Every quarter the Australian Taxation Office (ATO) shares their areas of focus when it comes to small businesses meeting their tax and superannuation obligations. These insights help businesses remain compliant with tax obligations and avoid costly penalties. As we enter the final quarter of the 2024/25 financial year, the ATO has announced three key focus areas for small business owners to be aware of. These include undeclared contractor income, suggested changes in GST reporting frequency and compliance with small business boost measures. Staying informed and aligned with the ATO small business focus areas can help you avoid ATO scrutiny and maintain good standing with the tax office.

Here are the ATO small business focus areas for Q4 of FY 2024/25:

1. Contractors Omitting Income

As part of the taxable payments reporting system (TPRS), businesses must report payments made to contractors for providing the following services.

  • building and construction
  • courier
  • cleaning
  • information technology (IT)
  • road freight
  • security, investigation or surveillance.

If you work as a contractor and provide any of these services, the business you contract to will report those payments to the ATO on their TPAR and you need to include this income on your tax return. Contractors need to be aware that the ATO is using sophisticated data matching techniques to identify contractors reported through the TPRS. This quarter, the ATO will be increasing its scrutiny on contractors who:

  • Accept cash payments without reporting the income.
  • Fail to include earnings from platforms or digital marketplaces.
  • Do not report all contract work, particularly in industries like construction, cleaning, and ride-sharing.

To remain compliant, contractors should ensure all income is accurately declared in their small business tax returns. The ATO uses data-matching technology to detect discrepancies between reported income and what is actually received.

2. Quarterly to Monthly GST Reporting

From March 2025, the ATO is encouraging more small businesses to transition from quarterly to monthly BAS (Business Activity Statement) reporting for GST purposes. If you have a history of failing to comply with your tax and GST obligations you may receive communication from the ATO notifying you of your new monthly reporting cycle effective from 1 April 2025. You are more likely to be migrated to the new reporting cycle if you have not responded to previous communications from the tax office and demonstrate a poor compliance history, for example:

  • paying late or not paying the amount due
  • not lodging or lodging late
  • reporting your tax obligations incorrectly.

The aim is to help businesses:

  • Stay on top of their tax obligations.
  • Improve cash flow by receiving GST refunds sooner.
  • Develop better financial discipline and forecasting.

While not mandatory for all small businesses, monthly GST reporting is highly recommended for businesses that frequently receive GST refunds or are struggling with quarterly reporting accuracy. The ATO is focusing on educating and assisting businesses with this transition during Q4.

If you’re considering switching to monthly GST reporting, speak with your accountant or advisor to determine if it’s the right move for your business.

3. Small Business Boost Measures

The ATO continues to monitor compliance with the recently introduced small business boost measures, which were designed to support digital adoption and skill development. These include:

  • The Small Business Technology Investment Boost, which allows eligible businesses to claim an additional 20% tax deduction on expenses that support digitising your operations.
  • The Small Business Skills and Training Boost, which provides a 20% tax deduction for eligible training expenses.

The ATO is actively reviewing claims to ensure they meet eligibility requirements. Key risks include:

  • Claiming ineligible or unrelated expenses.
  • Not retaining sufficient documentation to support deductions.
  • Misinterpreting the eligibility timeframes or criteria.

Among the main errors being reported for the Skills & Training Boost program include:

  • claiming when you are not in business, or your aggregated turnover is over $50 million
  • claiming for training where the person is not an employee of your business
  • sole traders claiming the boost deduction for expenditure on training for themselves
  • claiming more than the additional 20% deduction for eligible employee training expenditure
  • claiming when training is not provided by a registered training provider.

To remain compliant, ensure your claims are accurate, well-documented, and within the guidelines set out by the ATO.

The ATO will also continue to focus on non-commercial business losses, small business capital gains tax (CGT) concessions, business income is not personal income and GST registration and income of taxi, limousine and ride-sourcing services.

Stay Ahead with Expert Guidance

Staying compliant with ATO small business benchmarks and requirements doesn’t need to be overwhelming. By understanding the ATO’s focus areas and keeping your tax records and obligations in check, you can reduce risk and focus on growing your business.

At MGI South Qld, we help small businesses stay on top of their tax administration and compliance requirements. If you’re unsure about your income declarations, GST reporting obligations or small business boost claims, our team is here to support you.

Contact us today to stay ahead of ATO updates and ensure your business remains compliant for Q4 and beyond.