ATO's compliance focus for 2025: what small businesses need to know

Key compliance focus areas for 2025

The ATO's latest focus aims to address common problem areas where small businesses often make mistakes. Here are the key points that businesses should keep in mind:

Separation of business and personal income

The ATO continues to target businesses that blur the lines between personal and business expenses. Whether intentional or accidental, failing to maintain this separation can lead to serious compliance issues. The ATO encourages businesses to:

• Keep clear records of all business transactions.
• Maintain separate bank accounts for business and personal expenses.
• Use accounting software or platforms like Thriday to automate and simplify record-keeping.

For more details, visit the ATO's guidance on separating personal and business expenses.

Thriday was created specifically for this purpose.

Out allocations feature enables businesses to put their business budget on autopilot by distributing a percentage of revenue to dedicated accounts for profit, owners pay, tax and operational expenses.

Deductions and concessions

The ATO is closely monitoring deductions and concessions, especially:

• Non-commercial business losses: Businesses that repeatedly report losses may face scrutiny.
• Small business capital gains tax (CGT) concessions: These benefits offer significant tax savings but must meet specific eligibility criteria. The ATO is paying close attention to ensure claims align with the rules.

Read more on the ATO's focus on deductions and concessions.

Businesses operating outside the system

The ATO is increasing its focus on businesses operating partially or fully outside the tax system, particularly in the gig economy. Industries such as rideshare, food delivery, and cash-only services will face stricter scrutiny. The ATO’s data-matching technology allows them to identify businesses underreporting income or failing to register for GST.

Learn more about the ATO's strategy for businesses operating outside the system.

Contractor income reporting

In 2025, contractors omitting income has become a growing concern. The ATO is using enhanced data-matching tools to cross-reference payments reported by businesses with contractor income declarations. This ensures all business income is captured in the tax system.

Read about the ATO's crackdown on contractor income reporting.

Transition to monthly BAS reporting

The ATO is encouraging more businesses to shift from quarterly to monthly Business Activity Statement (BAS) reporting. This move aims to improve cash flow management and reduce the risk of unexpected tax debts. Businesses growing beyond certain thresholds will be required to make this transition.

Find out more about the ATO's guidance on monthly BAS reporting.

Self-amendment and error correction

For individuals and sole traders the ATO is promoting voluntary correction of errors as part of its compliance strategy. By identifying mistakes early and making corrections, businesses can avoid more serious penalties. The ATO actively encourages self-amendment as a positive step in managing tax obligations.

Learn about the ATO's self-amendment and error correction processes.

How Thriday can help small businesses stay compliant

Managing compliance requirements can be time-consuming and stressful. Thriday’s automated financial management platform simplifies tax preparation, record-keeping, and reporting. By seamlessly combining banking with bookkeeping, Thriday helps ensure your financial data is accurate and aligned with ATO expectations.

With Thriday, small businesses can:

• Automatically categorise transactions to keep business and personal expenses separate.
• Track and claim eligible deductions with confidence.
• Manage BAS lodgements efficiently with automated data tracking.

Conclusion

The ATO’s updated focus areas reflect its ongoing commitment to ensuring small businesses operate fairly and meet their tax obligations. By staying informed and proactive, businesses can reduce compliance risks and focus on growth. Platforms like Thriday are designed to support small businesses in managing their financial admin with ease, ensuring they remain compliant while saving time and effort.

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