5.2 million compliance activities. Additional tax paid voluntarily as wider revenue effects is estimated at $3.5 billion.

Total revenue effects are affected this year by a range of factors relating to COVID-19, including taxpayers’ ability to pay, our cautious approach to compliance, application of penalties and interest, debt recovery, and our focus on supporting the Australian community in delivering the government’s stimulus measures. In 2020–21, the impact of our work (reducing overpayments by $1.2 billion) to ensure compliance with JobKeeper and Cash Flow Boost is included in total revenue effects.

Due to the continued impact of COVID-19 and the lighter touch compliance approach, we tracked significantly below the total revenue effects target across the first nine months of the year. As resources were moved away from administering stimulus programs and back to our regular activities, along with some recovery of economic conditions, performance against the target improved in the final quarter.

The number of activities we completed this year increased. However, a pivot from stronger actions to a lighter touch approach which focused on help and assist lodgment activities, together with the impacts of COVID-19 on the community has meant that our liabilities and cash collections are lower this year.

For more information on total revenue effects, see ato.gov.au/totalrevenueeffects.

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Footnote

4 The PBS target of $15 billion was set using previous wider revenue effect model estimates. New models reduce this target by $900 million.

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Total revenue effects, 2018–19 to 2020–21(a)

All taxes

2018–19

2019–20

2020–21

Total revenue effects

$15.3b

$13.7b

$11.5b

- Audit yield

$10.5b

$9.5b

$6.8b

- Wider revenue effects

$4.8b

$4.3b

$3.5b(b)

- Stimulus measures

$1.2b

Liabilities raised(c)

$15.3b

$13.7b

$12.0b(d)

Compliance activities

4.3m

3.9m

5.2m

Notes

(a) Totals may differ from the sum of components due to rounding.

(b) A new model was used to estimate the wider revenue effects for activities related to individuals. The new model results are approximately $900 million less than the previous model results, which accounts for the decline in total wider revenue effects in 2020–21.

(c) Some liabilities raised relate to compliance activity in previous years.

(d) 2020–21 liabilities raised figure excludes $2.6 billion of liabilities that are considered outliers. Outlier cases include mistakes or deliberate fraud cases that are of such high value that our automated risk detection processes identify and stop such claims. These figures are excluded to avoid distorting the true impact of ATO discretionary action.

We categorise the revenue effects into three major components, those resulting from:

  • lodgment – our compliance activities undertaken to improve or enforce the lodgment of due returns and statements
  • client engagement – our compliance activities undertaken to ensure the right amount of tax and superannuation is assessed and paid
  • stimulus measures – our compliance activities to prevent and recover overpayments related to JobKeeper and Cash Flow Boost.

We have a broad program to engage with clients to obtain outstanding lodgments, re-engage taxpayers with the tax system and sustain lodgment compliance. During 2020–21, our lodgment program was modified in response to the hardship caused by the COVID-19 lockdowns and general economic deterioration. Outbound telephony to engage with taxpayers was pivoted to provide greater help and assistance and away from taking firmer action and enforcement. The economic impact of the pandemic was reflected in a lower average tax from each lodgment obtained and increased refunds. This meant that our 3.8 million lodgment related activities in 2020–21 (up 800,000) contributed $3.9 billion in total revenue effects (down more than $2 billion).

Our client engagement results relate to helping people get it right up front, correcting or addressing non-compliance where necessary, and locking in future compliance. This year we undertook 1.4 million client engagement interventions to improve compliance with an overall contribution estimated at $6.4 billion of total revenue effects.

Our stimulus-related compliance activities formed a significant portion of overall compliance activities in the first half of 2020–21, our efforts are estimated to have reduced or recovered overpayments of $1.2 billion of total revenue effects.

Total revenue effects, 2018–19 to 2020–21 by estimated source of total revenue effects provides the breakdown of the three components described above.

Total revenue effects, 2018–19 to 2020–21 by estimated source of total revenue effects  Client engagement – audit yield in 2018–19 was 5.5, in 2019–20 was 5.3, in 2020-21 was 4.4; Client engagement – wider revenue in 2018–19 was 2.5, in 2019–20 was 2.5, in 2020-21 was 2.0; Lodgment – audit yield in 2018–19 was 5.0, in 2019–20 was 4.2, in 2020-21 was 2.4; Lodgment – wider revenue in 2018–19 was 2.3, in 2019–20 was 1.8, in 2020-21 was 1.5; Stimulus compliance outcomes was introduced in 2020-21 and was 1.2. Data is available in the Content to aid accessibility - Table of total revenue effects, 2018–19 to 2020–21 as an alternative to the above chart.

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.
  • Client engagement includes all preventative and corrective interactions and excludes lodgment.

Data is available in the Table of total revenue effects, 2018–19 to 2020–21 as an alternative to the above chart.

Income tax

Through our compliance activities, we raised an additional $11.1 billion in liabilities and wider revenue effects for income tax in 2020–21, resulting in total revenue effects of $7.4 billion.

Income tax liabilities raised (plans and results), 2018–19 to 2020–21

Liabilities / wider revenue effects plans and results

2018–19
$m

2019–20
$m

2020–21
$m

Plans

13,911

14,154

13,026(a)

Liabilities raised

14,953

12,676

11,078(b)

Notes

(a) The plan for 2020–21 was lower than prior years in recognition of COVID-19 and impacts to the community and delivery of work programs.

(b) This includes around $426 million in income tax liabilities, including $217 million from large businesses, as a result of voluntary disclosures in 2020–21.

Income tax total revenue effects, 2018–19 to 2020–21(a)

Results

2018–19
$m

2019–20
$m

2020–21
$m

Measures – Audit yield

4,211

4,052

2,573

Measures – Wider revenue effects

589

779

1,173

Base – Audit yield

3,335

2,628

2,048

Base – Wider revenue effects

3,276

2,680

1,567

TOTAL

11,410

10,139

7,361

Note

(a) Totals may differ from the sum of components due to rounding.

Goods and services tax

Through our compliance activities, we raised an additional $3.6 billion in liabilities and wider revenue effects for GST in 2020–21 resulting in total revenue effects of $2.7 billion.

GST liabilities raised (plans and results), 2018–19 to 2020–21

Liabilities / wider revenue effects plans and results

2018–19
$m

2019–20
$m

2020–21
$m

Plans

3,563

3,705

3,188

Liabilities raised

4,346

3,675

3,594(a)

Note

(a) This includes around $504 million in GST liabilities, including $287 million from large businesses, as a result of voluntary disclosures in 2020–21.

GST total revenue effects, 2018–19 to 2020–21

Results

2018–19
$m

2019–20
$m

2020–21
$m

Measures – Audit yield

1,483

1,269

1,118

Measures – Wider revenue effects

146

248

249

Base – Audit yield

1,169

1,156

765

Base – Wider revenue effects

814

600

547

TOTAL

3,612

3,273

2,679

More information is available in our GST administration annual performance report at ato.gov.au/GSTadministration.

Excise and other indirect taxes

In 2020–21, we raised excise liabilities of $6.2 million from compliance activities and collected $4.5 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 $74.4 million, and adjustments in favour of revenue of $20.0 million. Of adjustments in favour of revenue, we collected $8.0 million from liabilities raised this year and 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 $31 million in fuel tax credits has been claimed by taxpayers.

JobKeeper and Cash Flow Boost

Compliance activities related to JobKeeper and Cash Flow Boost formed a significant portion of overall compliance activities completed for the first half of 2020–21.

Our estimate of the overall impact of our compliance work on JobKeeper overpayments reveals that $89 million was recovered, over $274 million was stopped, and we averted a further $763 million in likely incorrect claims in later periods (where a claim had been previously stopped or recovered).

The impact of our Cash Flow Boost compliance work is estimated to have reduced overpayments by $97 million.

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 2018–19 to 2020–21.

Penalties and interest, 2018–19 to 2020–21

Penalties and interest

2018–19
$m

2019–20
$m

2020–21
$m

Penalties: Applicable

1,387

499

1,345

Penalties: Remitted

375

220

149

Penalties: Collected

562

311

219

Interest: Applicable

3,871

2,325

4,559

Interest: Remitted

832

1,062

1,079

Interest: Collected

1,628

2,071

1,609

Additional analysis on the behavioural penalties imposed during 2020–21 is available at ato.gov.au/behaviouralpenalties.

Working holiday maker framework

Working holiday makers 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 PAYG withholding to payments they make to working holiday makers. At 30 June 2021, there were over 62,600 employers registered.

The next table shows updated figures for tax returns that were lodged by 30 June 2021 where an amount of net income for working holiday makers was declared.

Working holiday maker tax returns processed, 2017–18 to 2020–21

Results

2018–19

tax returns(a)

2019–20

tax returns(b)

2020–21

tax returns(b)

Number of tax returns lodged by working holiday makers

99,895

81,182

287

Average taxable income

$22,891

$25,095

$19,049

Average income tax withheld

$3,975

$4,560

$3,089

Average income tax assessed as payable

$3,886

$4,322

$2,982

Notes

(a) 2018–19 results include processing up to 31 October 2020.

(b) 2019–20 and 2020–21 results include returns lodged by 30 June 2021, reflecting early lodged tax returns for 2020–‍21.