Annual tax gap findings

We update our tax gap estimates in October each year. This year we are publishing estimates for 19 different gaps.

The tax gap can be viewed from 2 perspectives:

• The gross tax gap, which is the difference between the estimate of the amount we expect to receive (which includes what is voluntarily reported and paid) to the estimate of the amount of tax we theoretically would receive if every taxpayer was fully compliant with tax law.
• The net tax gap, which reduces the gross gap by the amount of amendments in that financial year, where amendments represent the outcomes from ATO compliance actions plus any amendments made by the taxpayer.

Table 1 shows our 2021–22 gross and net gap estimates (both as a dollar value and percentage) for the transaction-based tax gaps. It also contains the current reliability assessment ratings for the estimation approaches for all estimates. While some gaps also have an estimate for 2022–23 (see Table 4 for more details), all gaps have estimates for 2021–22.

Table 1: Transaction-based taxes, 2021–22 tax gap estimates

Tax gap estimate	Reliability assessment rating	Financial year	Gross gap ($m)	Net gap ($m)	Gross gap (%)	Net gap (%)
Goods and services tax	Medium	2021–22	10,798	4,395	13.6	5.5
Luxury car tax	Medium	2021–22	75	61	7.4	6.1
Wine equalisation tax	High	2021–22	47	37	4.1	3.3
Alcohol tax	Medium	2021–22	747	745	9.1	9.1
Tobacco tax	Medium	2021–22	5,203	2,343	29.1	13.1
Fuel excise	Reliable	2021–22	233	233	1.3	1.3

Table 2 shows our 2021–22 gross and net gap estimates (both as a dollar value and percentage) and their reliability assessment ratings for the income-based taxes.

Table 2: Income-based taxes, 2021–22 tax gap estimates

Tax gap estimate	Reliability assessment rating	Financial year	Gross gap ($m)	Net gap ($m)	Gross gap (%)	Net gap (%)
Large corporate groups income tax	High	2021–22	6,103	3,645	6.8	4.1
Petroleum resource rent tax	Reliable	2021–22	n/a	43	n/a	2.1
High wealth income tax	Medium	2021–22	1,472	1,237	7.3	6.1
Medium business income tax	Medium	2021–22	1,568	1,387	8.2	7.3
Small business income tax	Medium	2021–22	18,765	17,650	13.4	12.6
Fringe benefits tax	Medium	2021–22	1,908	1,882	35.3	34.8
Individuals not in business income tax	High	2021–22	11,506	10,558	6.7	6.1
Large super funds income tax	High	2021–22	275	195	2.0	1.4
Small super funds income tax	Medium	2021–22	84	68	3.6	2.9

The administered programs summary is for programs administered by us on behalf of the community. Table 3 shows the gross and net gap (both as a dollar value and percentage), as well as reliability assessment rating, for each of our gap estimates for selected administered programs for 2021–22 as well as for PAYG withholding.

Table 3: Administered programs and PAYGW, 2021–22 tax gap estimates

Gap estimate	Reliability assessment rating	Financial year	Gross gap ($m)	Net gap ($m)	Gross gap (%)	Net gap (%)
Fuel tax credits	Medium	2021–22	339	238	5.1	3.6
PAYG withholding	Medium	2021–22	6,309	4,404	2.7	1.8
Product stewardship for oil	High	2021–22	n/a	1.1	n/a	1.0
Superannuation guarantee	Medium	2021–22	6,170	5,157	7.6	6.3

For GST and excise gaps, we have more contemporaneous data which allows us to estimate their tax gaps for 2022–23 as well – see Table 4.

Table 4: Transaction-based and administrative programs with 2022–23 tax gap estimates

Gap estimate	Gap program	Reliability assessment rating	Financial year	Gross gap ($m)	Net gap ($m)	Gross gap (%)	Net gap (%)
Goods and services tax	Transaction-based	Medium	2022–23	11,206	7,938	12.6	9.0
Alcohol tax	Transaction-based	Medium	2022–23	800	798	9.6	9.6
Tobacco tax	Transaction-based	Medium	2022–23	6,278	2,711	33.1	14.3
Fuel excise	Transaction-based	Reliable	2022–23	812	812	3.9	3.9
Product stewardship for oil	Administered	High	2022–23	n/a	1.3	n/a	1.0
Fuel tax credits	Administered	Medium	2022–23	349	322	4.7	4.3