Understanding the ATO’s focus areas for 2025 is essential to ensuring your business remains compliant and successful. The ATO has outlined specific areas of concern to help you avoid common pitfalls and manage your tax obligations effectively.
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 repayment deadlines.
Deductions and concessions
Claiming deductions and concessions accurately is another key focus. The ATO sees frequent errors in the application of small business CGT concessions and 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.
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.
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 contacts, direct communication or moving your business to more frequent reporting periods. In cases of deliberate noncompliance, firmer actions such as audits, penalties and even legal sanctions may be applied.
