Duties tax gap analysis
Revenue NSW is undertaking a tax gap analysis for the transactions assessed under the Duties Act 1997.
Estimating tax gaps and addressing them forms part of our broader accountability and transparency as a leading revenue administrator and is consistent with international best practice in tax administration.
Tax gap analysis informs the potential variance between the tax that is owed and what is actually collected. Its measurement allows us to better understand levels of compliance and risks in the tax systems and identify learning and education opportunities where we can support our customers.
Addressing the gaps will guide our efforts to achieve a future state where the community is confident that our administration of the tax systems supports collection of the right tax, at the right time for the wellbeing of all NSW residents.
The aim of this analysis is to identify and sustainably reduce the tax gap and the insights gained will assist us in:
- developing strategies including administrative design,
- enhancing our digital services and processes to improve practitioner experience,
- providing more targeted support and tailored education programs to clarify areas of legislation that are complex and/or applied incorrectly, and
- improving our compliance methodologies.
We have proactively engaged with our industry partners and incorporated their feedback in our approach.
How will the analysis be conducted?
We will be collecting documents in relation to a sample of transactions assessed during the previous five year period, analyse them and use the findings for the purpose of estimation of the gaps.
The transactions forming part of this analysis have been randomly selected and cover a range of provisions under the Duties Act 1997 including but not limited to transfer of land, transactions where concessional rate of duty is payable like instruments in relation to trusts and superannuation funds, deceased estates, or where an exemption from duty is available like break-up of marriages and other relationships, transfer of certain business property between family members, etc.
Both, transactions assessed internally by us and externally by Electronic Duties Return (EDR) clients and/or Practitioners are part of the sample.
Where the transactions have been processed externally, we will get in touch with the responsible EDR client / Practitioner to request the required documents.
An EDR client / Practitioner is required to retain all supporting evidence in relation to the transaction/s processed by them for a period of five years as set out in Part 8 Section 53 of the Taxation Administration Act 1996 (the TAA)
Accordingly, we are anticipating that the EDR client / Practitioner will not be required to contact the taxpayer to obtain this evidence.
Privacy and Security is important to us
We will take reasonable security measures to protect personal information from loss, unauthorised access, use, modification or disclosure, or other misuse. We will ensure personal information is stored securely, not kept longer than necessary, and disposed of appropriately. Find out more in our Revenue NSW Privacy Policy.
In line with our Privacy Policy we will be using a secure portal for the collection of requested documents.
How will we contact you?
Each EDR Client / Practitioner required to provide documents will be asked to nominate a user who will be given access to the secure portal.
An email will be sent to the nominated user containing information on how to access the portal and upload documents. Once registered we will notify the user of the transaction/s which they will be required to upload via the portal. Each time we make a request for information, an email notification will be sent to the nominated user.
Watch our video to find out more about the registration and upload process:
Revenue NSW Tax Gap Portal from Revenue NSW on Vimeo.
How long will you have to provide documents?
You will have 21 days to upload the documents. In case you need more time to fulfil the request, you can contact us with the details provided in our request for information.
Will the outcomes be communicated?
The focus of the exercise is not on individual client level compliance, rather on industry wide gap identification. Accordingly, no individual outcomes will be communicated.
Transactions where a shortfall in revenue collected is identified may form part of future compliance programs.
We have an obligation to collect any shortfall in duty and would encourage practitioners to make a voluntary disclosure if they identify any discrepancies while collating the documents for Tax Gap. This may have impact on the interest and penalty tax imposed.
When making a voluntary disclosure, you need to provide information that will help us calculate the duty correctly. This includes:
- details of the adjustment required
- any reasons for the error
- paperwork/evidence that supports your calculations
You should make your voluntary disclosure in writing by providing a cover letter when uploading the required documents.
If you make a voluntary disclosure which allows us to calculate the duty liability before the start of an audit, we will not add penalty tax to the assessments. The full interest rate will still apply.
