ATO crackdowns 2025: What small businesses need to know

Accurate reporting of contractor income

Another central focus area for the ATO this year is contractor income. Income reporting can get messy in industries like construction, IT, cleaning, courier services, and security. The ATO is using advanced data-matching technology to cross-check payments made by businesses against what contractors are declaring on their tax returns.

If your business engages contractors, it's critical to keep meticulous records. Always issue payment summaries or invoices, and make sure your contractors are providing valid ABNs. If you're a contractor yourself, be honest about all your income. The ATO's systems are more powerful than ever, and trying to slip under the radar isn't worth the risk.

‍

The shift to monthly GST reporting

One change that caused a stir was the ATO's move to transition some businesses from quarterly to monthly GST reporting. If a business has a history of late payments, missed BAS lodgements, or incorrect GST reporting, the ATO may require it to file monthly instead.

At first glance, monthly reporting might seem excessive. But personally, I see some positives. Monthly lodgements mean smaller, more manageable payments and better cash flow management, and they force a regular reconciliation rhythm, which is much healthier for the business.

If you have had issues, opt into monthly reporting before the ATO mandates it voluntarily. On Thriday, the platform can automate BAS calculations, so moving to monthly lodgements is much easier.

Correct claiming of deductions and concessions

I see small businesses accidentally (or sometimes deliberately) overclaiming deductions or misusing concessions every year. The ATO is cracking down on this hard in 2025.

One key area is the small business capital gains tax (CGT) concessions. These concessions are incredibly valuable but come with strict eligibility criteria. Another focus is non-commercial business losses – businesses that repeatedly make losses can't just keep offsetting them without proving they are genuinely trying to make a profit.

My advice is simple: only claim what you are entitled to. Always verify your eligibility before claiming any concession or deduction. Most importantly, you should keep detailed records to substantiate every claim you make. Thriday makes this easier by automatically tagging transactions and storing receipts digitally, so you're always audit-ready.

‍

Compliance with small business boost measures

The government introduced two special measures to help small businesses invest in themselves: the Skills and Training Boost and the Technology Investment Boost. These allow you to claim an additional 20% deduction for eligible expenses.

But there's a catch – many businesses have incorrectly claimed these boosts. The ATO has flagged common errors like:

• Businesses claiming the boost even though they don't meet the definition of a small business
• Expenses claimed for non-employees
• Sole traders claiming the boost for self-education

To avoid problems, I recommend double-checking the eligibility rules. If you realise you've made an error in a past return, it's better to proactively amend it rather than wait for the ATO to knock.

At Thriday, we've built features to help track eligible expenses properly so that claiming these boosts can be done accurately and confidently.

‍

Operating within the tax system

In 2025, the ATO will aggressively target businesses outside the system entirely. That includes undeclared cash income, unregistered businesses, and even side hustles that haven't been adequately reported.

This is especially relevant for gig economy workers in ridesharing, delivery, freelance services, and the like. The ATO is accessing platform data directly from providers such as Uber, Airbnb, and Airtasker, so there's nowhere to hide.

If you're running a legitimate business – even a small side hustle – you need to:

• Register for an ABN
• Declare all income, even if it's cash
• Register for GST if your turnover exceeds $75,000

Thriday makes it easy to stay compliant because it automatically tracks every dollar in and out of your accounts. It means I can relax, knowing that nothing is missed.

Enhanced enforcement measures

The ATO isn't just relying on human audits anymore. In 2025, they are using artificial intelligence, real-time data reporting, and sophisticated cross-referencing tools to catch mistakes or fraud instantly.

This has two major consequences:

• if something doesn't add up, the ATO will often detect it without needing to wait for your annual return
• penalties and interest charges can escalate quickly if you're caught out

Rather than fearing this, I treat it as motivation to run my business cleanly, compliantly, and transparently. Using an automated accounting tool like Thriday means I can be confident that my finances are accurate and up to date.

How to stay ahead

I've learned that staying ahead of ATO crackdowns isn't about doing the minimum to scrape through. It's about building strong financial habits that protect the business in the long term.

Here are my key tips:

• Keep personal and business finances completely separate
• Maintain accurate, detailed records
• Declare all income, without exception
• Use an automated tool like Thriday to track transactions, generate BAS, and stay audit-ready
• Engage a registered Thriday tax agent if you're unsure about complex deductions or concessions.

The reality is that the ATO's technology is getting smarter every year. But with the right systems in place, staying compliant doesn't have to be hard. In fact, it can be a powerful advantage – freeing you up to focus on growing your business instead of stressing over paperwork.

Final thoughts

The ATO's crackdowns in 2025 are a wake-up call for every small business owner. But rather than seeing them as a threat, I see them as a reminder of how important it is to run a tight ship.

By staying organised, declaring income correctly, and claiming only legitimate deductions, small businesses like mine can not only survive but thrive under increased scrutiny.

If you want to make it even easier, Thriday can help automate your accounting, tax, and BAS lodgements, giving you peace of mind that everything is taken care of. In business, knowledge is power. And when it comes to tax compliance in 2025, being informed, proactive, and automated is the best way to succeed.