We use a random enquiry program to calculate the estimate for non-lodging funds. The non-lodging funds population for a financial year is based on the date of last lodgment and rollovers from other super funds.
Separate random samples were drawn from SMSFs that had:
- previously lodged but failed to lodge in 2020–21 (lapsed-lodgers)
- a rollover in 2020–21, but never lodged (never-lodgers).
The estimate was calculated for each of these sub-populations.
The estimate for lodging funds is based on analysis of auditor contravention reports (ACRs) received from approved auditors for the corresponding financial year. The analysis focused on identifying illegal early access occurring in the contravention types where it was most likely to occur (payment standard breaches and loan-to-member contraventions). An audit non-detection amount was added to address the risk that approved auditors may not fully identify all instances of illegal early access.
We step through the non-lodging funds method application below and combine the estimates from the sub-populations in Table 2.
The method application for the lodging funds is laid out in Table 3.
Step 1: Determine if illegal early access occurred
Audits are conducted on the sample of SMSFs to determine if illegal early access occurred. Bank statements are reviewed to identify specific payments, and assets in the fund are compared to previous known values to identify unexplained reductions.
Step 2: Sum up individual illegal early access amounts
For lapsed-lodgers and never-lodgers, separately add up the individual illegal early access amounts where they are greater than zero and calculate the average.
Step 3: Multiply average illegal early access by population
For both lapsed-lodgers and never-lodgers, multiply the sample average illegal early access amount from Step 2 by the annual populations.
Step 4: Estimate non-detection
For lapsed lodgers, apply the other non-detection percentage to the result of Step 3.
Step 5: Combine population estimates
Add the lapsed-lodger and never-lodger population estimates (Step 3) and non-detection (Step 4) to give the total non-lodger population estimate.
Table 2 shows the dollar value at steps 1 to 5.
|
Step |
Description |
2019–20 |
2020–21 |
|---|---|---|---|
|
2.1 |
Lapsed-lodgers sample average illegal early access |
$4,322 |
$2,688 |
|
2.2 |
Never-lodgers sample average illegal early access |
$65,074 |
$31,666 |
|
3.1 |
Lapsed-lodgers multiply sample average illegal early access by population ($m) |
$50.0m |
$58.5m |
|
3.2 |
Never-lodgers multiply sample average illegal early access by population |
$220.5m |
$100.9m |
|
4 |
Lapsed-lodgers non-detection |
$12.4m |
$15.0m |
|
5.1 |
Lapsed-lodgers estimated population illegal early access |
$62.5m |
$73.5m |
|
5.2 |
Never-lodgers estimated population illegal early access |
$220.5m |
$100.9m |
|
5.3 |
Non-lodgers estimated population illegal early access (5.1 plus 5.2) |
$283.0m |
$174.4m |
|
n/a |
Non-lodgers theoretical total assets |
$9,073.3m |
$17,304.1m |
|
n/a |
Non-lodgers estimate ratio to total assets |
3.1% |
1.01% |
The never-lodgers sample average illegal early access is lower in 2021 due to sample illegal early access amounts typically being smaller than in 2020.
Table 3 shows the dollar value of the components of the estimate for lodging funds.
|
Item |
Description |
2019–20 |
2020–21 |
|---|---|---|---|
|
1 |
Estimated illegal early access from benefit payment contraventions |
$35.8m |
$30.0m |
|
2 |
Estimated illegal early access from loans to members contraventions |
$39.5m |
$26.1m |
|
3 |
Addition for non-detection |
$21.9m |
$25.6m |
|
4 |
Lodgers estimate (1 plus 2 plus 3) |
$97.5m |
$81.7m |
|
n/a |
Lodgers theoretical total assets |
$711.5b |
$826.4b |
|
n/a |
Lodgers estimate ratio to total assets |
0.01% |
0.01% |
Find out more about our research methodology, data sources and analysis for creating our tax gap estimates.
Limitations
The following caveats and limitations apply when interpreting this estimate:
- ACRs provide limited information on the events reported as contraventions.
- Unrectified contraventions that occurred in previous financial years can be reported in the 2021 ACR. The methodology included a calculation to exclude payments that occurred in previous years from the 2021 estimate.
- Approved auditors may not detect and/or not report contraventions.
- The methodology of the non-lodger estimate calculation excludes from the population SMSFs that ceased lodging prior to 2020.
- ATO audits may not detect all instances of illegal early access.
- Estimated non-detection amounts have been included to address identified limitations of the methodology.
- Non-reporting in ACRs may also occur because only contraventions that meet the reporting criteria need to be reported.