ATO Targets Tradies and Professional Services

The Australian Taxation Office (ATO) has flagged the construction industry and the professional services sector for closer review. Here’s what small businesses should know.

Industries Under the Microscope

  • Construction and professional services
    These sectors (tradespersons and professional services such as engineers, consultants, and accountants) are seeing recurring compliance issues with reporting and record keeping.

Common Tax Issues

  • Incorrect income reporting
    Omitting sales or under-declaring income in BAS and tax returns remains a frequent error.
  • Overclaimed expenses
    Private or personal costs are being claimed as business deductions when they shouldn’t be.
  • GST mistakes
    Businesses are missing GST registration when required, or overclaiming GST credits.
  • R&D Tax Incentive (R&DTI) errors
    Claims are being made for activities that don’t meet eligibility criteria or lack proper documentation.

Key ATO Warnings

  • Closer monitoring
    The ATO is watching closely and will apply penalties and interest where errors are found.
  • Amendments and audits
    You may be asked to amend returns or face an audit if reporting doesn’t align with records.
  • Seek help early
    If you’re struggling to meet obligations, get assistance from a registered tax agent, a business adviser, or the ATO.

What the ATO Expects

  • Report all business income
    Ensure no jobs, invoices, or deposits are left out of BAS and tax returns.
  • Claim only legitimate business expenses
    Keep personal and business costs separate and substantiate deductions.
  • Maintain complete records
    Keep full and accurate documentation, especially for R&D activities and expenses.
  • Register for GST when required
    Register once your turnover exceeds the $75,000 threshold (or earlier if applicable).

Small Business Growth and Complexity

  • Obligations increase as you grow
    Tax and super become more complex, particularly for businesses with $1 million–$10 million turnover.
  • Accuracy matters
    Take extra care with income, deductions and offsets as your operations expand.

In Short

  • Now is the time to review
    Double-check your reporting, record keeping and R&D claims—the ATO is paying attention, and strong documentation is your best defence.

Disclaimer: This article contains general information only. Regrettably, no responsibility can be accepted for errors, omissions or possible misleading statements or for any action taken as a result of any material in this guide. It is not designed to be a substitute for professional advice, as such a brief guide cannot hope to cover all circumstances and conditions applying to the law as it relates to these items.

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Wayne Staal - Holmans Chartered Accountant

Principal/Director of Holmans.
Skills include accounting and taxation, taxation minimisation, business improvement, client management, compliance requirements.

Specialist in Small to Medium Businesses and High Net Worth Individuals (Health Professionals and Professional Sportspersons). I like to guide people through the maze of complexity that is accounting and tax with good planning, forecasting and plain language. Once the compliance obligations are under control, I then like to help the owners improve the business bottom line.

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