Angela Allen:
Cashflow is probably one of the biggest pressure points we see across the small business market. Don't stick your head in the sand. If you're having trouble with cash flow or you can't meet your obligations, seek advice early from a registered tax professional or contact the ATO.
Jenny Wong:
Welcome to With Interest. I'm Jenny Wong. Today, we're joined by Angela Allen, assistant commissioner at the Australian Taxation Office, responsible for small business experience, to talk about what small businesses need to know heading into tax time 2026. Every tax time brings new challenges and opportunities for small business owners, from avoiding common mistakes to keeping up with the ATO's latest compliance focus areas.
In this episode, Angela will take us through the key issues shaping this tax time, including new guidance and tools for small businesses, changes to deductions and reporting obligations, and what the ATO is doing to help businesses stay on top of their obligations throughout the year. Angela, welcome to With Interest.
Angela Allen:
Thanks for having me, and really looking forward to engaging with your listeners today.
Jenny Wong:
Angela, tell us what are the most common mistakes small businesses make at tax time and how's the ATO helping to avoid those errors?
Angela Allen:
You're right, every year we do see some small businesses run into avoidable mistakes during tax time. And so the majority of those mistakes we're seeing relate to not keeping good or accurate records. And this leads to a number of common issues we're seeing and that includes around deductions and income reporting. The types of things we see are not declaring all sources of income and including private expenses.
That's why good record keeping processes are important, not just at tax time, but all year round. This ensures a business has the right records before they lodge and also the right information to share with their tax professional.
I also wanted to highlight that we understand that not all small businesses are right across their tax obligations. So we understand they're busily working in their business. And so what we're doing to help them is create a lot of plain English support and guidance material on our website. And I'll call out just a couple that might help some of those small businesses. So the first one is the recordkeeping evaluation tool that enables a small business to assess their record keeping and also make adjustments that they might need to make.
The myDeductions tool, you and your listeners are probably aware of the app, and that's where a taxpayer can keep track of their expenses and then it provides an easy way to share their information with their tax professional. There's many other plain English tools and support on our website and I would encourage both small businesses and tax professionals to go to the website and access them.
Jenny Wong:
So Angela, this year, what are the key focus areas for the ATO when it comes to small business compliance?
Angela Allen:
Great question, Jenny. And as you would know and your listeners would know, each year we do have specific risks and I suppose areas that are attracting our attention. So for this year, I just wanted to highlight four key risk areas. So number one is knowingly operating outside of the system. So by this, I mean not declaring all income, overclaiming expenses, and this type of behaviour creates inconsistency with our third-party data matching capabilities, and it certainly doesn't go unnoticed.
Number two is deliberately not reporting or registering correctly to avoid obligations. And a big one we see in the small business market is not paying in full and on time. Number three is employers have extra responsibilities and we see some not understanding their tax and super obligations and number four and my final focus area, which is a big one we see across the small business market and that's employees paying cash to avoid meeting tax and super obligations.
Just in rounding off to support tax professionals, we do publish what is attracting our attention on a quarterly basis on our website. This enables a tax professional to have an early conversation and intervention with their clients. Just Google “ATO getting it right” and find all the information you need to know.
Jenny Wong:
Angela, are there any new or updated guidance materials, tools, or services the ATO is offering to support small business owners?
Angela Allen:
Yeah, there is, Jenny, and we fully understand tax professionals are busy and time poor and even more so at this time of year. To support tax professionals and small businesses, we do publish tools, guides, and online services on our website. For example, the Small Business Tax Time Toolkit is a one-stop shop that provides up-to-date tools, guides, and any changes that a small business might need to know about and will be released in early June.
Number two is essentials to strengthen your small business. This is a free online learning resource that has over 30 courses covering small business life-cycle events. It's a great free resource that can be accessed anytime. And importantly, we know small businesses are really busy and so they can start the course and they don't have to complete it. They can pick it up again when they have some time.
And number three is our refresh tax time basics for small business. This is 15 bite-size videos that are now live on our website. So we encourage tax professionals to take a look at our website, and it's also handy for your clients as well to understand their obligations and keep informed.
And so my final message, Jenny, is we understand there's economic pressure across the small business market at the moment. And if a small business is experiencing difficulty or short-term cashflow issues, we strongly encourage them to contact us early or speak to their registered tax professional early. Early engagement is critical for viable businesses to work through any short-term challenges.
Jenny Wong:
Angela, what should small businesses know about changes to deductions or reporting obligations this financial year?
Angela Allen:
Great question, Jenny. As you know, there are a couple of changes that are happening this year, and I'm sure your listeners are aware of some of those. However, I will just highlight three of probably the key changes that we're seeing. So number one is a great number of individuals in business or working as contractors will see payments reported to ATO through the taxable payment annual reporting, which is TPAR.
This data will be pre-filled as business income into individual tax returns. So a key reminder is TPAR lodgements are due the 28th of August, so your client's pre-fill information will not be available until after this date.
Number two is the instant asset write-off is available again this year. So eligible small businesses can claim an immediate deduction for eligible assets valued at up to 20,000. And a key reminder is you still need to keep good records to substantiate the claim. And number three, and probably my most important final reminder is Payday Super starts on 1 July. Employers will be required to pay super guarantee at the same time as wages.
And just a reminder, there's a lot of support material and a really good checklist on our website to confirm your readiness. You will also find information on our Payday Super compliance approach.
Jenny Wong:
Angela, what advice would you give small business owners to help them stay on top of their obligations throughout the year, not just at tax time?
Angela Allen:
Yeah, we understand the current economic pressures and the environment and potential cashflow challenges being experienced by small businesses. However, expectations remain around tax and super obligations. So we encourage the use of online services, digital tools, and business software. And of course, a registered tax professional can help you keep on top of your obligations.
And what we find is a successful small businesses uses online tools and services to help them keep on top of record keeping, streamlined processes. And also Jenny, importantly, allows them more time to focus on their business activities.
Earlier I spoke about the importance of good record keeping throughout the year, which then makes completing obligations easier. You understand the financial health of your business, and it also supports the sharing of information with your tax professional.
Cashflow is probably one of the biggest pressure points we see across the small business market. At a practical level, putting money aside for GST, pay-as-you-go withholding and super can really help. This money isn't spare money for a small business to use within the business. It's owed and needs to be paid to support government to deliver community services.
Importantly, if a small business is having trouble meeting the obligations, seek advice, and support from trusted sources such as the ATO website or your tax professional. This ensures you're accessing the current and accurate information. And Jenny, probably my final and most important message around this question is don't stick your head in the sand. If you're having trouble with cash flow or you can't meet your obligations, seek advice early from a registered tax professional or contact the ATO.
Jenny Wong:
Angela, what are the ATO's current priorities in addressing the shadow economy?
Angela Allen:
Another good question, Jenny. And our role at the tax office, as you and your listeners would know, is to collect the right amount of tax so government can deliver community services. We also have a pretty important responsibility to ensure there's a level playing field for all small businesses who are doing the right thing. In relation to shadow economy, we're focused on those operating outside the system and not reporting cash income, paying cash wages, paying below award wage, and not paying employee super.
In the last 12 months, we've investigated labour hire providers suspected of unlawful conduct and made unannounced visits to targeted food and hospitality businesses. Your listeners may have seen some of our activities in the media. For example, we visited the wine regions in South Australia, on the Gold Coast and in Darwin. Our expanded data matching allows us to identify under-reporting and risky behaviour earlier. Each week, we receive around a thousand tip-offs from workers, customers, and competitors who either know about or strongly suspect tax evasion.
Jenny Wong:
Well, it's clear there are a few issues small businesses need to be on top of during tax time. Angela, thank you for breaking down these important topics.
Angela Allen:
Thanks for having me, Jenny. It was my pleasure to be here with you and your listeners today.
Jenny Wong:
Thanks for listening to With Interest. Don't forget to check the show notes for links and resources from CPA Australia and the ATO. If you found this episode useful, please share it with your friends and colleagues, and hit the subscribe button so you don't miss future episodes. Until next time, thanks for listening.
