Each year, the Australian Taxation Office (ATO) outlines its compliance priorities, and 2025 is no exception. For small business owners, knowing where the ATO is focusing its attention helps you stay compliant, avoid penalties, and keep your finances on track.
In this guide, we break down the ATO’s key focus areas in 2025 and share practical steps you can take to stay on the right side of the tax office.
1. Why the ATO Targets Small Businesses
Small businesses are a vital part of Australia’s economy—but they also account for a significant portion of tax-related errors and unpaid obligations. In response, the ATO has increased its use of data-matching tools, real-time analytics, and proactive audits to identify risks.
💡 Tip: The ATO isn’t out to punish businesses—it’s about improving overall fairness in the system.
2. What the ATO Is Focusing on in 2025
✅ Accurate Income Reporting
Under-reporting of income remains one of the most common compliance issues. The ATO is closely reviewing:
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Cash sales not reported
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Online sales not included (e.g. eBay, Amazon, Shopify)
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Bank deposit mismatches with reported income
💡 If you receive income from multiple channels, keep clear records and ensure all income is declared.
✅ Incorrect GST Claims
Another major focus area is the overclaiming of GST credits or failing to register for GST when required.
GST watchpoints in 2025:
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Claiming GST on non-taxable purchases (e.g. insurance, wages)
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Forgetting to charge GST on taxable sales
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Late or missing Business Activity Statements (BAS)
✔ Tip: If your business earns over $75,000 per year, you must be registered for GST.
✅ Superannuation Guarantee Compliance
With the super guarantee now at 11% (rising to 12% by July 2025), the ATO is cracking down on:
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Missed super payments
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Underpaid contributions
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Late lodgement of superannuation data
Super is one of the top complaints employees make to the ATO—and they investigate.
✔ Tip: Automate super contributions using your accounting software, and make payments before the quarterly due dates.
✅ Improper Deductions and Work-Related Expenses
The ATO is also tightening checks on business and work-related deductions, especially:
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Home office expenses
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Vehicle and travel costs
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Entertainment and meal claims
If you claim a deduction, you must have:
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Proof the expense was incurred
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A direct connection to business income
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Supporting documentation (e.g. receipts, logbooks)
3. Common Mistakes to Avoid
Here are some easy errors that could trigger an ATO review:
❌ Using personal bank accounts for business without proper tracking
❌ Relying on estimates instead of actual figures
❌ Failing to report all income, especially cash jobs
❌ Using old tax rates or deduction limits
❌ Forgetting to update employee details in payroll systems
✔ Tip: If you’re unsure, speak to a Penrith accountant who stays up to date with ATO regulations.
4. The Role of Technology in ATO Monitoring
The ATO is now using tools like:
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Single Touch Payroll (STP) to monitor wages and super in real time
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Data-matching with banks, credit card providers, and e-commerce platforms
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AI-powered audit tools to flag inconsistencies across tax returns and BAS
That means it’s easier than ever for the ATO to spot irregularities—even if they’re accidental.
💡 Be proactive, not reactive. Accurate records are your best defence.
5. What to Do If the ATO Contacts You
If you receive a letter or call from the ATO:
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Don’t panic—many notices are standard data-check requests.
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Respond within the timeframe and provide any documents they request.
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Seek professional help if you’re unsure how to respond.
✔ If you’ve made a genuine error, the ATO may reduce penalties if you come forward voluntarily.
6. How to Stay Compliant in 2025
Here’s your small business compliance checklist:
✅ Keep business and personal finances separate
✅ Lodge BAS and tax returns on time
✅ Use accounting software for accurate tracking
✅ Pay superannuation before due dates
✅ Regularly reconcile your bank accounts
✅ Keep all receipts and documentation for 5 years
✅ Get professional advice at tax time or if you’re unsure
Conclusion
In 2025, the ATO is zeroing in on the same pain points that trip up many small businesses—income reporting, GST, super, and deductions. Staying on top of these areas is essential not just to avoid penalties, but to build a financially healthy and sustainable business.
Want peace of mind? Carmody Accounting works with small businesses across Penrith and Western Sydney to simplify compliance and stay audit-ready all year round.
