ATO small business focus areas for 2025
Understanding the ATO’s focus areas for 2025 is essential to ensuring your business remains tax compliant and successful.
The ATO has outlined specific areas of concern to help you avoid common pitfalls and manage your tax obligations effectively.
Here’s what you need to know to keep your business on the right track.
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Small business focus areas
The ATO’s primary focus areas for small businesses in 2025 include:
- distinguishing business income from personal income
- correctly claiming deductions and concessions
- ensuring all operations are within the tax system
These areas are crucial because they directly impact the financial health of your business and its compliance status.
Business income is not personal income
It’s important to understand that your business’s money and assets are not your personal funds.
This distinction is vital for maintaining accurate financial records and avoiding penalties.
The ATO is particularly vigilant about businesses using company funds for personal expenses without proper documentation. Familiarise yourself with Division 7A rules to prevent common errors, such as failing to declare interest on loans or not meeting minimum loan repayment deadlines.
Deductions and concessions
Claiming deductions and concessions accurately is another key area of focus.
The ATO sees frequent errors in the application of the small business CGT concessions and taxpayers claiming non-commercial business losses.
Ensure you’re eligible for any concessions you claim and that all criteria are met.
Misreporting can lead to amended assessments, repayments and potential penalties.
Engage a tax professional if you’re unsure about your eligibility or the correct application process.
Operating within the system
The ATO is committed to ensuring all businesses operate within the legal tax framework. Risky behaviours such as not declaring all income, over claiming expenses or using business funds for personal gain are under scrutiny.
Poor record keeping and cash flow management can also attract attention.
The ATO encourages businesses to develop strong compliance habits from the outset to avoid these pitfalls.
How the ATO supports compliance
The ATO provides various resources to help your small business meet its obligations. These include educational materials, self-paced courses, webinars and tailored support. Engaging with these resources can help you understand your responsibilities and implement best practices in your business operations.
If the ATO identifies issues within your business, they may contact you or your tax professional for clarification.
Depending on the severity, this could involve pre-issue contact, direct communication or moving your business to more frequent reporting periods.
In cases of deliberate noncompliance, firmer actions such as audits, penalties and other legal sanctions may be applied.
Steps to take if you're concerned
If you’re worried about your business’s tax or superannuation position, consider taking the following steps:
Seek advice: Engage with the ATO or a registered tax professional to get advice tailored to your situation.
Correct mistakes: If you identify errors in your tax reporting, don’t wait to hear from the ATO – request an amendment or make a voluntary disclosure to rectify the mistake.
Report suspicious activity: If you suspect illegal activity, such as tax evasion, you can report it confidentially to the ATO.
By staying informed and proactive, you can navigate the ATO’s focus areas confidently and keep your small business on the path to compliance and success.
Take advantage of the resources available and seek professional guidance when needed.
Disclaimer: The information on this page is for general information purposes only and is not specific to any particular person or situation. There are many factors that may affect your particular circumstances. We advise that you contact Mathews Tax Lawyers before making any decisions.