ATO Unveils Compliance Priorities for 2.5 Million Small Businesses
ATO Unveils Compliance Priorities for 2.5 Million Small Businesses
The Australian Taxation Office has outlined its latest compliance priorities for small businesses, highlighting key areas where errors and non-compliance are prevalent. While the majority of small businesses aim to do the right thing, the ATO has identified specific areas of concern where businesses may be making mistakes—either unintentionally or deliberately.
Key Focus Areas for Small Businesses
The ATO has pinpointed three main areas where it believes small businesses are falling short:
Incorrect Income Reporting by Contractors: The ATO is concerned that some contractors are underreporting or omitting income. Industries such as building and construction, courier services, cleaning, IT, road freight, and security services will be under increased scrutiny.
Inaccurate GST Reporting: Businesses that have a history of late lodgements, non-payment, or incorrect GST reporting will be moved from quarterly to monthly GST reporting starting April 1. This change aims to improve cash flow management and encourage better reporting habits.
Incorrect Claims for Tax Boosts: The ATO is urging small businesses to self-amend their tax returns if they have mistakenly claimed the Small Business Skills and Training Boost or the Small Business Technology Investment Boost, which provide a 20% tax deduction.
ATO’s Commitment to Supporting Small Businesses
ATO Deputy Commissioner Will Day emphasised that the ATO’s goal is to support small businesses in meeting their tax and superannuation obligations correctly.
“These are areas where we are concerned small businesses are getting it wrong—whether inadvertently, opportunistically, or deliberately. By sharing these concerns early, we want to help small businesses develop good compliance habits and stay on track,” Day said.
Additional Areas Under Review
Beyond the key focus areas, the ATO is also reviewing:
Capital Gains Tax (CGT) Concessions for Small Businesses: Ensuring businesses correctly apply CGT rules when selling assets.
Separation of Business and Personal Income: Addressing cases where business owners mix business and personal finances, which can lead to incorrect tax reporting.
Non-Commercial Business Losses: Ensuring businesses meet the criteria to claim losses against their income.
GST and Income for Ride-Sharing and Transport Services: Reviewing compliance for ride-sharing operators, taxi services, and limousine businesses to ensure they meet GST obligations.
What Small Businesses Should Do
To avoid scrutiny and potential penalties, small businesses should:
Review their reporting practices and ensure income is accurately reported.
Check GST lodgements for accuracy and timeliness.
Self-amend any errors related to tax deductions or boost claims.
Maintain clear financial separation between business and personal income.
Consult with their accountant or tax professional to ensure compliance with the latest ATO guidelines.
By staying informed and proactive, small businesses can avoid compliance issues and maintain smooth operations. The ATO remains committed to working with businesses to help them meet their obligations correctly while ensuring fairness in the tax system.