Don’t Shoot the Messenger – Here’s What Our Industry Bodies Are Saying

At the recent IPA National Congress, the ATO made one thing very clear: they’re tightening their approach to small business compliance. With a reported $27.2 billion small business tax gap, the ATO says it’s time for businesses to get back on track with timely lodgements, accurate reporting and consistent engagement. 

Here’s what our industry bodies are saying: 

Most small businesses do the right thing… but the gap is growing 

The ATO acknowledged that most small businesses lodge and pay on time, especially those who lean on their tax professionals. But the numbers still show a widening gap between what small businesses should be paying and what’s actually collected: 

• Small businesses paid 82.6 cents per dollar owed in 2022–23 
• They’re responsible for 47% of the total tax gap 
• Around $35.9 billion in collectable debt sits with small business 
• Most of the gap comes from omitted income and overclaimed deductions 

And it’s not just accidental. The ATO is particularly concerned about the 7% of businesses deliberately operating outside the system. Cash-only businesses, non-registrants and those ignoring obligations. 

More scrutiny on certain industries 

The ATO specifically called out three areas under closer review: 

• Ride-sourcing and transport providers (GST registration compliance) 
• Contractors (via the Taxable Payments Reporting System) 
• Property and construction (omitted sales, inflated expenses, incorrect R&D claims, GST issues 

The consequences of getting it wrong can ripple through a business: unexpected audits, cash flow disruptions, and the stress of reconciling past mistakes. 

Timely lodgement is a major focus 

Late lodgement isn’t a small issue in the ATO’s eyes as it affects government revenue and public services. The ATO is increasing early-intervention strategies, including: 

• SMS nudges 
• More payment plan reviews 
• Moving businesses with persistent issues from quarterly to monthly GST reporting 

And yes, they noted the profession’s concerns about interest charges with a hint that GIC settings may be reviewed. 

Non-engagement is where things get serious 

Ignoring obligations or failing to engage with the ATO isn’t just risky, it can have direct consequences for your business and its owners. This could include: 

• Director penalty notices, which can make you personally liable for unpaid amounts 
• Garnishees or frozen accounts that impact cash flow 
• Credit bureau reports, affecting your ability to borrow or secure finance 

If you’re reading this and thinking “yikes”, don’t stress. This isn’t a warning, it’s a heads-up. Our job is to help you stay compliant, avoid penalties, and keep the ATO off your back. And as always, if you’re unsure about anything, we’re here to help you navigate it.