ATO announces additional support for new small business owners

The Australian Taxation Office (ATO) has announced it is providing additional support for new small business owners to ensure they understand and comply with their tax, super and registry obligations from the start. The ATO’s campaign, coined ‘ready for business’, highlights that opening and running a small business is "serious business". According to the Australian Bureau of Statistics, about 50 per cent of businesses fail in the first three years, often because, ATO says, they don’t get their ATO obligations right when starting their small business journey. In the coming months, Australian business number (ABN) holders will receive a series of emails from the ATO which include tips on ABN obligations, business structures, registering for goods and services tax (GST) and understanding employer responsibilities. The ATO knows while most small businesses try to do the right thing and comply with their ATO obligations there are some making genuine mistakes and others deliberately not complying. "Our goal is to provide small businesses with guidance, tools and tips so new business owners can focus on growing their business with confidence," said ATO Deputy Commissioner Will Day. "Small businesses are vital participants in the tax and super system. As stewards for small businesses, our role in making it easy for small business owners to get their tax and super right is more important than ever. "We know that successful small business owners understand their tax, super and registry obligations and we are committed to helping them do so. "We also know that small businesses who engage a registered tax professional are more likely to stay on top of their tax and super obligations." Don’t get caught out by GST GST registration and payment is an ongoing area of concern for the ATO. The ATO estimates the community is missing out on almost $8 billion in GST each year that hasn’t been collected due to non-compliance. Small businesses failing to comply with GST obligations contribute significantly to this gap. Not every small business needs to be registered for GST, but when their GST turnover is $75,000 or more, or when they provide taxi, limousine or ride-sourcing services they must register and collect GST, and then pay this to the ATO. Small businesses who don’t understand their GST obligations can often be caught out when it comes time to pay. Mr Day encouraged small businesses to set aside GST, as well as pay as you go (PAYG) withholding and super if they have employer obligations. "Don’t be tempted to dip into GST, PAYG withholding or super to manage your cash flow – set up separate bank accounts for these funds so you’re always prepared when it’s time to pay," Mr Day said. In early 2025, the ATO wrote to ride-sourcing operators and taxi drivers announcing it was focussed on those operating outside the system. This action resulted in more than 3000 new GST registrations, Mr Day said. "Ride-sourcing operators and taxi drivers who deliberately operate outside the system will face consequences," he added. Side hustles in the spotlight More than 700,000 taxpayers are supplementing their income with ‘side hustles’, the ATO says, including ‘gig’ or sharing economy activities. If your hobby has turned into a profit-making business, you are responsible for certain tax, super and registry obligations. "Generally, a business involves continuous and repeated activities aimed at making a profit," Mr Day said. "Visit ato.gov.au/areyouinbusiness to learn more about whether your activities qualify as a business and understand your obligations." Plan ahead with PAYG instalments The ATO is also encouraging new small businesses to plan ahead to avoid a large tax bill when they lodge their first tax return. To prevent this, new small business owners can voluntarily enter and prepay their estimated tax liability through PAYG installments as soon as they start their business. "Through transparent communication, including the support we have available for small businesses, small business owners are better equipped to keep up with their obligations and stay on top of their tax payments," Mr Day said. "The ATO’s role is to collect the correct amount of tax so the government can deliver services for the Australian community."

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