ATO targets small businesses under-reporting income and GST

The Australian Taxation Office (ATO) is scrutinising foreign-owned businesses operating in Australia more closely, stepping up compliance action against small businesses that fail to report income or incorrectly claim tax deductions and GST credits.

Since July 2025, the ATO has engaged with more than 17,000 small businesses where it identified signs of omitted income, amending nearly $3 million in tax liabilities. ATO audits in 2025-2026 uncovered more than $210 million in unpaid taxes, and the ATO issued more than $50 million in penalties to businesses that deliberately omitted or under-reported income, including cash payments.

Common compliance issues include failing to report cash sales and contractor income, paying workers in cash to avoid tax and superannuation obligations, claiming private expenses as business deductions, incorrectly claiming GST credits, and using business bank accounts, credit cards or assets for personal expenses. 

The ATO uses data analytics and third-party information to identify businesses that may not be reporting correctly. 

Foreign-owned businesses operating in Australia should report all business income, keep business and personal finances separate, claim only eligible deductions and GST credits, and maintain accurate records of business transactions. The ATO also recommends using digital tools to support record-keeping. 

Businesses can access the ATO’s online learning courses and small business benchmarks for guidance on meeting their Australian tax obligations.

Last updated: 19th Oct 2026

About the Author

Ro Elvinia is ABN Australia's Customer Success and Marketing Manager. She holds a bachelor’s degree in mass communication, majoring in journalism, and also has an academic background in civil engineering. With over a decade of experience in professional writing and a background spanning journalism, Australian immigration, and business services, Ro brings a unique mix of communication and analytical expertise. She works closely with international clients and contributes to ABN Australia's content strategy, helping global businesses stay informed and confident as they navigate the Australian market.