ATO hunt $33.5b missing tax

The Commissioner of Taxation, Chris Jordan has told The Tax Institute’s Tax Summit he is on the hunt for $33.5 billion in missing tax including $2.6 billion from large corporates.

During questions today, Commission Jordan was asked to address the tax gap number released in the ATO’s Annual Report earlier this week. These numbers showed an overall gap of $33.5 billion, including $2.6 billion attributed to large corporates, $12.5 billion attributed to small business while for individuals the gap is $8.4 billion.

He said the ATO had “invested a lot of effort, process and oversight on that large corporate market.”

“We would be very surprised if we didn’t know what was going on when they lodge their tax return, so we’re pretty confident. With our justified trust programs, companies at that large level have the money to invest, to work with us to get this justified trust level where we’re not going to be crawling all over them every year because we believe their processes and systems are right,” he told the summit.

On the small business tax gap, the Commissioner said the Black Economy Taskforce has been successful in seeking to educate businesses in areas where cash is still heavily in use about their tax obligations and how to fulfil them.“

“We explain to people: if you go digital, if you have better records, you will know better. And frankly, it’s difficult for us to know where you stand tax-wise, because you’re not really in our system. You might be remitting something but not a lot, you might not even be in the system.“

“A lot of it is localised, in a way, but it does impact on businesses that do pay tax. So, it’s unacceptable. There is no licence to not pay tax. … Everyone who makes profit, makes taxable income, needs to pay tax.”

The Tax Institute’s General Manager, Tax Policy and Advocacy, Scott Treatt pointed out that the tax gap for FBT was by far the largest by percentage (22.6 per cent), but relatively small in dollar value ($1.1 billion).

“Those numbers point to a grossly inefficient tax and gives more weight to the argument that it should be replaced. A simplified tax system could go a long way in increasing compliance with tax obligations.”

The Commissioner’s published speech today (excluding audience questions) can be found here. Here is the ATO’s fact sheet on the tax gap and the breakdown between different sectors.

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