For 2020–21, we estimate a net gap of 3.1% or $70 million. This means we expect to collect around 97% of the tax we should collect from small super funds.
Small super funds population
For this analysis, we define small super funds as those with no more than 6 members. The small super fund lodged population for 2020–21 consists of approximately:
- 521,000 self-managed super funds (SMSFs)
- 1,500 small Australian Prudential Regulation Authority regulated funds.
This gap forms a part of our overall tax performance program. Find out more about the concept of tax gaps and the latest gaps available.
Overview of the latest estimate
This year's gap estimate uses the data reported to us for the 2020–21 tax year. This includes the registered population, lodged population, amendments and voluntary expected collections.
For the 2020–21 year we have undertaken an updated random enquiry program (REP) to improve our tax gap estimates. This involved stratifying the small super population based on retirement status and asset level, taking representative samples from each stratum, and auditing those super funds selected for any non-compliance with income tax legislation. The results of these random audits were extrapolated to the full small super funds population to estimate the total gross and net tax gaps.
This updated methodology contributes to improving the reliability rating, bringing it up to a medium score.
The small super funds income tax net gap varies between 2.1% and 3.4% over the 6-year reporting period. The latest year has seen a small increase in the gap estimate, however, this latest year uses the REP method.
In our random enquiry program, we found the main drivers of adjustments regardless of the super fund's life cycle, were to income, deductions and offset, specifically in relation to:
- contributions
- net capital gains
- investment, management and administration expenses
- franking credits
- trust distributions
- exempt current pension income.
The non-lodging population contributes to the gap with the total funds not lodging an SMSF annual return increasing each year.
Table 1 shows the dollar values at the various elements involved in calculating the gap for 2015–16 to 2020–21. The gross and net gaps are also shown as percentages.
|
Element |
2015–16 |
2016–17 |
2017–18 |
2018–19 |
2019–20 |
2020–21 |
|---|---|---|---|---|---|---|
|
Population |
535,719 |
548,673 |
552,845 |
549,548 |
541,608 |
522,288 |
|
Gross gap ($m) |
61 |
78 |
59 |
58 |
58 |
90 |
|
Adjustments ($m) |
21 |
27 |
20 |
20 |
20 |
20 |
|
Net gap ($m) |
40 |
51 |
39 |
38 |
38 |
70 |
|
Expected collections ($m) |
1,346 |
1,460 |
1,728 |
1,585 |
1,765 |
2,144 |
|
Theoretical liability |
1,386 |
1,511 |
1,767 |
1,623 |
1,803 |
2,214 |
|
Gross gap (%) |
4.4 |
5.2 |
3.3 |
3.6 |
3.2 |
4.1 |
|
Net gap (%) |
2.9 |
3.4 |
2.2 |
2.3 |
2.1 |
3.1 |
Figure 1: Gross and net tax gap percentage – small super funds, 2015–16 to 2020–21