Key Risk Areas the ATO is Targeting
The ATO has made it clear where it’s focusing its attention — and small businesses are firmly in the spotlight.
This isn’t about new laws.
It’s about existing rules being enforced more aggressively.
Here’s what the ATO is watching — and what we see working for businesses that stay out of trouble.
The ATO’s current focus areas
According to the ATO’s Deputy Commissioner, these are the areas causing the most issues right now — either through mistakes, shortcuts, or poor systems.
1. Contractors not declaring all income
This is a big one.
The ATO is heavily data-matching:
payments reported by customers
bank deposits
platform income
If income doesn’t line up, it gets flagged.
What we see go wrong:
income spread across multiple accounts
cash jobs not recorded properly
assuming “small amounts don’t matter”
What works:
simple, consistent income tracking
one source of truth for revenue
reconciling income regularly, not yearly
If income is earned, it needs to be declared — every time.
2. Moving businesses from quarterly to monthly BAS
The ATO is encouraging more small businesses to lodge BAS monthly instead of quarterly.
This isn’t about punishment — it’s about control.
Why the ATO likes monthly BAS:
better cash flow visibility
smaller, more manageable payments
fewer end-of-quarter surprises
What we see:
Businesses that move to monthly BAS usually:
manage cash better
fall behind less
make fewer mistakes
Quarterly BAS often hides problems until they’re too big to ignore.
3. Encouraging self-amendment of tax returns
The ATO would rather businesses fix mistakes themselves than wait to be audited.
They’re actively encouraging:
voluntary corrections
self-amendments
early disclosure
What works:
fixing errors as soon as they’re identified
not waiting for the ATO to come knocking
treating mistakes as something to correct, not hide
Self-amending early is almost always cheaper and less stressful.
4. Ongoing focus areas that still catch people out
The ATO is also continuing to watch:
non-commercial losses
small business CGT concessions
GST registration (especially ride-share, taxis, delivery platforms)
These areas aren’t new — but they’re still commonly misunderstood and misapplied.
Behaviours that attract ATO attention (we see these all the time)
The ATO has been very clear about what puts businesses on the radar.
🚩 Underreporting income
Whether intentional or not, this is one of the fastest ways to trigger scrutiny.
🚩 Failing to lodge or pay on time
Late lodgements and unpaid liabilities signal a lack of control.
🚩 Cash payments to avoid tax or super
Paying staff in cash to “keep it simple” is a major red flag.
🚩 Using business money for personal expenses
Without proper records or reporting, this quickly becomes a problem.
🚩 Poor record-keeping
If you can’t back up the numbers, the ATO assumes the worst.
Most audits don’t start because of one big mistake —
they start because of patterns.
What we see actually keeps businesses safe
Businesses that stay out of trouble tend to do a few things consistently:
report income properly and on time
keep records clean and up to date
deal with issues early, not later
don’t push grey areas hoping they won’t be noticed
ask questions before problems escalate
Good habits matter more than clever strategies.
Who this applies to
When the ATO talks about “small business”, they mean:
sole traders
companies
trusts
partnerships
with turnover under $10 million.
If that’s you, these focus areas apply.
Bottom line
The ATO isn’t changing the rules — it’s enforcing them more closely.
Most businesses don’t get into trouble because they’re reckless.
They get into trouble because:
systems are loose
advice is reactive
issues are ignored too long
Staying one step ahead here means:
knowing what the ATO cares about
tightening the basics
fixing problems early
That approach is always cheaper than dealing with an audit later.