ATO Compliance – Tax Tips for Businesses

The Australian Tax Office keeps a watchful eye on all business activities. Businesses of any size are under obligation to ensure their ATO compliance to Australian tax standards – failing do to so will incur significant penalties. Such misconduct includes providing false or misleading tax statements, failure to report entire income, failure to lodge a return or statement on time, or failure to withhold amounts required under the PAYG system.

Here are some simple tips for businesses to follow, which will help ensure your compliance of tax obligations, and the reduction of fees and penalties.

Utilising Tax Advice and Other Tools

While using tax accountants incurs a cost, our knowledge and experience means we can not only manage the complexities of tax time for you but can also ensure that you meet the tax requirements of the ATO.

Additionally, there are a number of bookkeeping software applications (such as Xero), which can be used to assist in managing invoices, single touch payroll obligations and other records. Cloud technology like Xero connects you with your accountant and centralises information in real time, simplifying the process for everyone involved. These applications have become popular due their user-friendly way of managing small business’s finances and taxes.

Identifying Business Expenses

Business owners must also be capable of identifying expenses which are business related, as non-business expenses are not deductible.

The ‘three golden rules’ (as given by the Australian Tax Office) which can define business deductible expenses are:

  1. The expense must have been for a business purpose, not for private use.
  2. If the expense is for a mix of business and private use, you can only claim the portion that is used for your business.
  3. You must have records to prove your claim.

It’s important that proof of business expense includes the following:

  • Name of supplier
  • Tax invoice number
  • Amount of expense
  • Nature of the goods or services
  • Date the expense was paid
  • Date of the document

Examples of proof include payment summaries, bank statements indicating earned interest and receipts or invoices for asset purchases and sales.

Considering the Costs

Naturally, there are financial costs involved in managing tax affairs, including the costs of, purchasing tax reference material and software for tax purposes. These costs can also be claimed as a deduction.

The Australian Tax Office have highly developed tools for data analytics and data matching (used for identifying work-related expenses). The ATO also has the data necessary for targeting online retailers (e.g. eBay and Amazon), credit cards, and share registries. Given the digital prevalence of business income activity, it’s important that care is taken. Failure to adhere to the reporting obligations of the ATO can incur penalties of up to 75% of the shortfall amount (the difference between your correct tax liability and that worked out from the information you provided).


With experience and expertise, the Morrows Tax Advisory team are equipped to manage any aspect of your business’ ATO compliance needs. Reach out to our staff for the most appropriate advice to meet your individual business needs.

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