ATO Targets Small Business Compliance in 2025

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The Australian Taxation Office (ATO) has announced its compliance priorities for small businesses in 2025, with a strong focus on income reporting, GST obligations, and the correct use of incentive measures.

1. Contractor Income Reporting

The ATO continues to uncover cases where contractors — including sole traders, consultants, and subcontractors — are omitting or under-reporting income. Through the Taxable Payments Reporting System (TPRS), payments made to contractors are reported and matched against tax returns and activity statements. Any mismatches raise red flags and may trigger ATO contact, reviews, or even audits. Contractors are reminded to ensure all income is fully reported to avoid penalties and interest.

2. GST Non-Compliance

Small businesses with a history of late BAS lodgments, missed payments, or incorrect GST reporting are firmly in the spotlight. From 1 April 2025, the ATO can require non-compliant businesses to shift from quarterly to monthly GST reporting for at least 12 months. This move aims to instil better compliance habits and improve cash flow visibility. Businesses are also encouraged to voluntarily adopt monthly reporting as a way to better manage obligations.

3. Small Business Boost Measures

The ATO is reviewing claims made under the skills and training boost and the technology investment boost. These measures provide bonus deductions of 20% on eligible expenses, but many businesses have made errors such as:

  • claiming for ineligible training or technology costs,
  • exceeding turnover thresholds, or
  • incorrectly applying deductions to themselves rather than employees.

The ATO urges businesses to carefully check eligibility criteria and amend claims if errors are found before audits or reviews occur.

Looking Ahead

Beyond these areas, the ATO has flagged upcoming focus on issues such as:

  • non-commercial business losses,
  • small business CGT concessions,
  • private use of business income, and
  • GST compliance in taxi, limousine, and ride-share sectors.

What This Means for Small Businesses

The message is clear: the ATO is ramping up enforcement where businesses have a track record of errors or non-compliance. Small businesses should:

  • review income reporting processes,
  • ensure GST is lodged and paid on time,
  • double-check eligibility before claiming boosts, and
  • work with their accountant to address potential red flags.

By tightening financial governance and staying proactive, small businesses can avoid unwanted ATO attention while also strengthening their long-term business health.

👉 Want to know how these changes affect you or your business? Contact Richard A Bobb Chartered Accountants for tailored guidance.

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