The ATO has estimated that the 2015/16 income tax gap for the small business sector is approximately 12.5% or $11.1b, with over $7b (or over 64% of the total value of the gap) being attributed to black economy behaviour.
The tax gap is an estimate of the difference between the tax collected and the amount that would have been collected if everyone was fully compliant with the law.
The ATO estimates that almost 90% of income tax from small businesses has been paid voluntarily or with little intervention from the ATO. While only a small percentage of businesses are deliberately avoiding their tax obligations, this adds up by dollar value to a significant portion of the gap.
Source: ATO media release, 27 August 2019.
