The Australian National Audit Office (ANAO) has released a report which indicates that while the ATO may have indicated that hundreds of millions of dollars in tax revenue was being taken in, the actual amount may have been overstated.
The new report by the ANAO found that the ATO had on at least one occasion over a five-year period “overstated” revenue raised from its data matching activities by $368.7 million. Its report also noted other cases where revenue may have been distorted.
“The ATO’s monitoring of revenue and expenses associated with compliance measures could be improved. It has not had methodologies in place to accurately calculate additional revenue and expenses for all measures when introduced and does not have a comprehensive set of performance indicators.”
The report highlights, for example, that the ATO had been using an outdated assumption of “base” levels of revenue. “The base levels of revenue that the ATO has been using to estimate aggregate level compliance revenue (that is, for all compliance activity) have been based on an unreliable estimate of business-as-usual revenue — a flat ‘base’ level of revenue for income tax and GST, which has not been adjusted since 2010-11.”
The ATO maintains that it has indeed met or exceeded revenue targets. “The main conclusion drawn by the ANAO from the review is that it is unclear whether the ATO met the revenue commitments arising from compliance measures over the period 2010-11 to 2014-15,” wrote acting second commissioner Alison Lendon in response to the report. “The ATO does not agree with this conclusion, with one exception where we know we have not met our commitment.”
The ANAO is critical of the methodologies and assumptions that underpin the ATO’s figures. “Inaccurate attribution undermines the assurance to government that the agreed amount of additional revenue is actually being raised and that the additional resources provided are used as agreed,” the report says.
The ANAO calls on the ATO to develop better ways of measuring and reporting revenue, and include penalties and interest in its revenue models. It also considers that indirect revenue needs to be accounted for in a more timely manner, and that delays in collecting tax revenue (the time from when a tax assessment made and when that tax is collected) may also have an influence on final outcomes.
# [anao], [assessable income], [ATO], [auditor-general], [chris jordan], [tax], [tax collection], [tax revenue]
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