4.1 The level of non-lodgement of individual income tax returns that exists within the community

4.1.1 Proportion of survey respondents required to submit a tax return

Survey respondents were asked a series of questions12 in order to determine whether they were required to submit a tax return for the 2006/07 financial year. In the general community survey (stage 1), eighty-five percent (84.98%) were required to submit a return.

Figure 1: Proportion of survey respondents required to submit a tax return

Bar chart showing the proportion of survey respondents required to submit a tax return. Eighty-five percent were required to submit a return.

Determined via ATO's online decision tool

Base: All survey respondents in Stage 1 data collection: general community survey (n=800)

Table 5 below profiles those respondents required and not required to submit a return demographically. Some interesting points to note include:

  • Though the large majority of both men and women were required to submit a return, women have a higher tendency than men to not be required (20% c.f. 10%).
  • A higher proportion of middle-aged respondents (i.e. 31-50 years) are required to submit a tax return compared to those both younger and older. A higher proportion of younger (16-30 years) and older (51 years+) respondents are not required.
  • Though the large majority of all residents in all states surveyed are required to submit a return, a higher proportion of Queensland residents surveyed are not required in comparison to New South Wales (23% c.f. 12%).
  • Most respondents surveyed regardless of language spoken are required to submit a return, however a higher proportion of those who speak English only are not required (16% c.f. 8% speak language other than English).
  • Those not required to submit a return earn significantly less than those required. Almost one-third (29%) of respondents from low income households are not required to submit a return - significantly more than those from medium (4%) and high (5%) income households.
  • Those not required to submit a return have lower education levels than those required. Almost one-quarter (22%) of those whose highest level of education is Year 12 or below are not required to submit a return - significantly more than those with post-secondary (10%) or post-graduate education (5%).
Table 5: Proportion of survey respondents required to submit a tax return -profile according to demographics
  Ref Required to submit a return
%
Not required to submit a return
%
GENDER
Male a 90b 10
Female b 80 20a
AGE
16 - 30 years c 84 16d
31 - 50 years d 93ac 7
51 years+ e 78 22d
STATE
QLD f 77 23g
NSW g 88f 12
VIC h 86 14
SA i 91 9
WA j 86 14
TAS k ** **
NT l ** **
ACT m ** **
SPEAK LANGUAGE OTHER THAN ENGLISH
Speaks language other than English n 92o 8
Speak English only o 84 16n
Refused p ** **
ABORIGINAL AND TORRES STRAIT ISLANDER IDENTIFICATION
Aboriginal and Torres Strait Islander q ** **
Other r 85 15
Refused s ** **
HOUSEHOLD INCOME
Low income (<$50,000) t 71 29uvx
Medium income ($50,001 -$80,000) u 96tu 4
High income (>$80,000) v 95tu 5
Don't know w 79 21uv
Refused x 88t 12
EDUCATION
Secondary Education (including Year 12 or below) y 78 22z(aa)
Post Secondary Education (including trade certificate, apprenticeship, traineeship or any TAFE qualification, bachelors degree at university) z 90y 10
Post Graduate Education (Honours degree, Masters degree or PhD) aa 95y 5
Refused ab ** **

Determined via ATO's online decision tool

Base: All survey respondents in Stage 1 data collection: general community survey (n=800)

**Sample size of this group is too small for accurate results to be obtained.

4.1.2 Proportion of survey respondents who submitted a tax return

Over the last three years lodgement has remained at a consistent level of around 80%. Rounding to the nearest whole number, 82% (including both those required and not required) lodged a tax return last financial year (2006/07), 80% lodged in 2005/06 and 79% lodged in 2004/05. Just over one in ten (13%) of respondents did not lodge a return in any of the past three financial years. These results were obtained from the general community survey (stage 1).

Whilst there has been a 2.96% increase in lodgement since 2004/05, this doesn't necessarily reflect a trend of improvement. A change of this magnitude is not statistically significant and may simply be a reflection of the survey's margin of error13.

Figure 2: Proportion of survey respondents who submitted a tax return

Chart showing the proportion of survey respondents who submitted a tax return from 2004/05 to 2006/07.

S16. Did you lodge a personal tax return in the following financial years? READ OUT [SINGLE RESPONSE]

Base: All survey respondents in Stage 1 data collection: general community survey (n=800)

Table 6 below profiles each demographic according to whether they lodged or did not lodge a return in 2006/07. Each group includes both those required and not required. Some interesting points to note include:

  • Though both males and females are more likely to have lodged rather than not lodged, females are significantly more likely not to have done so (24% c.f. 14% males).
  • There is a tendency for those who did not lodge to be slightly older as those aged 51 years or older are significantly more likely not to have lodged (26% c.f. 16% 1630 years; 13% 31-50 years).
  • Those who did not lodge a return earn significantly less than those who did. One-third (33%) of low income respondents did not lodge a return in 2006/07 compared to just 10% of medium income and 9% of high income respondents.
  • Respondents who did not submit a return have lower education levels than those who lodged. One-quarter (24%) of respondents whose highest level of education is Year 12 or below did not lodge compared to just 15% of post-secondary and 9% of post-graduate educated respondents.

The demographic characteristics of those who lodged a return in 2006/07 are very similar to those people required to lodge. This is because the large majority of those required to lodge, lodged.

Similarly the demographic characteristics of those who did not lodge a return in 2006/07 are very similar to those people required - again because most people who did not lodge were not required to do so.

Table 6: Proportion of survey respondents who submitted and did not submit a tax return in 2006/07 (including those required and not required) - profile according to demographics
  Ref Submitted a return in 2006/07
%
Did not submit a return in 2006/07
%
GENDER
Male a 86a 14
Female b 76 24a
AGE
16 - 30 years c 84e 16
31 - 50 years d 87e 13
51 years+ e 74 26cd
STATE
QLD f 74 26
NSW g 83 17
VIC h 80 20
SA i 87 13
WA j 86 14
TAS k ** **
NT l ** **
ACT m ** **
SPEAK LANGUAGE OTHER THAN ENGLISH
Speaks language other than English n 87 13
Speak English only o 80 20
Refused p ** **
ABORIGINAL AND TORRES STRAIT ISLANDER IDENTIFICATION
Aboriginal and Torres Strait Islander q ** **
Other r 81 19
Refused s ** **
HOUSEHOLD INCOME
Low income (<$50,000) t 67 33uvw
Medium income ($50,001 -$80,000) u 90tw 10
High income (>$80,000) v 91tw 9
Don't know w 78 22uv
Refused x 88t 12
EDUCATION
Secondary Education (including Year 12 or below) y 75 25z(aa)
Post Secondary Education (including trade certificate, apprenticeship, traineeship or any TAFE qualification, bachelors degree at university) z 85a 15
Post Graduate Education (Honours degree, Masters degree or PhD) aa 91a 9
Refused ab ** **

S16. Did you lodge a personal tax return in the following financial years? READ OUT [SINGLE RESPONSE]

Base: All survey respondents in Stage 1 data collection: general community survey (n=800)

4.1.3 Proportion of non-lodgement within the Australian community

Based on the general community survey results 7.94% of the Australian community aged 16 years or older were required to lodge a tax return in the 2006/07 financial year but failed to do so (required non-lodgers). Taking the survey's margin of error into account, it can be estimated that between 700,654 - 1,782 915 people within Australia were required to submit a return but failed to do so for the 2006/07 financial year14.

The majority (77.04%) of the general community were required to submit a return and actually did so (required lodgers).

Whilst 10.51% of survey respondents were not required to submit a return and did not submit a return in 2006/07, interestingly 4.51% were not required to submit a return but did so anyway.

Figure 3: Proportion of total community who satisfy segment criteria

Bar chart showing the proportion of the total community who satisfy the segment criteria. The majority (77.04%) of the general community were required to submit a return and actually did so (required lodgers). Whilst 10.51% of survey respondents were not required to submit a return and did not submit a return in 2006/07, interestingly 4.51% were not required to submit a return but did so anyway.

S16. Did you lodge a personal tax return in the following financial years? READ OUT [SINGLE RESPONSE]

Base: All survey respondents in Stage 1 data collection: general community survey (n=800)

Members of each segment vary slightly in terms of some demographic characteristics. The segments are profiled demographically in Appendix D and the statistically significant differences in characteristics are noted. Tests for statistical significance were conducted in order to identify whether the required non-lodger group was any different to the required lodger group in terms of demographic characteristics.

The key characteristics of required lodgers and required non-lodgers are outlined below.

Gender

The gender split amongst required lodgers is even (50% males; 50% females). Amongst required non-lodgers there is a slight skew towards being female (42% male; 58% female).

Age

Around two in ten (23%) of the required lodgers surveyed are aged 16-30 years, four in ten (40%) are aged 31-50 years while a further four in ten (37%) are 51 years or older. A comparison of these age brackets amongst the required non-lodger group shows a relatively similar profile according to age. Two in ten (18%) are aged 16-30 years, four in ten (42%) are aged 31-50 years and a further four in ten (40%) are 51 years or older.

Looking at age in greater detail, required non-lodgers were however more likely to be aged 61-70 years (18% required non-lodgers c.f. 11% required lodgers) - this is likely to be linked to one of the main reasons for not submitting a return, that is, the belief they were not required as they received a pension or a Centrelink payment (this is detailed later in the report).

State

The majority of required lodgers surveyed resided in New South Wales (36%), Victoria (22%) and Queensland (18%) - in line with the Australian population skew towards these states. The states in which required non-lodgers resided were relatively similar - the majority also resided in New South Wales (31%), Victoria (30%) and Queensland (22%).

Language spoken

The large majority of both required lodgers and required non-lodgers are English (only) speaking residents (88% required lodgers; 89% required non-lodgers).

Aboriginal and Torres Strait Islander Identification

The large majority of both required lodgers and required non-lodgers do not identify themselves as being of Aboriginal and Torres Strait Islander descent (99% required lodgers; 98% required non-lodgers).

Annual Household Income

The majority of required lodgers belong to households of medium15 (20%) or high16 (35%) incomes. The majority of required non-lodgers belong to households of low17 (46%) of medium (17%) incomes.

Looking at income in greater detail, the required non-lodgers surveyed are more likely have significantly lower household income, in particular they are:

  • less likely to have an annual household income of $80,000 or more (18% required non-lodgers c.f. 35% required lodgers) or $100,000 or more (10% required non-lodgers c.f. 24% required lodgers); and
  • more likely to have an annual household income of $40,000 or less (40% required non-lodgers c.f. 18% required lodgers) or $50,000 or less (46% required non-lodgers c.f. 27% required lodgers).

Highest Educational Qualification

A relatively even proportion of required lodgers' highest educational qualification was secondary (43%) or post-secondary (41%). The remainder (16%) had post-graduate qualifications. Required non-lodgers were also just as likely to have secondary qualifications (46%) as post-secondary (43%). They were however significantly less likely than required non-lodgers to have a post graduate education (i.e. Honours degree, Masters degree or PhD) (10% required non-lodgers c.f. 16% required lodgers).

4.1.4 Proportion of non-lodgement amongst those required to lodge

Among those who were required to lodge a return in the 2006/07 financial year 90.65% reported they had lodged and 9.35% reported they did not lodge.

Figure 4: Proportion of required taxpayers who submitted and did not submit a tax return

Bar chart showing the proportion of required taxpayers who submitted and did not submit a tax return. Among those who were required to lodge a return in the 2006/07 financial year 90.65% reported they had lodged and 9.35% reported they did not lodge.

S16. Did you lodge a personal tax return in the following financial years? READ OUT [SINGLE RESPONSE]

Base: All required survey respondents in Stage 1 data collection: general community survey (n=685)

A demographic profile of both groups above is contained within Appendix D - the groups have been labelled 'required lodgers' and 'required non-lodgers'. A summary of key characteristics of both groups is contained within the previous section (4.1.3).

The reasons given by low income required taxpayers who failed to submit their tax return (shown later in this report) suggest they believed they were not required - either because they thought they were below the income threshold or because they received some sort of pension or Centrelink payment.

In order to assess the severity of the non-lodgement issue in terms of financial implications, an examination of the income status of the required non-lodger group was undertaken. Though required non-lodgers have lower levels of income than required lodgers (and 46% in total have a household income of less than $50,000 per annum), 35% of required non-lodgers have medium or high18 incomes.

However, medium to high19 income required non-lodgers are more likely to have lodged their tax return in the past and more likely to do so in the future compared to their low20 income counterparts. Their attitudes towards the likelihood of the Tax office taking action, the penalties for non-lodgement and the perceived current level of non-lodgement in Australia are the same.

4.1.5 Proportion of lodgement amongst those not required to lodge

Among those who were not required to lodge a return in the 2006/07 financial year 69.97% reported they had not lodged and 30.03% reported that they did lodge. The latter figure suggests a substantial minority of taxpayers do not know or are unsure of whether they are required to submit a return.

Figure 5: Lodging behaviour of non-required taxpayers

Bar chart showing the lodging behaviour of non-required taxpayers. Among those who were not required to lodge a return in the 2006/07 financial year 69.97% reported they had not lodged and 30.03% reported that they did lodge.

S16. Did you lodge a personal tax return in the following financial years? READ OUT [SINGLE RESPONSE]

Base: All survey respondents in Stage 1 data collection not required to submit a return: general community survey (n=115)

A demographic profile of both groups above is contained within Appendix D - the groups have been labelled 'non-required non-lodgers' and 'non-required lodgers'. A summary of key characteristics of both groups is contained within a previous section in this report (4.1.3).

4.1.6 Estimated level of non-lodgement this coming financial year

Compared to 18% who didn't lodge in 2006/07, 12% of respondents surveyed are unlikely21 to lodge a tax return for the coming 2007/08 financial year, while 85% are likely22. Therefore the level of intended lodgement next financial year is slightly higher than reported lodgement last financial year.

As expected, required taxpayers who submitted their return for 2006/07 are also the most likely to do so next year (97% of required lodgers and 78% of non required lodgers are likely to lodge a return in 2007/08). Required non-lodgers are significantly less likely to lodge a tax return next year (42% likely and 45% unlikely).

Table 7: Likelihood of lodgement next year
  Total
%
a
Required lodgers
%
b
Non-required lodgers
%
c
Required non-lodgers
%
d
Non-required non-lodgers
%
Very unlikely (1-2) 12 1 19a 42ab 76abc
Slightly unlikely (3-4) 0 0 0 3a 1
UNLIKELY (1-4) 12 1 19a 45ab 77abc
Neither likely or unlikely (5-6) 2 1 3 8a 4
Slightly likely (7-8) 3 2 8a 6a 3
Very likely (9-10) 82 96bcd 69cd 36d 14
LIKELY (7-10) 85 97bcd 78cd 42d 16
Don't know 0 0 0 5 3
Total 100 100 100 100 100
Mean 8.2 9.8bcd 7.9cd 5.3d 2.7

Q2. On a scale of 1 to 10 where 1 is extremely unlikely and 10 is extremely likely, how likely is it that you will lodge your tax return at the end of this coming financial year? DO NOT READ OUT [SINGLE RESPONSE]

Base: Total % results based on all survey respondents in Stage 1 data collection; All results for segments except for required non-lodgers based on data also collected in Stage 1; Results for required non-lodger group based on combined data collected in Stages 1 and 2.

Table 8 below outlines the proportion of each demographic group likely or unlikely to submit a return next financial year. The results include both those required and not required. Overall, the large majority of each group have indicated they are likely to submit a return.

However there are some particular groups that are less likely to submit their return in comparison with others. For example 17% of females surveyed cited they were unlikely to submit a return next financial year compared to just 10% of males. Other particular groups that are significantly less likely to submit their tax return next financial year include:

  • Older survey respondents, specifically those aged 51 years or older (26%) are less likely than those aged 16 - 30 years old (6%) and 31 - 50 years old (7%)23. This is likely to be due to decreasing income in this age bracket and the belief that they may not be required to submit a return due to receiving a pension and/or Centrelink payments24.
  • Those people with lower levels of education, specifically those whose highest level of education is Year 12 or below (19%) are significantly less likely to submit their return next financial year compared to those people with higher levels of education, specifically post secondary education (10%) and postgraduate education (6%)25.
  • Those survey respondents with annual household incomes of $40,000 or less (39%) or $50,000 or less (30%) are significantly less likely to submit their tax return. Again this is likely to be because there is a higher likelihood of being below the income threshold26.
  • Queenslanders (20%) are less likely in comparison to those in New South Wales (11%) and Victoria (13%).
Table 8: Estimated level of lodgement and non-lodgement next year (including those both required and not required) - profile according to demographics
  Ref Unlikely to submit a return in 2007/08
%
Likely to submit a return in 2007/08
%
GENDER
Male a 10 87a
Female b 17a 79
AGE
16 - 30 years c 6 88e
31 - 50 years d 7 91e
51 years+ e 26cd 72
STATE
QLD f 20gh 77
NSW g 11 86f
VIC h 13 83
SA i 14 84
WA j 14 83
TAS k ** **
NT l ** **
ACT m ** **
SPEAK LANGUAGE OTHER THAN ENGLISH
Speaks language other than English n 7 91o
Speak English only o 15 82
Refused p ** **
ABORIGINAL AND TORRES STRAIT ISLANDER IDENTIFICATION
Aboriginal and Torres Strait Islander q ** **
Other r 14 83
Refused s ** **
HOUSEHOLD INCOME
Low income (<$50,000) t 30uvwx 67
Medium income ($50,001 -$80,000) u 5 94tw
High income (>$80,000) v 3 92tw
Don't know w 15uvx 83t
Refused x 4 93t
EDUCATION
Secondary Education (including Year 12 or below) y 19z(aa) 77
Post Secondary Education (including trade certificate, apprenticeship, traineeship or any TAFE qualification, bachelors degree at university) z 10 87y
Post Graduate Education (Honours degree, Masters degree or PhD) aa 6 93yz
Refused ab ** **

Q2. On a scale of 1 to 10 where 1 is extremely unlikely and 10 is extremely likely, how likely is it that you will lodge your tax return at the end of this coming financial year? DO NOT READ OUT [SINGLE RESPONSE]

Base: All results above incorporate the data collected in both Stages 1 and 2.

**Sample size of this group is too small for accurate results to be obtained.

Table 9 below outlines the estimated proportion of required respondents in each demographic group likely or unlikely to submit a return next financial year. As it was impossible for the survey to determine whether a respondent would be required to submit a return next financial year, respondents eligibility in the 2006/07 financial year has been used as a proxy.

The large majority of all demographic groups required to submit a return next year plan to do so. There are however some groups less likely than others to submit.

Even amongst those required, those aged 51 years or older are still the most unlikely to submit a return (8% indicated they were unlikely). Those residing in households of low income (i.e. less than $50,000 per annum) were also the least likely to submit their return in the next financial year.

Table 9: Estimated level of lodgement and non-lodgement next year (amongst only those required) - profile according to demographics
  Ref Unlikely to submit a return in 2007/08
%
Likely to submit a return in 2007/08
%
GENDER
Male a 4 93
Female b 5 92
AGE
16 - 30 years c 2 94
31 - 50 years d 4 94
51 years+ e 8cd 90
STATE
QLD f 5 93
NSW g 5 93
VIC h 5 90
SA i 6 91
WA j 3 95
TAS k ** **
NT l ** **
ACT m ** **
SPEAK LANGUAGE OTHER THAN ENGLISH
Speaks language other than English n 5 94
Speak English only o 5 92
Refused p ** **
ABORIGINAL AND TORRES STRAIT ISLANDER IDENTIFICATION
Aboriginal and Torres Strait Islander q ** **
Other r 5 93
Refused s ** **
HOUSEHOLD INCOME
Low income (<$50,000) t 11uv 87
Medium income ($50,001 -$80,000) u 3 95t
High income (>$80,000) v 2 95t
Don't know w 2 95
Refused x 3 94
EDUCATION
Secondary Education (including Year 12 or below) y 6 91
Post Secondary Education (including trade certificate, apprenticeship, traineeship or any TAFE qualification, bachelors degree at university) z 4 94
Post Graduate Education (Honours degree, Masters degree or PhD) aa 3 96
Refused ab ** **

Q2. On a scale of 1 to 10 where 1 is extremely unlikely and 10 is extremely likely, how likely is it that you will lodge your tax return at the end of this coming financial year? DO NOT READ OUT [SINGLE RESPONSE]

Base: All results incorporate the data in both Stages 1 and 2.

**Sample size of this group is too small for accurate results to be obtained.

The reasons why respondents are unlikely to lodge a return next financial year are outlined in Section 4.5.

4.2 The level that the community expects the Tax Office to keep non-lodgement

Table 10 on the following page details expectations regarding the level at which the non-lodgement should be kept by the Tax Office. To prevent any distortion of perceptions of the total community surveyed, the first column outlines those perceptions of the total compliant community surveyed, that is, the perceptions of required non-lodgers have not been included.

Four in ten (40%) of the compliant community surveyed expect the Tax Office to keep the level of non-lodgement within the community at 0% - that is, they believe that everyone who is required should submit a tax return. Just under two-thirds (61%) expect the Tax Office to keep non-lodgement at or below 8%.

This suggests that the majority of the compliant community would find the actual level of non-lodgement as measured in this survey unacceptable as it is higher than what they expect the Tax Office to keep it at (as shown previously in Section 4.1.4, 9.35% of those required failed to submit their return).

Those required to submit a tax return in 2006/07 but failed to do so (required non-lodgers) have a tendency to expect the ATO to be more lenient on the level of non-lodgement within the community:

  • The average required non-lodger expects non-lodgement to be kept at '1 million -1.5 million (8-12% of those required)' whereas the average required lodger expects non-lodgement to be kept at 'less than 500,000 people (less than 4% of those required)'.
  • Compared to required lodgers, required non-lodgers are significantly more likely to believe non-lodgement should be kept at a level of 15% or higher.
Table 10: The level at which the community expects the Tax Office to keep non-lodgement
  Total Compliant Community*
%
a
Required lodgers
%
b
Non-required lodgers
%
c
Required non-lodgers
%
d
Non-required non-lodgers
%
0 people (0% of those required) 40 38c 39c 15 49c
Less than 500,000 people (less than 4% of those required) 13 13 6 19a 16
0.5 million - 1 million (4-8% of those required) 8 9 6 15ad 3
1 million - 1.5 million (8-12% of those required) 10 11 3 13 9
1.5 million - 2 million (1215% of those required) 7 7 11 9 4
2 million - 2.5 million (1519% of those required) 4 3 6 8a 9a
2.5 million - 3 million (1923% of those required) 4 4 8 4 3
3 million - 3.5 million (2327% of those required) 3 3 0 2 4
3.5 million - 4 million (27-31% of those required) 12 12 22d 16d 4
Total 100 100 100 100 100

Q4c. Please complete the following sentence. I would expect the Tax Office to keep the number of people who are required to lodge but didn't lodge to....? READ OUT [SINGLE RESPONSE]

Base: Total % results based on all survey respondents in Stage 1 data collection; All results for segments except for required non-lodgers based on data also collected in Stage 1; Results for required non-lodger group based on combined data collected in Stages 1 and 2.

* Includes the perceptions of required lodgers, non-required lodgers and non-required non-lodgers but excludes the perceptions of required non-lodgers.

The older a respondent, the more likely they are to believe that the ATO should keep the level of non-lodgement at nil:

  • Those aged 51 years or older (50%) are more likely believe this, particularly:
    • those aged 71 - 80 years (68%); and
    • those aged 81 years or older (71%).
  • Those aged 16 - 30 years are the least likely to believe the Tax Office should keep the level of non-lodgement at nil. Instead, they are significantly more likely to believe that the Tax Office should keep non-lodgement at a level higher than 8% (51%).

New South Wales residents have a tendency to be more lenient about the level of non-lodgement the ATO should accept:

  • Compared to Queenslanders (34%) and Victorians (33%), New South Wales residents (51%) are significantly more likely to believe the ATO should accept a level non-lodgement within the community higher than 8%.
  • Compared to Queenslanders (43%) and Victorians (45%), New South Wales residents (29%) are also significantly less likely to believe non-lodgement should be kept at nil.

In addition, those who speak a language other than English tend to think the ATO should be more lenient on non-lodgement - they are more likely than those who speak English only to believe that a level of 8% or higher is acceptable (c.f. 49% c.f. 39%).

Table 11: The level at which the community expects the Tax Office to keep non-lodgement - profile according to demographics
  Ref At 0%
%
Below 8%
%
Above 8%
%
GENDER
Male a 37 61 39
Female b 41 59 41
AGE
16 - 30 years c 26 49 51de
31 - 50 years d 36c 59c 41e
51 years+ e 50de 68cd 32
STATE
QLD f 43 66g 34
NSW g 29 49 51ac
VIC h 45 67b 33
SA i 41 55 45
WA j 40 65 35
TAS k ** ** **
NT l ** ** **
ACT m ** ** **
SPEAK LANGUAGE OTHER THAN ENGLISH
Speaks language other than English n 31 51 49o
Speak English only o 39 61n 39
Refused p ** ** **
ABORIGINAL AND TORRES STRAIT ISLANDER IDENTIFICATION
Aboriginal and Torres Strait Islander q ** ** **
Other r 38 60 40
Refused s ** ** **
HOUSEHOLD INCOME
Low income (<$50,000) t 44 60x 40
Medium income ($50,001 -$80,000) u 37 57 43
High income (>$80,000) v 35 65x 35
Don't know w 38 61 39
Refused x 33 44 56tv
EDUCATION
Secondary Education (including Year 12 or below) y 42 61 39
Post Secondary Education (including trade certificate, apprenticeship, traineeship or any TAFE qualification, bachelors degree at university) z 37 59 41
Post Graduate Education (Honours degree, Masters degree or PhD) aa 31 59 41
Refused ab ** ** **

Q4c. Please complete the following sentence. I would expect the Tax Office to keep the number of people who are required to lodge but didn't lodge to....? READ OUT [SINGLE RESPONSE]

Base: All results incorporate the data in both Stages 1 and 2.

**Sample size of this group is too small for accurate results to be obtained.

4.3 The relationship between perceptions of the level of non-lodgement and lodgement behaviour

The research sought to identify whether there is a relationship between perceptions of the level of non-lodgement within the Australian community and their lodgement behaviour.

Ten percent of respondents estimated that 100% or more of Australians required to submit a tax return submitted one for the last financial year. The overwhelming majority however (90%) estimated that less than 100% lodged their return. The most common estimate was less than 85% of those required (45% estimated this). This was also the median response, the most accurate measure of central tendency of responses to this question - it is expected that the average Australian aged 16 years or older would estimate that less than 85% of those required Australians submitted their tax return. The median estimate for both required lodgers and required non-lodgers was also 11 million (85% of those required). Looking at specific estimates, there are no significant differences in the perceptions about the level of non-lodgement between each group.

This finding suggests that there is no relationship between perceptions of the level of non-lodgement within the community and lodgement behaviour. Rather the research suggests non-lodgement is more likely to be caused by confusion about the requirement to lodge due to low income, unemployment or receipt of income support or laziness, disorganisation or forgetfulness. There also appears to be a relationship between perceptions of whether the ATO will take action if the taxpayer does not lodge and lodgement behaviour (see section 4.5.7).

Table 12: Perceived level of non-lodgement within Australia
  Total
%
a
Required lodgers
%
b
Non-required lodgers
%
c
Required non-lodgers
%
d
Non-required non-lodgers
%
More than 14 million (more than 108% of those required) 2 2 0 2 5
14 million (108% of those required) 2 2 3 2 0
13 million (100% of those required) 6 7 8 5 6
100% OR MORE 10 11 11 10 11
12 million (92% of those required) 24 22 31 21 32
11 million (85% of those required) 21 21 19 27 20
Less than 11 million (less than 85% of those required) 45 46 39 42 37
LESS THAN 100% 90 89 89 90 89
Total 100 100 100 100 100

Q4a. 13 million Australians were required to lodge a tax return last financial year. How many people do you estimate lodged their tax return? READ OUT [SINGLE RESPONSE]

Base: Total % results based on all survey respondents in Stage 1 data collection; All results for segments except for required non-lodgers based on data also collected in Stage 1; Results for required non-lodger group based on combined data collected in Stages 1 and 2.

Interesting is a comparison of the surveyed community's estimation of the level of non-lodgement and the level they expect the Tax Office to keep non-lodgement. The surveyed community's estimation of the level of non-lodgement is higher than what they expect the Tax Office to keep it at. Two-thirds (66%) perceive non-lodgement to be higher than 8%, while 61% expect the Tax Office to keep non-lodgement at 8% or less.

Looking at each demographic, there are no notable differences in the perceived level of non-lodgement in Australia (see Table 13). The large majority of each demographic believe that less than 100% of those required lodged their return for the 2006/07 financial year.

Table 13: Perceived level of non-lodgement within Australia - profile according to demographics
  Ref 100% or more
%
Less than 100%
%
GENDER
Male a 12 88
Female b 10 90
AGE
16 - 30 years c 9 91
31 - 50 years d 10 90
51 years+ e 12 88
STATE
QLD f 8 92
NSW g 12 88
VIC h 12 88
SA i 8 92
WA j 7 93
TAS k ** **
NT l ** **
ACT m ** **
SPEAK LANGUAGE OTHER THAN ENGLISH
Speaks language other than English n 15 85
Speak English only o 10 90
Refused p ** **
ABORIGINAL AND TORRES STRAIT ISLANDER IDENTIFICATION
Aboriginal and Torres Strait Islander q ** **
Other r 11 89
Refused s ** **
HOUSEHOLD INCOME
Low income (<$50,000) t 9 91x
Medium income ($50,001 - $80,000) u 6 94xe
High income (>$80,000) v 7 93xe
Don't know w 17uv 83
Refused x 30tuv 70
EDUCATION
Secondary Education (including Year 12 or below) y 13 87
Post Secondary Education (including trade certificate, apprenticeship, traineeship or any TAFE qualification, bachelors degree at university) z 9 91
Post Graduate Education (Honours degree, Masters degree or PhD) aa 8 92
Refused ab ** **

Q4a. 13 million Australians were required to lodge a tax return last financial year. How many people do you estimate lodged their tax return? READ OUT [SINGLE RESPONSE]

Base: All results incorporate the data in both Stages 1 and 2.

**Sample size of this group is too small for accurate results to be obtained.

Survey respondents were asked how acceptable or unacceptable different levels of non-lodgement within the community were. As expected, the higher the perceived level of non-lodgement within the community, the less acceptable respondents perceive that level to be.

The average Australian aged 16 years or older, whose belief is that less than 11 million (less than 85% of those required) lodged their tax return in the 2006/07 financial year, cite this to be highly unacceptable. Half (49%) cite this as being very unacceptable while almost two-thirds (63%) cite this to be slightly or very unacceptable.

Table 14: Acceptance of the perceived level of non-lodgement within Australia
  a
14 million or more (108% of those required or more)27
b
13 million (100% of those required)
c
12 million (92% of those required)
d
11 million (85% of those required)
e
Less than 11 million (less than 85% of those required)
Very unacceptable (1‑2) 6 5 41ab 46ab 49ab
Slightly unacceptable (3‑4) 12 2 9 15 14
UNACCEPTABLE (1-4) 18 7 50ab 61ab 63abc
Neither acceptable or unacceptable (5-6) 7 6 16 18 18
Slightly acceptable (7-8) 12 8 19e 11 10
Very acceptable (9-10) 59cde 71cde 13cde 9 7
ACCEPTABLE (7-10) 71cde 78cde 32e 20 16
Don't know 5 9 2 1 3
Total 100 100 100 100 100
Mean 8.0cde 8.8cde 4.3e 3.7 3.4

Q4b. On a scale of 1 to 10 where 1 is completely acceptable and 10 is completely unacceptable, how acceptable or unacceptable is it that [SHOW ANSWER AT Q4A] lodged their tax return? READ OUT [SINGLE RESPONSE]

Base: All survey respondents in Stage 1 data collection (n=800); excludes Stage 2 respondents.

4.4 Whether the community would accept a regime where non-lodgers had their refunds docked or forfeited

Table 15 details the surveyed community's level of agreement that people who fail to lodge a tax return should have part of their refund taken by the Tax Office. To prevent any distortion of perceptions of the total community surveyed, the first column outlines those perceptions of the total compliant community surveyed, that is, the perceptions of required non-lodgers have not been included.

Amongst the compliant community surveyed, there is moderate community support for a regime where the Tax Office docks or forfeits the returns of those who fail to lodge a tax return. Just over half (57%) of the general community surveyed slightly or strongly agreed with this. One quarter (24%) slightly or strongly disagreed.

Compared to the required lodgers (24%), required non-lodgers are significantly more likely to strongly disagree (32%) with non-lodgers having their refunds docked or forfeited as a punishment for not lodging. They are also more likely to slightly or strongly disagree (40%). This is likely to be because members of this segment are the ones likely to be affected by this action.

Table 15: Level of agreement that people who fail to lodge a tax return should have part of their refund taken by the Tax Office
  Total Compliant Community*
%
a
Required lodgers
%
b
Non-required lodgers
%
c
Required non-lodgers
%
d
Non-required non-lodgers
%
Strongly disagree (1-2) 17 18 11 32ad 11
Slightly disagree (3-4) 7 6 11 7 6
Disagree (1-4) 24 24 22 40ad 18
Neither agree or disagree (5-6) 16 16 19 24a 14
Slightly agree (7-8) 14 14 8 13 15
Strongly agree (9-10) 44 44c 50c 18 48c
Agree (7-10) 57 57c 58c 32 63c
Don't know 2 2 0 5 5
Total 100 100 100 100 100
Mean 6.8 6.8c 7.1c 5.0 7.4c

Q5. On a scale of 1 to 10 where 1 is totally disagree and 10 is totally agree, please indicate the extent that you agree or disagree that people who fail to lodge a tax return should have part of their refund taken by the Tax Office? DO NOT READ OUT [SINGLE RESPONSE]

Base: Total % results based on all survey respondents in Stage 1 data collection; All results for segments except for required non-lodgers based on data also collected in Stage 1; Results for required non-lodger group based on combined data collected in Stages 1 and 2.

* Includes the perceptions of required lodgers, non-required lodgers and non-required non-lodgers but excludes the perceptions of required non-lodgers.

Table 16 below shows that particular groups within the community are more likely to agree28 that the Tax Office take this action. These include:

  • Those aged 51 years or older (62%).
  • Those whose first and only language spoken at home is English (58%) compared to those who speak another language at home (40%);
  • Those whose highest level of education is Year 12 or below (61%) or post secondary education (e.g. trade certificate, apprenticeship, traineeship or TAFE qualification (54%), particularly in comparison to those whose highest level of education is of a post-graduate level (42%).

Apart from required non-lodgers, particular groups within the community are also more likely to disagree29 the Tax Office should retain a portion of refunds of those who fail to submit a return. These include:

  • Younger respondents, particularly those aged 16 - 30 years (28%) and 31 - 50 years (27%);
  • Those who speak another language at home (34%) compared to those whose first and only language is English (23%);
  • Community members with higher levels of education, particularly post graduate education (33%), particularly in comparison to those whose highest level of education was year 12 or below (20%); and
  • Medium30 (30%) and high31 (28%) income respondents, particularly in comparison to low income respondents (16%).
Table 16: Level of agreement that people who fail to lodge a tax return should have part of their refund taken by the Tax Office - profile according to demographics
  Ref Disagree
%
Agree
%
GENDER
Male a 27b 56
Female b 22 56
AGE
16 - 30 years c 28e 49
31 - 50 years d 27e 54
51 years+ e 19 62c
STATE
QLD f 24 58
NSW g 21 58
VIC h 31 51
SA i 23 57
WA j 20 58
TAS k ** **
NT l ** **
ACT m ** **
SPEAK LANGUAGE OTHER THAN ENGLISH
Speaks language other than English n 34n 40
Speak English only o 23 58a
Refused p ** **
ABORIGINAL AND TORRES STRAIT ISLANDER IDENTIFICATION
Aboriginal and Torres Strait Islander q ** **
Other r 25 56
Refused s ** **
HOUSEHOLD INCOME
Low income (<$50,000) t 16 63a
Medium income ($50,001 -$80,000) u 30t 52
High income (>$80,000) v 28t 55
Don't know w 32t 43
Refused x 25 58
EDUCATION
Secondary Education (including Year 12 or below) y 20 61(aa)
Post Secondary Education (including trade certificate, apprenticeship, traineeship or any TAFE qualification, bachelors degree at university) z 27 54(aa)
Post Graduate Education (Honours degree, Masters degree or PhD) aa 33y 42
Refused ab ** **

Q5. On a scale of 1 to 10 where 1 is totally disagree and 10 is totally agree, please indicate the extent that you agree or disagree that people who fail to lodge a tax return should have part of their refund taken by the Tax Office? DO NOT READ OUT [SINGLE RESPONSE]

Base: All results incorporate the data in both Stages 1 and 2.

**Sample size of this group is too small for accurate results to be obtained.

4.5 For required non-lodgers: number of returns not lodged, reasons for not lodging and perceived risk of tax office compliance action

4.5.1 Number of returns not lodged / lodgement history

The table below shows self-reported lodgement behaviour over the past three financial years.

Almost two thirds (62%) of required non-lodgers also failed to submit their returns in both of the preceding two financial years. On average, each required non-lodger has 2.4 returns outstanding.

Table 17: The percentage of survey respondents who have lodged or not lodged a tax return over the past three financial years
  Total
%
a
Required lodgers
%
b
Non-required lodgers
%
c
Required non-lodgers
%
d
Non-required non-lodgers
%
2006/07 financial year
Lodged 82 100 100 0 0
Did not lodge 18 0 0 100 100
Total 100 100 100 100 100
2005/06 financial year
Lodged 80 95bcd 83cd 26d 10
Did not lodge 20 5 17a 74ab 90abc
Total 100 100 100 100 100
2004/05 financial year
Lodged 79 92bcd 72cd 37d 16
Did not lodge 21 8 28a 63ab 84abc
Total 100 100 100 100 100
Did not lodge in any of the past 3 financial years 13 0 0 62ab 84abc
Average no. returns lodged 2.4 2.9bcd 2.6cd .6d .3
Average no. returns NOT lodged 0.6 .1 .4a 2.4ab 2 7abc

S16. Did you lodge a personal tax return in the following financial years? READ OUT [SINGLE RESPONSE]

Base: Total % results based on all survey respondents in Stage 1 data collection; All results for segments except for required non-lodgers based on data also collected in Stage 1; Results for required non-lodger group based on combined data collected in Stages 1 and 2.

Looking at just the required non-lodgers, Table 18 below outlines the average number of returns outstanding by respondents displaying particular demographic characteristics.

Required non-lodgers aged 16-30 years and 50 years + appear to be the most prone to not lodging their returns over the past three years. The same can be said about low income required non-lodgers and those with lower levels of education - particularly those whose highest level of education is Year 12 or below, or post-secondary.

Table 18: Number of returns outstanding by required non-lodgers - profile according to demographics
  Ref Did Not Lodge in 2005/06
%
Did not lodge in 2004/05
%
Average no. returns outstanding since 2004/05
GENDER
Male a 69 58 2.3
Female b 78 68 2.5
AGE
16 - 30 years c 88d 81de 2.7
31 - 50 years d 61 51 21
51 years+ e 81d 69d 2.5
STATE
QLD f 74 59 2.3
NSW g 73 63 2.4
VIC h 79 69 2.5
SA i ** ** **
WA j ** ** **
TAS k ** ** **
NT l ** ** **
ACT m ** ** **
SPEAK LANGUAGE OTHER THAN ENGLISH
Speaks language other than English n 82 75 2.6
Speak English only o 73 62 2.3
Refused p ** ** **
ABORIGINAL AND TORRES STRAIT ISLANDER IDENTIFICATION
Aboriginal and Torres Strait Islander q ** ** **
Other r 74 63 2.4
Refused s ** ** **
HOUSEHOLD INCOME
Low income (<$50,000) t 83uv 75uv 2.6
Medium income ($50,001 -$80,000) u 62 46 21
High income (>$80,000) v 58 46 2.0
Don't know w 80uv 74uv 2.5
Refused x 78v 65 2.4
EDUCATION
Secondary Education (including Year 12 or below) y 76(aa) 66(aa) 2.4
Post Secondary Education (including trade certificate, apprenticeship, traineeship or any TAFE qualification, bachelors degree at university) z 77(aa) 66(aa) 2.4
Post Graduate Education (Honours degree, Masters degree or PhD) aa 50 39 1.9

S16. Did you lodge a personal tax return in the following financial years? READ OUT [SINGLE RESPONSE]

Base: All results incorporate the data in both Stages 1 and 2.

**Sample size of this group is too small for accurate results to be obtained.

4.5.2 Reasons for not lodging a tax return in any of the past three financial years

The reasons for not lodging a tax return remain relatively consistent from year to year. Table 19 below summarises the reasons people gave for not lodging their tax returns over the past three financial years.

Table 19: Reasons for not lodging a tax return in the last three financial years32
  Total
%
a
Required non-lodgers
%
b
Non-required non-lodgers
%
Didn't earn enough/Below threshold 21 20 27
Unemployed/Not working 22 19 35a
On a pension/Centrelink and didn't need to 20 18 28a
Just didn't get around to it/Forgot/Lazy 11 13 0
Didn't need to (no reason given) 10 10 8
Had to organise a number of different group certificates/Not prepared 5 6 0
Didn't have time 5 6 0
Accountant hasn't finished/got an extension 3 4 0
Had an accident/illness 3 3 3
Living overseas 3 3 1
It is in the process of being done now 3 3 1
Usually do 2 or more years at a time 2 2 0
Other 19 22a 3

Q1a. For what reasons did you not lodge your tax return in 2006/07? [RECORD VERBATIM]

Q1b. For what reasons did you not lodge your tax return in 2005/06? [RECORD VERBATIM]

Q1c. For what reasons did you not lodge your tax return in 2004/05? [RECORD VERBATIM]

Base: Respondents who did not submit a tax return in any of these three financial years. Total % and non-required non-lodger results based on survey respondents in Stage 1 data collection; Results for required non-lodger group based on combined data collected in Stages 1 and 2.

The most common reasons mentioned for not lodging a tax return in the past three financial years amongst the required non-lodger group included:

  • Believing they didn't earn enough or were below the income threshold (20%);
  • Being unemployed and not working and therefore believing there was no requirement to submit a return (19%);
  • Being on a pension or receiving Centrelink payments and therefore believing there was no requirement to submit a return (18%); and
  • Just didn't get around to it, forgot about it, or was too lazy (13%).

Twenty-two percent of the reasons offered more random 'other' reasons as to why they failed to lodge. The 'other' verbatims provided in response to not lodging specifically in 2006/07 are listed below:

  • "I've been exempted for 20 years."
  • "I fear the debt."
  • "I'm against the whole thing, it's boring, and you don't get enough back. It's not worth my time. I haven't lodged it in 11 years."
  • "I've got a phobia." x 2
  • "I didn't put it in at the right time."
  • "Still withholding money."
  • "I moved states - had other priorities."
  • "The forms for my trust fund came too late."
  • "My accountant passed away and the papers are being sorted out currently."
  • "I lost my group certificates."
  • "I can't do them - too difficult."
  • "Foul-up with Centrelink who had to put in an amended payment advice. By the time they did, I was too broke to pay accountant to re-lodge affected returns and then do following."
  • "A business tax return was lodged instead."
  • "I stopped doing tax returns when the Tax Office sent me a bill for $1200+ for an error that Centrelink made."
  • "Our income is below the tax threshold and our tax deductions are too small to recover without being swallowed by the cost of a tax accountant."
  • "As my income may be shared with my spouse for taxation purposes, I did not see the requirement."
  • "Too hard to do it on your own. Too much cost involved for an accountant. Taxation Office would not give any assistance."
  • "It costs too much to do."
  • "I don't really know how to go about it."
  • "Personal difficulties that I find almost impossible to overcome, or even discuss."
  • "I was interstate and didn't have access to my records to lodge my return."
  • "I did lodge a tax return for my work but not from personal."
  • "I felt that it would be a waste of time and money trying to buck the Bureaucrats."
  • "I have lost the use of my hands - 7 operations and am now going to try + complete the missing years. Also had difficulties with an aged parent and son on drugs. There are too many important distractions that lodging tax returns don't matter."
  • "I couldn't afford to get my tax return done."
  • "I report my personal tax in a BAS form instead."
  • "Too costly to lodge a tax return."
  • "Complications with investment property."
  • "Don't know why I didn't lodge really."
  • "It's been too long since I did lodge a return that I just didn't this time around either."
  • "Changing accountants."
  • "Prefer not to answer" x 3
  • "I am missing my group certificates plus personal problems prevented me from doing so e.g. unemployment and eviction from residence."
  • "I still intend to lodge my return."
  • "I missed the date as I was in Ireland and was told that I was not allowed to file one after the date had closed."
  • "I paid no tax -I am on superannuation."
  • "I haven't been able to afford the payment to HR Block."
  • "I sent all my papers to the tax agent and paid them for it but they never actually did it, even though they said they did. Taxation Office never received it. Lost the $1001 paid them."
  • "Have been lazy + suspect I owe tax so I haven't lodged - might come back to bite me if I do".
  • "You only get a return of a very small amount. It's just not worth the effort."
  • "Personal reasons."

'Other' reasons for not lodging in 2005/04 or 2005/06 are very similar to that shown above.

4.5.3 Reasons for not lodging a tax return in 2006/07

A breakdown of the reasons why people fail to lodge a tax return is outlined in the following sections.

Those who failed to lodge in 2006/07, regardless of whether or not they were required to do so, were asked about the reasons they failed to lodge. Their verbatims were coded into themes.

Amongst required non-lodgers, the most common reasons included:

  • The belief they didn't earn enough or were below the threshold (18%);
  • Being on a pension or receiving Centrelink payments and therefore believing they weren't required to (17%); and
  • Being unemployed or not working (14%).

This suggests that there may be some misconception about eligibility amongst those who didn't lodge (i.e. they didn't lodge because they thought they didn't have to, even though they did). Many required non-lodgers thought that because there were certain circumstances around their finances, this meant they were exempt when in fact they weren't. This widespread confusion about eligibility is not just isolated to those required as 30% of those not required to submit a tax return submitted one anyway for the 2006/07 financial year.

Other less common reasons for not lodging suggest that a smaller proportion of people knew they were required but for reasons such as laziness, lack of time, and unique personal circumstances they did not. Others still plan to submit a return for the 2006/07 financial year (7%).

Table 20: Reasons for not lodging last financial year (2006/07)
  Total
%
a
Required non-lodgers
%
b
Non-required non-lodgers
%
Didn't earn enough/Below threshold 20 18 27
On a pension/Centrelink and didn't need to 18 17 27
Unemployed/Not working 18 14 35a
Just didn't get around to it/Forgot/Lazy 10 12 0
Didn't need to (no reason given) 8 8 6
Had to organise a number of different group certificates/Not prepared 5 5 0
Didn't have time 4 5 0
Accountant hasn't finished it/got an extension 3 4 0
It is in the process of being done now 3 3 1
Had an accident/illness 2 3 1
Usually do 2 or more years at a time 2 2 0
Living overseas 2 2 1
Other 10 12b 3

Q1a. For what reasons did you not lodge your tax return in 2006/07? [RECORD VERBATIM]

Base: Respondents who did not submit a tax return in 2006/07. Total % and results for required non-lodger group based on combined data collected in Stages 1 and 2; Results for non-required non-lodgers based on data collected in Stage 1.

4.5.4 Reasons for not lodging a tax return in 2005/06

Amongst those who failed to lodge a tax return for the 2005/06 financial year, the most common reason mentioned for not lodging in 2006/07 also applies - the belief that because they were unemployed or not working they did not need to lodge a tax return (18%). Other common reasons for not lodging for the 2005/06 financial year amongst the required non-lodger group include:

  • The belief they did not earn enough or were below the income threshold (16%); and
  • Being on a pension or receiving Centrelink payments therefore believing they were not required (15%).
Table 21: Reasons for not lodging in 2005/06 financial year
  Total
%
a
Required non-lodgers33
%
b
Non-required non-lodgers34
%
Unemployed/Not working 22 20 32a
Didn't earn enough/Below threshold 19 16 29a
On a pension/Centrelink and didn't need to 19 16 29a
Didn't need to (no reason given) 9 10 6
Just didn't get around to it/Forgot/Lazy 4 5 0
Living overseas 3 3 2
Didn't have time 2 2 0
Had an accident/illness 2 2 2
Other 15 19b 2
No reason given 7 8 2

Q1b. For what reasons did you not lodge your tax return in 2005/06? [RECORD VERBATIM]

Base: Respondents who did not submit a tax return in 2006/07. Total % and results for required non-lodger group based on combined data collected in Stages 1 and 2; Results for non-required non-lodgers based on data collected in Stage 1.

4.5.5 Reasons for not lodging a tax return in 2004/05

Amongst those who failed to lodge a tax return for the 2004/05 financial year, the most common reason amongst those who were required to do so is also the belief that because they were unemployed or not working they did not need to lodge a tax return (20%). Other common reasons for not lodging for the 2004/05 financial year amongst the required non-lodger group include:

  • the belief they did not earn enough or were below the income threshold (16%); and
  • being on a pension or receiving Centrelink payments and therefore not being required (16%).
Table 22: Reasons for not lodging in 2004/05 financial year
  Total
%
a
Required nonlodgers35
%
b
Non-required non-lodgers36
%
Unemployed/Not working 22 20 32a
Didn't earn enough/Below threshold 19 16 29a
On a pension/Centrelink and didn't need to 19 16 29a
Didn't need to (no reason given) 9 10 6
Just didn't get around to it/Forgot/Lazy 4 5 0
Living overseas 3 3 2
Didn't have time 2 2 0
Had an accident/illness 2 2 2
Other 15 19b 2
No reason given 7 8 2

Q1c. For what reasons did you not lodge your tax return in 2004/05? [RECORD VERBATIM]

Base: Respondents who did not submit a tax return in 2006/07. Total % and results for required non-lodger group based on combined data collected in Stages 1 and 2; Results for non-required non-lodgers based on data collected in Stage 1.

4.5.6 Reasons for low intention to lodge a return at the end of this financial year 2007/08

Overall the most common reasons for having a low intention to lodge a return next financial year are very similar to reasons for not lodging in the past. The most common reasons overall include:

  • Being unemployed or not working (30%);
  • Likelihood of not earning enough or being below the threshold (28%); and
  • Being on a pension or receiving Centrelink payments and therefore not required to lodge (22%).

Amongst the required non-lodger group specifically, these are also the most common reasons for a low intention to lodge in 2007/08 though a slightly different percentage of this group cited each. In order of most commonly cited, they are most likely to cite the following as reasons:

  • Being on a pension or receiving Centrelink payments and therefore not required to lodge next financial year (24%);
  • Being unemployed or not working (21%); and
  • Likelihood of earning less than the income threshold (21%).
Table 23: Reasons for low intention to lodge at the end of this financial year 2007/08
  Total
%
a
Required lodgers**
%
b
Non-required lodgers**
%
c
Required non-lodgers
%
d
Non-required non-lodgers
%
Unemployed/Not working 30 29 25 21 31
Won't earn enough/below threshold 28 18 25 21 33
On a pension/Centrelink and won't need to 22 18 38 24 23
Won't need to/Told I won't need to (no reason given) 10 6 13 10 13
Won't get around to it/Forget/Lazy 2 6 0 0 0
Won't have time 1 0 0 1 0
Other 7 18 0 20 2
Don't know 1 12 0 3 0

Q3. For what reasons are you unlikely to lodge? [RECORD VERBATIM]

Base: Respondents who rated 1 - 6 at Q2. Total % results based on survey respondents in Stage 1 data collection; All results for segments except for required non-lodgers based on data also collected in Stage 1; Results for required non-lodger group based on combined data collected in Stages 1 and 2.

**Sample sizes are particularly small - results for these groups are highly indicative and should not be relied on to extrapolate to the general population.

4.5.7 Perceived risk of Tax Office compliance action

Overall the perceived risk of the Tax Office taking action if someone failed to submit a tax return is only moderately high - 52% believe this to be likely37 while 20% believe this to be unlikely38.

Required non-lodgers are significantly less likely to believe the Tax Office would take action. Compared to required lodgers, required non-lodgers were significantly more likely to cite this as being unlikely (37% c.f.18%). A significantly higher proportion of required lodgers reported this as being likely compared to required non-lodgers (56% c.f. 33%).

In addition, required non-lodgers (15%) were significantly more likely to believe they didn't know whether the Tax Office would take action compared to required lodgers (4%) who were much more certain the Tax Office would take action.

So whilst the perceived level of non-lodgement does not appear to impact on lodgement behaviour there does appear to be a relationship between the perceived likelihood of the Tax Office taking action and reported lodgement behaviour.

Table 24: Perceived risk of Tax Office compliance action
  Total
%
a
Required lodgers
%
b
Non-required lodgers
%
c
Required non-lodgers
%
d
Non-required non-lodgers
%
Very unlikely (1-2) 10 8 6 30ab 16
Slightly unlikely (3-4) 10 10 22cd 7 4
UNLIKELY (1-4) 20 18 28 37ad 20
Neither likely or unlikely (5-6) 22 22 22 16 19
Slightly likely (7-8) 16 17 6 13 18
Very likely (9-10) 37 39c 39c 19 35c
LIKELY (7-10) 52 56c 44 33 53c
Don't know 6 4 6 15a 8
Total 100 100 100 100 100
Mean 6.8 7.0c 6.6c 5.1 6.6c

Q6. On a scale of 1 to 10 where 1 is extremely unlikely and 10 is extremely likely, if you did not lodge a tax return, how likely or unlikely would it be that the Tax Office would take action ? READ OUT [SINGLE RESPONSE]

Base: Total % results based on all survey respondents in Stage 1 data collection; All results for segments except for required non-lodgers based on data also collected in Stage 1; Results for required non-lodger group based on combined data collected in Stages 1 and 2.

Table 25 outlines the perceived risk of Tax Office compliance action amongst respondents of varying demographics.

There are very little differences according to demographic characteristics. One exception exists -older respondents are more likely to believe the Tax Office would take action. A significantly higher proportion of those aged 51 years or older cited action would be likely compared to 16 - 30 year olds (58% c.f. 43%). Significantly fewer also cited that action would be unlikely (14%).

Table 25: Perceived risk of Tax Office compliance action - profile according to demographics
  Ref Unlikely that the Tax Office would take action
%
Likely that the Tax Office would take action
%
GENDER
Male a 21 53
Female b 19 51
AGE
16 - 30 years c 27e 43
31 - 50 years d 22e 52c
51 years+ e 14 58c
STATE
QLD f 19 51
NSW g 23 50
VIC h 19 49
SA i 23 57
WA j 14 58
TAS k ** **
NT l ** **
ACT m ** **
SPEAK LANGUAGE OTHER THAN ENGLISH
Speaks language other than English n 21 52
Speak English only o 20 52
Refused p ** **
ABORIGINAL AND TORRES STRAIT ISLANDER IDENTIFICATION
Aboriginal and Torres Strait Islander q ** **
Other r 20 52
Refused s ** **
HOUSEHOLD INCOME
Low income (<$50,000) t 19 52
Medium income ($50,001 -$80,000) u 19 49
High income (>$80,000) v 24 54
Don't know w 19 50
Refused x 15 56
EDUCATION
Secondary Education (including Year 12 or below) y 18 53
Post Secondary Education (including trade certificate, apprenticeship, traineeship or any TAFE qualification, bachelors degree at university) z 23 50
Post Graduate Education (Honours degree, Masters degree or PhD) aa 19 52
Refused ab ** **

Q6. On a scale of 1 to 10 where 1 is extremely unlikely and 10 is extremely likely, if you did not lodge a tax return, how likely or unlikely would it be that the Tax Office would take action ? READ OUT [SINGLE RESPONSE]

Base: All results incorporate the data in both Stages 1 and 2.

**Sample size of this group is too small for accurate results to be obtained.


12 Eligibility questions were identical to those used in the ATO's interactive online decision tool to determine eligibility to lodge a tax return, Accessed 28 April 2008

13 In order to be able to report a statistically significant change in lodgement, a 3.88% change must be observed.

14 The margin of error of this survey is +/-3.46%. Extrapolation calculation based on Australian Bureau of Statistics 2006 Census figures shown on page 36.

15 Household income of $50,001 - $80,000 per annum

16 Household income of more than $80,001per annum

17 Household income of less than $50,000 per annum

18 Household income of more than $50,001 per annum

19 Household income of more than $50,001 per annum

20 Household income of less than $50,000 per annum

21 Rated 1 - 4 at Q2.

22 Rated 7 - 10 at Q2.

23 Percentages shown in this paragraph represent the proportion of people in each age bracket who indicated they were unlikely (rated 1-4 at Q2) to submit their return next financial year.

24 Percentages shown in this paragraph represent the proportion of people in each income bracket who indicated they were unlikely (rated 1-4 at Q2) to submit their return next financial year.

25 Percentages shown in this paragraph represent the proportion of people in each education group who indicated they were unlikely (rated 1-4 at Q2) to submit their return next financial year.

26 Percentages shown in this paragraph represent the proportion of people in each income bracket who indicated they were unlikely (rated 1-4 at Q2) to submit their return next financial year.

27 This is a combined category of the original categories 'More than 14 million (more than 108% of those required)' and '14 million (108% of those required)'. The original categories were needed to be combined for meaningful interpretation due to the number of respondents indicating each individual category being too low for accurate analysis.

28 Rated 7-10 at Q5

29 Rated 1-4 at Q5

30 Household income of $50,001 - $80,000 per annum

31 Household income of more than $80,000 per annum

32 Includes 2004/05, 2005/06 and 2006/07 financial years

33 The definition of required non-lodgers is based on determined eligibility and lodgement behaviour for the 2006/07 financial year. It is possible that a small proportion of the required non-lodger group responses shown in this table are those belonging to people who were not required to submit a tax return for 2005/06. Results for the required non-lodger group in this table should therefore be used as an indicative guide only.

34 The definition of non-required non-lodgers is based on determined eligibility and lodgement behaviour for the 2006/07 financial year. It is possible that a small proportion of the non-required non-lodger group responses shown in this table are those belonging to people who were required to submit a tax return for 2005/06. Results for the non-required non-lodger group in this table should therefore be used as an indicative guide only.

35 The definition of required non-lodgers is based on determined eligibility and lodgement behaviour for the 2006/07 financial year. As eligibility in previous financial years was unable to be determined for previous years, it is possible that a small proportion of the required non-lodger group responses shown in this table are those belonging to people who were not required to submit a tax return for 2004/05. Results for the required non-lodger group in this table should therefore be used as an indicative guide only.

36 The definition of non-required non-lodgers is based on determined eligibility and lodgement behaviour for the 2006/07 financial year. It is possible that a small proportion of the non-required non-lodger group responses shown in this table are those belonging to people who were required to submit a tax return for 2004/05. Results for the non-required non-lodger group in this table should therefore be used as an indicative guide only.

37 Rated 7 - 10 at Q6.

38 Rated 1 - 4 at Q6.