As tax time rolls around in Australia, the Australian Taxation Office (ATO) has released its 2025 compliance focus areas, targeting common mistakes made by small business owners. If you’re running a business in Penrith or the wider Western Sydney area, understanding these priorities can help you avoid penalties and stay on top of your obligations.
This guide explains where the ATO is focusing its attention in 2025 and how your small business can stay compliant and stress-free this financial year.
1. Key ATO Focus Areas for 2025
The ATO continues to invest heavily in data analytics, digital tracking, and small business reviews. In 2025, it’s paying close attention to the following:
✅ Incorrect Income Reporting
Under-reporting income remains one of the most common compliance issues.
All income from platforms like Shopify, Airbnb, and Uber must be declared.
Businesses must ensure cash payments and digital transactions are included in tax returns.
✅ Personal vs Business Expenses
Claiming personal expenses as business deductions is under strict review.
This includes motor vehicles, home office deductions, and personal travel.
The ATO is using AI-powered data-matching tools to flag irregularities.
✅ Superannuation Guarantee Payments
Employers must pay the correct super rate (11.5% as of July 2024) on time.
Missed or late super contributions attract penalties and loss of tax deductibility.
✅ GST and BAS Accuracy
The ATO is targeting incorrect Business Activity Statement (BAS) claims.
Common errors include overclaiming GST credits and failing to report GST on income.
2. What These ATO Focus Areas Mean for You
Small businesses in Australia make up over 97% of all businesses. Unfortunately, many owners unintentionally make tax mistakes due to lack of time, knowledge, or outdated systems. The ATO’s 2025 approach is about early intervention, real-time data checks, and increased audit activity.
3. How to Stay Compliant in 2025
🔍 Use Separate Bank Accounts
Always keep your business and personal expenses separate.
This makes bookkeeping easier and reduces the risk of incorrect claims.
📄 Keep Digital Records
Store receipts, invoices, and vehicle logs electronically for easy access.
The ATO requires records to be kept for at least 5 years.
📆 Meet Key Lodgement Deadlines
BAS lodgements: Monthly or quarterly depending on your GST status.
PAYG and superannuation payments: On time to avoid interest and penalties.
Tax return deadlines: Vary depending on whether you use a registered agent.
💼 Work With a Qualified Accountant
A local Penrith accountant or tax advisor can:
Review your financials before submission
Ensure claims are legitimate and substantiated
Help you prepare for any possible audit
4. ATO Tools to Help You Comply
The ATO offers several resources for small businesses:
ATO app for recording expenses and tracking deductions
myGovID for secure access to ATO services
Tax Time Toolkit for small businesses, available at ato.gov.au
These tools make it easier to track compliance in real time, especially if you manage your own books.
5. What If You Make a Mistake?
If you realise you’ve made a mistake after lodging, act quickly:
Amend your tax return or BAS through the ATO portal or with your accountant
Voluntary disclosures may reduce penalties or interest
💡 The ATO is often more lenient when errors are self-corrected before audit activity begins.
6. What Penrith and Western Sydney Businesses Should Prioritise
With many small and micro businesses operating in Western Sydney, local businesses should:
Review their record-keeping practices
Double-check all claims against ATO checklists
Consider a mid-year tax review with a Penrith accountant to identify risks early
Whether you run a café, plumbing business, or e-commerce store, the ATO’s spotlight is universal. Don’t leave compliance to the last minute.
Conclusion
ATO compliance in 2025 is all about accuracy, transparency, and preparation. By understanding where the ATO is focusing, small business owners can avoid mistakes that lead to audits, penalties, and unnecessary stress.
Want to ensure your business is ATO-ready? Carmody Accounting works with businesses across Penrith and Western Sydney to keep their tax and compliance in check—before the ATO ever gets in touch.
