For 2020–21, we estimate voluntary expected collections from large corporate groups at more than 93%, and nearly 96% after including the impacts of engagement and compliance actions.
Large corporate groups population
A large corporate group has a gross income of over $250 million in a given financial year. In 2020–21, large corporate groups:
- reported $2.1 trillion in gross income
- generated $258 billion in taxable income
- produce expected collections around $70 billion in income tax.
This gap forms a part of our overall tax performance program. Find out about the concept of tax gaps and the latest gaps available.
Overview of the latest estimate
For 2020–21, we estimate a gross gap of 6.5% or $4.8 billion, which is the gap prior to considering the impact of engagement with the ATO. We estimate a net gap of 4.2% or $3.1 billion which reflects the final amount uncollected after accounting for the impacts of our compliance actions.
In other words, this means we expect to collect nearly 96% of the theoretical total amount of income tax payable by them in 2020–21.
The gross tax gap continues to trend downward over time and the 2020–21 estimate is among the lowest gross tax gap estimate since the tax gap program commenced. It means more than 93% is expected to be collected voluntarily from large corporate groups, or around $68 billion of income tax.
The net tax gap estimate is 4.2%, which means expected collections from large corporate groups, after amendments, is nearly 96%. These amendments average around $1.7 billion each year, excluding interest and penalties.
The estimated net tax gap of 4.2% is the same as the estimate for 2019-20 that was published last year. It has increased compared to refreshed prior year estimates which is explained in more detail below. Based on historical re-estimations we expect that the net tax gap for 2020-21 will be revised down in future years once further actual results are available.
A suite of legislative reforms and operational changes have enabled us to continue reducing the large corporate groups tax gap over the last 6 years. We discuss some of these measures in Tax and Corporate Australia, including:
- enhancements made to the general anti-avoidance rule and transfer pricing provisions
- the adoption of transparency measures
- the expansion of our justified trust program
- a continued focus on public advice and guidance.
The tax gap can be viewed in net and gross terms to show the impact of amendments. Table 1 shows the expected collections tax paid, amendments, and net and gross income estimates for the period 2015–16 to 2020–21.
|
Element |
2015-16 |
2016-17 |
2017-18 |
2018-19 |
2019-20 |
2020-21 |
|---|---|---|---|---|---|---|
|
Population |
6,568 |
6,747 |
7,050 |
7,441 |
7,280 |
7,244 |
|
Gross gap ($m) |
3,302 |
3,178 |
3,828 |
4,177 |
3,756 |
4,773 |
|
Amendments ($m) |
1,512 |
1,555 |
1,785 |
1,943 |
1,579 |
1,697 |
|
Net gap ($m) |
1,790 |
1,623 |
2,042 |
2,234 |
2,177 |
3,076 |
|
Expected collections ($m) |
39,703 |
46,939 |
53,041 |
58,450 |
58,907 |
69,989 |
|
Theoretical liability ($m) |
41,493 |
48,562 |
55,083 |
60,684 |
61,083 |
73,065 |
|
Gross gap (%) |
8.0% |
6.5% |
6.9% |
6.9% |
6.1% |
6.5% |
|
Net gap (%) |
4.3% |
3.3% |
3.7% |
3.7% |
3.6% |
4.2% |
|
Element |
Published year |
2015-16 |
2016-17 |
2017-18 |
2018-19 |
2019-20 |
2020-21 |
|---|---|---|---|---|---|---|---|
|
Net tax gap |
Current year |
4.3% |
3.3% |
3.7% |
3.7% |
3.6% |
4.2% |
|
|
Last year |
4.8% |
3.3% |
4.1% |
4.3% |
4.2% |
|
|
Gross tax gap |
Current year |
8.0% |
6.5% |
6.9% |
6.9% |
6.1% |
6.5% |
|
|
Last year |
9.5% |
8.0% |
8.2% |
8.1% |
7.4% |
|
Figure 1 displays the trend in the gross and net income tax gap over the same period.
Figure 1: Gross and net income tax gap (percentage) – large corporate groups, 2015–16 to 2020–21