Revenue collection
In 2023–24, net GST cash collections (excluding non-GIC penalties) were $84.9 billion, including net Department of Home Affairs collections of $5.3 billion.
The 2023–24 cash outcome was 4.4% (or $3.6 billion) higher than in 2022–23, consistent with growth in household consumption.
Nonetheless, this growth was lower than expected, resulting in cash collections being:
- 1.2% (or $1.0 billion) below the estimate for 2023–24 of $85.9 billion published in the 2023–24 Budget
- 0.9% (or $0.8 billion) below the estimate for 2023–24 of $85.7 billion, published in the 2024–25 Budget.
While net GST cash collections were $84.9 billion, net GST accrued on a tax liability method (TLM) was $88.1 billion. TLM is defined as being the earlier of the cash payment being received or the associated liability being recognised. The difference between net GST accruals and cash collections of $3.2 billion, largely reflects late payments and increasing debt.
The estimated total statement outcome for June 2023 to May 2024 business activity statements (BAS) due in 2023–24 was $78.8 billion, $3.7 billion higher than the corresponding period in 2022–23. This is mainly due to strength in the professional, scientific and technical services, construction and wholesale trade sectors. Partially offsetting these were higher refunds to the mining and public administration sectors.
|
GST revenue |
2019–20 |
2020–21 |
2021–22 |
2022–23 |
2023–24 |
|---|---|---|---|---|---|
|
Total GST accrual |
66,682 |
72,606 |
76,001 |
85,295 |
88,126 |
|
Total GST cash |
60,236 |
73,073 |
73,581 |
81,332 |
84,918 |
|
– Net Home Affairs GST cash |
4,175 |
4,774 |
5,692 |
5,683 |
5,337 |
Measurement and effectiveness
The ATO uses a suite of measures to provide insights into the health and operation of the GST system and the effect of our actions. These performance measures include:
- GST gap
- voluntary compliance ratio (VCR)
- total revenue effects (TRE)
- GST assured.
Three of our performance measures (GST gap, VCR and GST assured) are ‘lag indicators’ that tell us about past performance. We supplement these with the TRE, which measures our current impact on tax collection.
GST gap
The GST gap estimates the difference between GST collected and the amount that would have been collected if all taxpayers were fully compliant with tax law (theoretical GST).
There are 2 types of GST gap:
- Gross GST gap – the gap before the impact of our engagement
- Net GST gap – the gap after our engagement.
Using revised methodologies and updated data, the estimates indicate a sharp increase in the estimated net tax gap to $7.9 billion in 2022–23 (9.0% of theoretical GST) up from $4.4 billion (5.5%) in 2021–22.
As the economy rebounded from COVID-19, the estimated GST base rose strongly with 2 years of record growth in 2021–22 (9.8%) and 2022–23 (11.8%).
In both 2021–22 and 2022–23 there were relatively large estimates of non-pursuable debt, and the net gap is estimated to have increased in both years.
The estimated gross gap is measured before the impact of ATO compliance activities are considered. The gross gap is estimated to have risen quite sharply from $6.1 billion in 2020–21 to $10.8 billion in 2021–22 before a more moderate increase to $11.2 billion in 2022–23. As a share of theoretical GST, the gross gap fell from 13.6% in 2021–22 to 12.6% in 2022–23, reflecting the strong growth in the GST base. The large increase in 2021–22 reflected a high level of activity statement fraud, estimated at $6.4 billion.
Some of this activity statement fraud was identified and stopped prior to the refund being paid to the taxpayer. However, some claims that were amended after refunds were paid. In those instances, our ability to recover these refunds is lower than other GST debt. This resulted in an uplift in estimated non-pursuable debt which is impeding growth in revenue expected to be paid.
In 2022–23 the level of non-compliance has returned to more normal levels and moderated the uplift in the gross gap (relative to the net gap).
Accounting for the shadow economy
Estimating the size of the shadow economy in normal economic times is subject to significant uncertainty, resulting in a wide margin for error. Divergent impacts associated with COVID-19 have increased the range of uncertainty.
Reflecting this uncertainty and the higher estimates of the shadow economy published in a government taskforce report, we now consider it prudent to reflect a more contemporary view of the shadow economy in the GST gap.
Given these concerns, we are developing a bottom-up model to estimate the GST gap using microdata generated by operational (risk-based) audits.
Indicative estimates using the bottom-up approach suggest the net GST gap is higher than those from the top-down model and reinforce that the shadow economy is understated in the top-down analysis.
The estimates generated by a bottom-up approach will complement the top-down estimates and greatly enhance our understanding of the GST gap and its key drivers.
We envisage that estimates based on the bottom-up approach will be published next year.
For more information, see Australian tax gaps.
Figure 2.1 Estimated gross and net GST gap
|
Type of measure |
2018–19 |
2019–20 |
2020–21 |
2021–22 |
2022–23 |
|---|---|---|---|---|---|
|
Excluding non-pursuable debt |
4.6 |
3.1 |
1.6 |
1.5 |
5.9 |
|
Including non-pursuable debt |
5.3 |
4.4 |
3.1 |
4.4 |
7.9 |
ATO action to reduce the GST gap
Addressing and influencing taxpayer behaviour to maximise voluntary compliance and minimise GST gap remains a priority. Taxpayer actions which impact the GST gap continue to range in severity from honest reporting errors to deliberate non-compliance, and include:
- non-reporting of GST
- under-reporting of GST
- over-claiming of refunds
- non-payment of GST liabilities.
Our compliance programs therefore provide a balance of prevention, early engagement and assurance activities and target higher-risk taxpayers and industries.
We continue our focus on managing GST compliance risks and behaviours impacting the integrity of the GST. Contemporary technology continues to strengthen our ability to manage GST risks including fraud by:
- improving our risk identification process with earlier detection techniques, enabling us to apply differentiated and tailored treatment strategies
- delivering an automated solution to streamline processes related to managing high-risk refunds
- providing staff with a more holistic view of GST lodgment to support a better client experience when engaging with taxpayers.
Where a BAS lodged online contains an identifiable or likely reporting error, nudge messaging recommending taxpayers check their BAS before lodging their refund is generated.
Consultation and initiatives to provide a digitalised future supporting small business is a key focus area of the ATO Corporate Plan 2024–25. This encourages enhanced integration that supports high-quality, system-generated tax guidance to:
- provide certainty, increasing confidence
- minimise errors
- promote right-time reporting and payment.
This work is aligned to the Organisation for Economic Co-operation and Development (OECD) Tax Administration 3.0 vision and the ATO digital strategy 2022–25.
To ensure large businesses pay the right amount of GST and to reduce the gap, we have a combination of one-to-one and one-to-many approaches. These include our justified trust assurance programs and advice and guidance strategies. We are also working with large businesses to introduce supplementary annual GST reporting on their ongoing investment in GST compliance. The new annual return will help ensure we maintain assurance over taxpayers and prioritise our compliance resources.
We prevent compliance issues before they arise, by supporting those who want to do the right thing and helping them reduce mistakes through:
- reminders
- nudges
- improved information on our website
- public advice and guidance.
At the same time, we take a firmer approach with those we detect deliberately evading their GST and other tax obligations.
We will continue to work towards closing the gap by:
- building trust and confidence within the community by implementing strategies under the GST Compliance Program
- achieving GST compliance outcomes from other ATO government funded programs, including the Shadow Economy Advisory Forum, Serious Financial Crime Taskforce, Phoenix Taskforce.
Australian tax gaps – overview provides further information on the concept of tax gaps, including why and how we measure them, and a summary of the latest available tax gap data.
GST voluntary compliance ratio
The GST VCR complements the GST gap by measuring the proportion of taxpayers fully compliant with the 4 pillars of compliance – registration, lodgment, reporting and payment. For a taxpayer to be deemed fully compliant they must:
- be correctly registered
- lodge by the due date
- report the correct amount of GST
- pay the correct amount on time.
The proportion of taxpayers voluntarily complying with their obligations and the value of GST remitted voluntarily are important indicators of the health of the GST system and community confidence.
The GST VCR is measured at 2 levels:
- Taxpayer level – the number of taxpayers who completely meet all their obligations for the financial year.
- GST value level – the amount of GST that is voluntarily remitted in accordance with the law for the financial year.
Using our strict definition of compliance, we estimate the VCR for 2022–23 at 47%, down 1% from 2021–22. We recorded more taxpayers correctly registering and meeting their lodgment obligations through the year. However, these improvements were ultimately offset by the estimated increase in the GST gap value. An increased GST gap value results in a reduced number of taxpayers reporting the correct amount of GST.
To account for minor unintentional late payments or lodgments, the relaxed definition adjusts for:
- taxpayers who have no total business income in the year, that is, a nil BAS
- taxpayers who are only considered non-compliant due to a single BAS lodged late or a single late payment.
The relaxed measure is down when compared to 2021–22 but is in line with earlier years.
The VCR by GST value equalled 82%. Over many years, the higher value reflects the high level of GST compliance from Australia’s largest taxpayers.
Figure 2.2: VCR by GST value and taxpayers
Total revenue effects
GST total revenue effects (TRE) is a measure of the additional tax revenue collected as a direct result of previous ATO compliance activities, including preventative compliance strategies, that aim to:
- positively change the compliance behaviour of taxpayers
- address non-compliance
- disrupt or prevent evasion and fraud activities.
These activities serve to 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 TRE, we include the:
- payment of liabilities, including penalties and interest, that are directly connected to the adjustments we make through our audit actions to ensure the right amount of GST is assessed and paid
- value of incorrect claims that we stopped prior to a refund issuing
- estimated additional tax paid voluntarily by taxpayers we influence through our preventative actions (activities undertaken before they lodge to ensure they lodge correctly), where there is a clear causal connection with our engagements
- revenue associated with our lodgment actions to improve or enforce lodgment of due returns and statements, as well as estimated sustained lodgment compliance following these actions
- significant refunds due to objections or litigation where we have previously reported the payment as part of total revenue effects.
As shown in Table 2.3, 2023–24 TRE from all activities totalled $3.1 billion (excluding penalties and interest). Table 2.4 shows TRE including penalties and interests totalling $3.2 billion for 2023–24.
Audit actions and incorrect claims stopped
In 2023–24, we estimate that our audit actions stopped incorrect claims and contributed $1.6 billion (excluding penalties and interest) in total revenue effects.
Lodgment actions
The 2023–24 lodgment program included a strong focus on GST compliance and the shadow economy. Lodgment activities include a mix of SMS, letters, telephone calls and firmer actions such as failure to lodge penalties and prosecution referrals.
In 2023–24:
- lodgment-related activities contributed $889 million (excluding penalties and interest) in TRE
- sustained lodgment compliance following action contributed $364 million (excluding penalties and interest) in TRE.
Prevention and sustained compliance
Our prevention and sustained compliance activities benefit the broader integrity and long-term management of the GST system. Preventative actions are those aimed at helping taxpayers get it right the first time when they lodge. This includes targeted campaigns and real-time nudges.
For 2023–24, our estimates for prevention and sustained compliance are lower than
2022–23, with an estimated total of $319 million contributing to TRE. The lower estimate in part reflects our focus in recent years on activity statement fraud where we do not expect the treated population to continue to participate in the tax system, leaving limited sustained compliance to be measured.
For more information, see Total revenue effects.
|
Category |
2019–20 |
2020–21 |
2021–22 |
2022–23 |
2023–24 |
|---|---|---|---|---|---|
|
Audit actions and incorrect claims stopped |
1,070 |
1,132 |
3,389 |
2,089 |
1,577 |
|
Lodgment actions |
1,221 |
702 |
1,025 |
962 |
889 |
|
Preventative actions and sustained compliance |
370 |
426 |
390 |
398 |
319 |
|
Sustained lodgment compliance |
477 |
370 |
224 |
346 |
364 |
|
Total |
3,139 |
2,631 |
5,028 |
3,795 |
3,148 |
|
Category |
2019–20 |
2020–21 |
2021–22 |
2022–23 |
2023–24 |
|---|---|---|---|---|---|
|
Audit actions and incorrect claims stopped |
1,162 |
1,157 |
3,451 |
2,202 |
1,592 |
|
Lodgment actions |
1,264 |
727 |
1,052 |
1,033 |
955 |
|
Preventative actions and sustained compliance |
370 |
426 |
390 |
398 |
319 |
|
Sustained lodgment compliance |
477 |
370 |
224 |
346 |
364 |
|
Total |
3,273 |
2,679 |
5,117 |
3,979 |
3,230 |
|
Category |
2019–20 |
2020–21 |
2021–22 |
2022–23 |
2023–24 |
|---|---|---|---|---|---|
|
Liabilities raised through active compliance |
2,645 |
2,339 |
5,407 |
4,829 |
2,958 |
|
Preventative actions and sustained compliance |
370 |
426 |
390 |
398 |
319 |
|
Sustained lodgment compliance |
477 |
370 |
224 |
346 |
364 |
|
Total liabilities raised |
3,493 |
3,135 |
6,020 |
5,573 |
3,641 |
|
Category |
2019–20 |
2020–21 |
2021–22 |
2022–23 |
2023–24 |
|---|---|---|---|---|---|
|
Liabilities raised through active compliance |
2,827 |
2,798 |
5,806 |
5,384 |
3,481 |
|
Preventative actions and sustained compliance |
370 |
426 |
390 |
398 |
319 |
|
Sustained lodgment compliance |
477 |
370 |
224 |
346 |
364 |
|
Total liabilities raised |
3,675 |
3,594 |
6,419 |
6,128 |
4,163 |
GST assured
GST assured is an estimate of the tax that we are highly confident is correctly reported on a positive assurance basis.
This indicator is based on the concept of ‘justified trust’. GST is assured when, justified trust is achieved and where we have defensible evidence that demonstrates the reporting of GST is complete and accurate.
For businesses (particularly larger businesses), we primarily assure GST by reviewing objective evidence obtained through one-to-one engagements. GST results are primarily driven by public and multinational businesses, due to their economic size. There was approximately $5.5 billion of GST assured in the public and multinational businesses sector in 2021–22, predominantly from the Top 100 and Top 1,000 programs.
It is not practical to assure all tax is correctly reported, and our tax assured estimates will always be lower than the real amount of tax that is correctly reported. Where we cannot gather information to assure tax, we rely on our broader risk management approaches to provide us with confidence over the rest of the total tax reported.
It is estimated $5.5 billion (7.8%) of the total net GST BAS outcome of $70.9 billion could be assured on a positive assurance basis for 2021–22 (the most recent year that estimates can be made).
The decline in GST assured reflects the combined effect of reduced GST assured for the Top 100 program offsetting the increase in GST assured for the Top 1,000 for 2021–22. The increase for the Top 1,000 program reflects the expansion in 2022 of the combined assurance review (CAR) approach. As a result, GST is now assured in the CAR rather than by a risk approach (with only select taxpayers being assured in a separate review).
The reduction for the Top 100 program is not due to a decrease in assurance activities. It highlights that tax assured is a lag measure where the assurance activities were more heavily focussed on earlier years, increasing the GST assured for those years and contributing to a perceived reduction in GST assured for 2022.
|
Results |
2019–20 |
2020–21 |
2021–22 |
|---|---|---|---|
|
GST assured ($m) |
5,225 |
6,087 |
5,516 |
|
Net GST BAS outcome ($m) |
59,826 |
67,261 |
70,860 |
|
Percentage assured (%) |
8.8 |
9.1 |
7.8 |