UNDERSTANDING THE ATO'S SHIFT TO MONTHLY GST REPORTING FOR SMALL BUSINESSES WITH TAX COMPLIANCE ISSUES

The ATO will be taking further steps in relation to small businesses who are behind with their tax obligations (whether that be lodgments, liabilities or something else). Effective 1 April 2025, the ATO intends on shifting those businesses to a monthly reporting cycle for GST.

The ATO stated that they are implementing this to “help small businesses to keep on top of their obligations and remain viable”.

However, compounded with tough economic conditions and enhanced ATO scrutiny on tax compliance generally, an added layer of administrative burden on small businesses now arises as affected businesses must now engage registered agents to lodge three times more frequently throughout the year.

In relation to director penalty laws, there is an added risk that affected small businesses will fail to lodge the relevant GST returns by the new due dates. This can increase the risk of a director penalty notice being issued:

  • at all;

  • by reference to ‘estimated’ GST amounts; and/or

  • on a ‘lockdown basis’, reducing the options available to a director to avoid personal liability.

The ATO are relying on the GST legislation as requiring it to implement this change on small businesses who have a history of failing to comply with tax laws. The specific statutory provisions are subject to interpretation and reasonable minds may differ as to whether the threshold for monthly reporting is met for each individual case. The ATO’s decision can be contested.

Speaking generally and by reference to all relevant factors, it may be commercially prudent for affected small businesses to consider if they have proper grounds to resist the change in cycle and then engaging with the Commissioner to obtain a favourable outcome.

The team at SMAILES KRAWITZ has experience in dealing with tax compliance and representing taxpayers before the ATO, Administrative Review Tribunal or Federal Court.

Contact us for advice specific to your circumstances on (08) 6373 7756

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Alan Krawitz