The Australian Taxation Office (ATO) is intensifying its focus on small business tax compliance, with a particular emphasis on "unexplained wealth" and undeclared income. This comes as the ATO also announces the closure of the Small Business Superannuation Clearing House, impacting how some businesses manage their superannuation obligations. The tax office is leveraging data matching and social media monitoring to identify discrepancies between reported income and observed lifestyles.

• The ATO is targeting "unexplained wealth" and undeclared income among small business owners.
• The Small Business Superannuation Clearing House is closing, requiring businesses to adapt their super payment methods.
• Increased scrutiny on deductions, particularly for travel and phone/internet expenses.
• The ATO is enhancing IT services to improve stability and taxpayer experience.

ATO Commissioner Chris Jordan has identified "unexplained wealth or lifestyle for individuals and small businesses" as a top priority. The tax office is employing sophisticated data-matching techniques and even monitoring social media platforms like Facebook to detect instances where individuals’ reported income does not align with their displayed wealth or lifestyle. This initiative aims to address the significant "tax gap" of over $2.5 billion annually, which is partly attributed to incorrect or undeclared income.

In a significant change, the Small Business Superannuation Clearing House (SBSCH) is set to close. This move is part of a broader reform to payday superannuation, where employers will be required to pay superannuation guarantee contributions at the same time they process their employees’ salary and wages, starting from July 1. While this aims to ensure timely super payments, businesses, especially those with fluctuating cash flow, need to adjust their financial planning. The ATO has released a checklist to help businesses navigate these changes and is working with payroll software providers and super funds to streamline the process.

The ATO is also increasing its focus on specific areas of tax compliance for small businesses. This includes potential undeclared income, unpaid superannuation, and the operations of cash-only businesses. Tax agents are being urged to ensure their clients’ tax deduction claims are genuine and directly related to earning income, warning against carelessness or opportunistic claims. Specific attention is being paid to travel expenses and phone/internet deductions, where businesses often incorrectly claim 100% of costs that also have a personal use component. Furthermore, the ATO is targeting contractors who may be omitting taxable income and businesses misusing tax incentive schemes like the Technology Investment Boost and Skills and Training Boost.

Despite the increased enforcement activities, the ATO has pledged to strengthen its IT services and ensure system stability. Commissioner Jordan acknowledged past system outages and assured the tax agent community that efforts are underway to improve service delivery across nine key areas, including the stability of tax agent and business activity statement portals. This commitment aims to support businesses in meeting their tax obligations more effectively.

• ATO commissioner says tax office will be targeting "unexplained wealth" of small business owners –
  SmartCompany, SmartCompany.
• ATO reveals hit list for businesses in 2025, SmartCompany.
• Small Businesses left exposed as ATO shuts down Small Business Super Clearing House, Australian Bookkeepers Network.
• The Small Business Superannuation Clearing House is closing, Australian Taxation Office.
• New ATO checklist prepares small businesses for payday super, SmartCompany.