ATO Cracks Down on Businesses Dodging Tax

Take note, Aussie businesses, because there’s a new weapon in use as the ATO cracks down on businesses failing to pay tax.

The Australian Taxation Office (ATO) is quietly cracking down on businesses of all sizes failing to comply with their full range of tax obligations.

While the ATO has previously targeted businesses for failing to comply with specific obligations such as superannuation and Fringe Benefit Tax (FBT), the tax office is now taking a more expansive approach.

Using the Random Enquiry Program (REP)—which has previously only been used to target individual and business income tax returns—the ATO is now conducting intensive reviews to ensure businesses are making all of their Pay As You Go tax, super, and FBT contributions.

It’s an aggressive stance that reflects the ATO’s renewed focus on clawing back tax revenue.

Businesses selected for REP audits are chosen at random, regardless of size or turnover.

Having started the REP in 2016 and expanding it a year later to focus on small businesses, the ATO audited more than 1600 such businesses between 2017 and 2020. 

Now the tax office has turned its attention to businesses of all shapes and sizes—sparked, in part, by a number of high-profile tax breaches across the spectrum of Australian business.

While most Australian businesses do their utmost to fulfill all of their tax obligations, many overlook the importance of some fundamental elements of employment tax.

ATO cracks down often include poor data-keeping and a failure to maintain proper records, as well as failure to meet FBT obligations.

Non-compliance can result in significant penalties—with fines reaching up to $782,500 plus interest for global-sized firms, while company directors can also face director penalty notices and be held personally liable for PAYG withholding and missed superannuation payments.

It means businesses of all sizes need to remain vigilant when it comes to paying their taxes.

New Compliance Measures ATO cracks down

The ATO has a range of tools at its disposal to identify tax dodgers, including

1. Data-matching programs – cross-checking information from banks, payment providers, and government agencies.
2. Director Identification Numbers (DINs) – preventing phoenixing and holding directors accountable.
3. Random audits and site visits – particularly in industries with high levels of cash transactions and ATO cracks down
4. Stronger penalties – including fines, interest charges, and even prosecution for serious offenders.

What This Means for Businesses

For the majority of businesses doing the right thing, the ATO cracks down should be seen as positive. It levels the playing field and ensures fair competition. However, businesses engaging in aggressive tax minimisation strategies or failing to keep proper records should take notice.

The ATO expects all businesses to:

1. Keep accurate and up-to-date records.
2. Report all income and sales correctly.
3. Ensure deductions and claims are legitimate and supported by evidence.
4. Pay GST, PAYG, and superannuation contributions on time.

Not Sure if Your Business Is Meeting All Your Tax Requirements?

While the chances of an audit may be slim, they shouldn’t be ruled out entirely. 

That means it’s important to ensure your record-keeping is up to date and tax compliant.

If you’re not sure whether your business is meeting all its tax obligations, simply leave us your details or call +61 02 9415 1511 to discuss.

Or take advantage of our audit insurance solution for total peace of mind. Get in touch to learn more.