For 2021–22 we estimate a net super guarantee (SG) gap of around $5.2 billion or 6.3% of estimated theoretical SG liability. This means approximately 94% of the total theoretical SG liability is expected to be collected.
Our current gap estimate is based on findings from our random enquiry program (REP) for the 2022 financial year. As this is the first year of applying a bottom-up approach methodology to estimate the SG gap, the method may be subject to further enhancements in future years. See findings from our REP.
|
Element |
2016–17 |
2017–18 |
2018–19 |
2019–20 |
2020–21 |
2021–22 |
|---|---|---|---|---|---|---|
|
Population |
871,272 |
873,210 |
857,337 |
903,261 |
1,017,939 |
1,003,474 |
|
Gross gap ($m) |
4,284 |
4,504 |
4,685 |
5,065 |
5,638 |
6,170 |
|
Amendments ($m) |
735 |
820 |
804 |
653 |
802 |
1,012 |
|
Net gap ($m) |
3,549 |
3,685 |
3,881 |
4,412 |
4,836 |
5,157 |
|
Expected collections ($m) |
55,777 |
58,416 |
61,420 |
64,912 |
66,830 |
75,103 |
|
Theoretical liability ($m) |
60,061 |
62,920 |
66,105 |
69,977 |
72,468 |
81,272 |
|
Gross gap (%) |
7.1% |
7.2% |
7.1% |
7.2% |
7.8% |
7.6% |
|
Net gap (%) |
5.9% |
5.9 % |
5.9% |
6.3% |
6.7% |
6.3% |
Figure 1 shows the gross and net gap as a percentage over the same period. The 2020-21 year has the highest gross and net SG gap estimates and appear to be a departure from pre-COVID estimates. In the latest year, we see both the gross and net SG gap decline to levels much closer to pre-COVID.
Figure 1: SG gross and net gap as share of theoretical liability, 2016–17 to 2021–22
The random enquiry program
In our REP, we randomly select and profile a sample of employers. We estimate the gap by using the incidence rate of adjustments and mean value of amendments resulting from non-compliance. Adjustments refer to changes we make to items on a tax return to correct errors identified in the audit and review process.
This method provides insights into the:
- value of non-compliance
- proportion of the sample, and by extension the population, who are incorrectly reporting.
Findings from the REP
In 2021–22, we undertook 668 REP audits and reviews across a representative sample of the active employer's population. These cases informed our 2021–22 year estimate.
During the selection process, we stratified the population by large and non-large PAYG withholders, to ensure the overall population was appropriately represented. Employers considered at higher risk of shadow economy behaviour were represented as well as employers with lower risk of shadow economy behaviour.
In the sample, the incidence of adjustment was 41%. The median increase to employers' SG contributions was approximately $8,000. While individually this amount may not be large, it is extrapolated across a population of over 1 million employers.
What is driving the gap
As this is the first year we have utilised this method, we don't have insights into what might be driving the trend in the gap. However, case intelligence has been gathered allowing us to capture qualitative data that is highly valuable in understanding client behaviour.
The most common non-compliance incidents identified from the REP were:
- late lodgment
- SG underpayment
- SG charge non-payment
- incorrect application of the law.