Despite the challenges brought on by the pandemic, the Australian Tax Office (ATO) is reporting improved goods and services tax cash collections for the 2020-21 period. According to the recently released GST administration annual performance report 2020-21, net GST cash collections, including Department of Home Affairs collections of $4.8 billion, reached a total of $73.1 billion. This is 22% higher than the $59.9 billion that was indicated in initial 2020-21 Budget estimates and still higher than later upward revisions of the same to $69.8 billion.
This collection was also found to be 21.3% higher than collections made during 2019-20. The report indicates that the growth was driven by higher levels of household consumption and dwelling investment as the economy recovered from the effects of the pandemic. Some collections were also attributed to 2019-20 Covid-19 deferrals that were paid during 2020-21. An estimated $2.3 billion was also netted in liabilities through client engagement activities.
The net GST gap was also have found to have improved. This is a performance measure that estimates the difference between what GST was collected by the ATO and what would have been collected if all taxpayers were 100% in compliance with tax laws. As per 2019-20 figures, the gap was estimated to be about 7.8%, representing $5.3 billion in tax collections. This means just over 92% of businesses complied in paying net GST revenue for this period. This gap was found to have declined since the 2015-16 reporting period but has held steady over the last 3 years.
To further nurture its relationships with businesses undertaking significant commercial deals, the ATO has introduced a new early engagement service to help in understanding the tax consequences and outcomes of such transactions. This is intended to help businesses understand what and how tax laws will apply to the transactions, and gain ATO endorsement before lodging tax returns.
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