The ATO is increasing its focus on small business compliance. Here are five practical steps to help your business stay compliant and avoid unnecessary penalties.

ATO Compliance Crackdown: 5 Steps Small Businesses Should Take

The Australian Taxation Office is increasing its focus on small business compliance.

As Angela Allen, Assistant Commissioner at the ATO, recently noted:

“Every year we see small businesses run into avoidable issues because they haven’t kept accurate records, reported all their income or managed their cashflow effectively.”

For many businesses the issue is not deliberate non-compliance, but simply poor systems, weak record keeping or falling behind on obligations.

With the ATO expanding its use of data matching and compliance activity, now is a good time for business owners to review their processes.

There are several practical steps businesses can take to strengthen their compliance position and reduce the risk of penalties or enforcement action.

Manage ATO Debts Early

If your business has an ATO debt, the worst approach is to ignore it.

Engaging early with the ATO to arrange a payment plan or begin repayments can prevent stronger enforcement action and help manage cashflow more effectively.

Separate Accounts for Tax Obligations

A simple but effective strategy is maintaining separate bank accounts for GST and PAYG withholding.

This ensures funds collected for tax obligations are available when BAS lodgements and payments fall due.

Maintain Accurate Records

Maintaining accurate records is a legal requirement for Australian businesses.

The ATO continues to encourage businesses to move away from manual “shoebox” methods and adopt digital accounting systems that improve accuracy and reporting.

Prepare for Payday Super

From 1 July 2026, the new Payday Super rules will require employers to pay Superannuation Guarantee contributions at the same time employees are paid.

Businesses should review payroll systems now to ensure they are prepared for the increased payment frequency.

Finalise Obligations When Closing a Business

When closing or winding down a business, it is important to finalise all outstanding tax obligations.

This includes lodging final tax returns, cancelling the ABN where appropriate and ensuring all employee entitlements have been settled.

Work With a Registered Tax Adviser

Working with a registered tax practitioner can help ensure your business meets its obligations and remains compliant with changing tax laws.

Professional advice can also help identify risks before they become compliance problems.

Contact Lockwood & Ward on (02) 9299 7044, visit www.lockwood.com.au, or stop by Level 9, 50 Clarence Street, Sydney NSW 2000.