This audit would assess the effectiveness of the Australian Taxation Office’s (ATO’s) management of compliance in the small business market.

The ATO reported that there are five million small businesses in Australia as of October 2022, and that the net income tax gap for the small business market was $11.9 billion (or 11.6 per cent of the theoretical liability for small businesses) in 2019–20. This is the ATO’s largest tax gap in terms of value (the ATO’s overall net tax gap is $33.4 billion). During COVID-19 pandemic, the ATO shifted resources to focus on supporting small businesses through the pandemic. In its 2022–23 corporate plan, the ATO has identified ‘improving small business tax performance’ as a key focus area.

Work program portfolio

This potential Performance audit is featured in 1 annual audit work program portfolio: