The Australian Taxation Office (ATO) has reported an AUD20bn (USD18bn) fall in tax collections for the 2008-09 financial year due to the global recession.
The ATO's 88th annual report, covering the period from July 1, 2008, to June 30, 2009, shows that total cash receipts collected were AUD264.5bn during 2008-09, 7% below the budget forecast.
"The figures contained in the Tax Office Annual Report show how hard the global recession has hit revenues. This is the biggest fall in tax revenue since 1930-31," the Assistant Treasurer, Nick Sherry observed.
The annual report states that company tax collections came in 15.8% below budget forecasts and were responsible for half the budget forecast shortfall. Goods and services tax (GST) collections were 9.1% below budget forecasts.
It highlighted the role of the economic crisis in the reduced collection levels stating that "lower than originally forecasted collections were driven primarily by the sharp downturn in economic conditions over the year, rather than a reduction in the level of compliance".
The ATO has implemented 65 new legislative measures, including a number of measures within the government's economic stimulus plan.
In a further response to the global economic downturn, the ATO's small business assistance programme has provided practical assistance to more than 101,000 small businesses. For example, this year, the tax authority provided small businesses with 12 month interest-free payment arrangements, and interest-free deferrals of the payment-due date on activity statement liabilities. It also provided cash flow relief by reducing the GDP uplift factor used to calculate GST quarterly instalments for 2009–10 from 9% to 2%.
While compliance levels remain high, according to the report, the ATO noted some fragility in Australia’s business tax system associated with structural features and higher levels of risk.
For example, interest and expense deductions to overseas entities or branches continued to rise (and were not always accompanied by a commensurate increase in foreign earnings) and there have been substantial uplifts in the market value of assets by some consolidated groups.
Through the Offshore Voluntary Disclosure Initiative and Project Wickenby, the ATO has been delivering real results in pursuing tax compliance, it announced.
The annual report highlighted that there were 558 audits and reviews completed as part of Project Wickenby in 2008-09. In addition, the ATO cross-matched around 350 million items of third-party data as part of its data-matching activities, including more than 100m share transactions.
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