SMEs urged to stay compliant as ATO crackdown intensifies in 2025
The Australian Taxation Office (ATO) is tightening its grip on small and medium-sized enterprises (SMEs) in 2025, targeting tax performance, outstanding debts and compliance failures, urging accountants to help businesses stay compliant from the start.
By Ro Elvinia
With SMEs accounting for $35.6 billion – over 65% of the nation’s total collectable tax debt – it is crucial for businesses to stay ahead of these growing challenges. The ATO is cracking down on businesses that underreport income, overclaim deductions and conceal wages or operate entirely outside the tax system.
The tax agency’s latest findings reveal an alarming $17.7 billion tax gap for SMEs in 2021–2022. Their findings indicate that the key contributors to this gap include complexity caused mistakes, opportunistic behaviour and deliberately avoiding obligations. Businesses that fail to comply with their tax obligations are warned that they risk audits, hefty penalties and even criminal sanctions.
ATO Deputy Commissioner Will Day has issued a stark warning during his most recent speech to the Institute of Public Accountants (IPA) National Congress, stating that the ATO will be actively targeting SMEs, particularly those nearing the $10 million turnover mark. He said, “We are being transparent and sharing with you early what these concerns are to give you a runway to address any issues and help your clients get their affairs in order.”
The ATO is committed to supporting businesses through a “quarterly campaign” designed to help SMEs get their tax obligations right from the start. This ongoing initiative encourages businesses to actively engage with accountants to ensure compliance and avoid the costly consequences of mistakes. Day emphasised that the focus on “getting it right” is not a one-time effort but a continuous process of keeping up with evolving tax regulations and maintaining good standing with the ATO.
As Day cautioned, “While collecting outstanding debt is important, preventing future debt accumulation is even more critical.” This highlights the urgency for SMEs to take immediate action to ensure their tax affairs are in order before the ATO’s focus intensifies this year.
With the ATO increasing its scrutiny, seeking professional tax advice is more crucial than ever. Since 1976, ABN Australia has been helping international business operators navigate Australia's complex tax and compliance landscape. Our experienced team is equipped to keep your business compliant while legally minimising your tax expenses wherever possible.
Do not risk your business by handling taxation yourself, as it could lead to costly mistakes. Seek ABN Australia’s expertise to ensure your tax matters are properly managed and avoid serious consequences. Act now and contact us for professional assistance.
Published: 31st Jan 2025 | Last updated: 31st Jan 2025