ATO's Focus On Small Businesses

The ATO has been seeing a number of deduction claims for dental expenses this tax time. Dental expenses, including preventative and necessary dental treatment, medical expenses and other costs relating to client's personal appearance (such as teeth whitening, makeup, skin care, shaving products and haircuts) are not deductible. These expenses are generally private expenses, even if an employer expects an employee to maintain a certain appearance, or pays them an allowance to cover grooming expenses. Taxpayers should remember that they can only claim an expense that directly relates to earning their income. Private expenses cannot be claimed as a deduction.  Taxpayers should have written evidence of all their expenses, and be able to show a direct connection with those expenses to their employment income. Please contact our office for more information.

The ATO has been seeing a number of deduction claims for dental expenses this tax time. Dental expenses, including preventative and necessary dental treatment, medical expenses and other costs relating to client's personal appearance (such as teeth whitening, makeup, skin care, shaving products and haircuts) are not deductible. These expenses are generally private expenses, even if an employer expects an employee to maintain a certain appearance, or pays them an allowance to cover grooming expenses. Taxpayers should remember that they can only claim an expense that directly relates to earning their income. Private expenses cannot be claimed as a deduction.  Taxpayers should have written evidence of all their expenses, and be able to show a direct connection with those expenses to their employment income. Please contact our office for more information.

Employee super contributions for the quarter ending 31 December 2025 must be received by the relevant super funds by 28 January 2026. If the correct amount of SG is not paid by an employer on time, they will be liable to pay the SG charge, which includes a penalty and interest component. The SG rate is 12% for the 2026 income year (increased from 11.5% for the 2025 income year). Please contact our office for more information.

Employers should start preparing for the permanent closure of the Small Business Superannuation Clearing House ('SBSCH') on 1 July 2026. By acting now to find an alternative service, employers will: have an established process in place to pay super guarantee ('SG') for the March and June quarters (if they currently pay quarterly); reduce the risk of late payment of SG for the June 2026 quarter due date (28 July), as the SBSCH will be already closed; have more time to set up their business cash flow to enable frequent payments of SG; and have finalised payments and downloaded any reports from the SBSCH before it closes permanently. Employers that are still using the SBSCH should be aware of the following key dates. 10 December 2025 — Super payments, along with instructions, must be received by 5.30 pm AEDT on this date. The ATO says payments received after this time will be processed from 2 January 2026. 28 January 2026 — December 2025 SG quarterly payments due date. February to March 2026 — Employers should move to an alternative option to the SBSCH. 28 April 2026 — March 2026 SG quarterly payments due date. 30 June 2026 — Final day for employers to use the service, make any final payments and download reports. 1 July 2026 — SBSCH is no longer available. Employers may already have other options readily available so they can exit from using the SBSCH ahead of time. They should check their existing software and payroll packages, as they may already include super functions they can use to pay SG. Otherwise, employers can look for options from super funds or digital service providers offering payroll services, software or commercial clearing houses. Please contact our office for more information.

The Administrative Review Tribunal ('ART') recently held that some sales of subdivided farmland were subject to GST as they were made by the taxpayer in the course of carrying on an enterprise. The taxpayer owned farmland near Adelaide. He entered into an agreement with a developer, under which the developer sought rezoning and development approvals, carried out development works, and marketed the subdivided lots.  The taxpayer progressively gave the developer access to the property as required and signed documents where necessary, including contracts for the sale of the subdivided lots. The taxpayer received 20% of the proceeds of sale progressively as sales of the subdivided lots were completed, with the developer receiving the remaining 80%. The taxpayer argued that his role was passive, and that such rights as he had, and actions he took under the agreement with the developer, were of an administrative nature not amounting to a series of activities in the form of a business. The ART disagreed, finding that the sales of the subdivided land were subject to GST as they were made in the course of carrying on an enterprise. The ART noted that the taxpayer's activities "exhibited some of the well-known indicia of a business." Amongst other factors, the taxpayer's activities in facilitating the implementation of the development agreement "had a degree of regularity and repetition", including allowing access to the land progressively as required, an ongoing obligation not to encumber or sell the land during the project, and the continuous signing of sales contracts and monitoring of sales returns. Please contact our office for more information.

Release authorities are documents issued by the ATO to super funds, authorising the release of money from a member's super account to pay specific liabilities, including in relation to excess concessional contributions, excess non-concessional contributions, and Division 293 tax assessments. The ATO is seeing a rise in SMSFs that receive a release authority and are either: not responding within 10 business days as required; or  responding incorrectly (i.e., either not releasing the requested amount, or failing to submit a release authority statement back to the ATO, or both). Failure to meet these obligations may result in significant penalties for the fund. SMSF trustees should make sure they have effective processes in place to respond to release authorities promptly and accurately. Please contact our office for more information.

The ATO acquires and uses data for pre-filling, detecting dishonest or fraudulent behaviour, and identifying areas where it can educate taxpayers to help them understand their tax obligations. When data does not match, the ATO may contact tax agents and their clients to find out why. Rental Income Data-Matching Over the coming months, the ATO will be sending letters where its data indicates: tax returns including rental income may need to be lodged for specific years; or rental income should be included in previously lodged tax returns. Please contact us if you receive such a letter. Offshore Merchant Data-Matching Program The ATO will acquire merchant data from the big four Australian banks (ANZ, Commonwealth Bank, National Australia Bank and Westpac) for the 2025 to 2027 income years. The ATO estimates that records relating to approximately 9,000 offshore merchants will be obtained each financial year. Please contact our office for more information.

Taxpayers can claim a tax deduction for most business expenses, provided they meet the ATO's three 'golden rules': The expense must be for business use, not for private use. If the expense is for a mix of business and private use, they can only claim the portion that is used for business.  They must have records to prove their claim. The ATO also wants business taxpayers to remember that there are some expenses that they cannot claim, including entertainment expenses, traffic fines, and expenses that relate to earning non-assessable income. Please contact our office for more information.

The ATO wishes to dispel the 'common myth' that dual cab utes are automatically exempt from fringe benefits tax ('FBT'). If an employer provides dual cab utes to staff to complete their duties and the vehicle is available for personal use, then the benefit may be subject to FBT. By understanding how their employees use their dual cab utes, employers can work out if FBT applies and meet their FBT obligations. To qualify for an exemption, the dual cab ute must be an 'eligible vehicle'. That is, it must be designed to carry a load of one tonne or more, or more than eight passengers (including the driver), or a load under one tonne and not primarily designed for carrying passengers. The dual cab ute must also only be used for limited private use (i.e., minor, infrequent and irregular), such as the occasional trip to the tip or helping a mate move house. If an employee's personal use of the dual cab ute does not meet both of the above exemption conditions, then the employer will be liable for FBT. Please contact our office for more information.