$8 billion dollars in tax is lost every year through dodgy tax returns, despite a multimillion-dollar crackdown on workers by the Australian Tax Office.

Each year up to $8.7 billion in income tax is estimated to be wrongly claimed or lost because income has not been declared, with only $500 million of that sum ever successfully recouped.

The transition to a fully digitised system will only increase compliance by an extra $250 million a year over the next four years, the Tax Office has estimated.