The ATO is cracking down on companies and Secured Lending can assist businesses with strategic finance solutions to manage all ATO liabilities. Contact us today if you need urgent help.
The Australian Taxation Office (ATO) has made it plain that its enforcement and compliance focus is intensifying through 2025 and into 2026. This matters to business owners of all sizes, because the ATO’s compliance programs increasingly leverage real-time data, analytics and targeted audits.
If your business owes tax, GST, superannuation, or PAYG (and you’re struggling to pay) Secured Lending can help you secure financing to manage ATO debt responsibly and avoid harsher enforcement outcomes.
Below is a factual breakdown of the most significant ATO crackdowns and priority enforcement areas business owners should understand heading into 2026.
1. Debt Collection & Director Penalty Enforcement
The ATO’s top strategic priority for 2025–26 is improving payment performance and collecting outstanding tax debts. The Commissioner has publicly prioritised stronger debt recovery, insisting the ATO will reduce leniency that followed the pandemic and enforce on unpaid amounts.
Key points business owners should know:
- Director Penalty Notices (DPNs) are being issued more frequently for unpaid liabilities — including GST, PAYG withholding and superannuation — making directors personally liable if the company doesn’t act quickly.
- The ATO’s total collectible debt has grown substantially, and it has stated its intention to drive this down.
Practical takeaway: Directors must lodge and pay on time, and engage early with the ATO if cashflow makes payment difficult. Ignoring assessments or letters accelerates enforcement activity.
2. Small Business Compliance Blitz (Cash Economy & GST)
The ATO is intensifying compliance activity against small businesses for:
- Cash economy under-reporting
- GST misreporting and refund fraud
- Incorrect or inflated deductions
This is backed by the ATO’s published small business focus areas and public warnings that traditional “cash-based” omissions are now significant risk triggers.
Specific elements include:
- Data matching between bank/payment platforms and BAS lodgements — real-time feeds allow the ATO to spot undeclared turnover quickly.
- Operation Protego-style reviews focusing on GST claims and refund integrity.
- Mandatory monthly GST reporting for businesses with poor compliance histories.
Practical takeaway: Under-reporting cash turnover or claiming refunds your records don’t support directly increases the likelihood of an ATO review.
3. Contractors & Omitted Income
The ATO’s quarterly hit lists for 2025 repeatedly highlight contractors failing to declare income as a major compliance area.
This includes:
- Income from subcontractors, gig economy platforms and other non-traditional sources being omitted from tax returns.
- The ATO using third-party data to match declared income against what platforms report.
Practical takeaway: If your business engages contractors or you earn income reported through digital platforms (e.g., ride-sharing, marketplace sales), ensure all income received is reflected in your tax returns.
4. Small Business Deductions & Bonus Claim Scrutiny
The ATO has warned that aggressive or incorrect deduction claims, including the misuse of small business “bonus” deductions, are attracting review and correction activity.
Areas flagged include:
- Misunderstood or opportunistic claims around temporary incentive deductions.
- Personal expenses incorrectly claimed as business expenses. There are rules about what can be legitimately claimed, and the ATO is actively comparing claims against actual patterns.
Practical takeaway: If your deduction claims aren’t fully backed by records and direct business connection, expect increased scrutiny.
5. Privately Owned & Wealthy Groups: 2025–26 Focus Areas
For larger private groups and multi-entity families/companies, the ATO’s 2025–26 focus extends beyond basic compliance. According to the ATO’s own release, priorities include:
- Tax governance and foundational compliance
- Use of business money for personal purposes (Division 7A risks)
- Succession planning and wealth transfers
- Capital gains tax concessions applied incorrectly
- Trust distributions and related-party arrangements
These are long-standing ATO red flags where poor documentation or non-commercial terms can trigger audits.
Practical takeaway: Private groups with inter-entity arrangements or succession planning should ensure governance, documentation and commercial reasoning are watertight.
6. Barter Credit & Donation Scheme Warnings
Late in 2025 the ATO issued a Taxpayer Alert on barter credit tax schemes, warning that arrangements involving barter credits and disproportionate deduction claims (e.g., donating low-cost credits to a charity to claim inflated deductions) will be treated as avoidance.
Practical takeaway: Don’t rely on contrived barter or cross-credit transactions to reduce tax; the ATO has signaled these as priority compliance concerns.
7. Fringe Benefits Tax (FBT) — Vehicle & Employer Benefits
Emerging into 2026 is the ATO’s increased scrutiny on FBT compliance, especially regarding employer-provided vehicles. Recent independent analysis points to this area as a high risk, driven by expanded vehicle and payroll data matches.
Common FBT exposure points:
- Misclassifying vehicle types (e.g., dual cab utes)
- Private use that isn’t correctly reflected
- Incorrect logbooks or valuation methods
Practical takeaway: Employers providing vehicles or other fringe benefits should review FBT classifications and reporting before the next FBT year.
8. Ongoing Property & Development Avoidance Enforcement
Property development and construction remain a specific and active compliance focus for the ATO through 2025 and into 2026.
In late 2024 and 2025, the ATO issued formal guidance signalling a crackdown on contrived property development arrangements, particularly those involving related parties and non-commercial structuring. These arrangements are typically designed to defer, minimise, or shift tax liabilities rather than reflect genuine commercial outcomes.
The ATO has identified several recurring risk patterns, including:
- Related-party development structures where profits are diverted to entities with carried-forward losses or lower tax rates
- Artificial fee arrangements (management fees, development fees, or “project fees”) that lack commercial justification
- Non-arm’s-length financing between associated entities, including interest rates or repayment terms that do not reflect market conditions
- Profit deferral strategies that attempt to delay recognition of taxable income until a later period without a genuine commercial basis
- Circular funding arrangements, where money effectively returns to the same economic group but is dressed as third-party finance or consideration
The ATO has been explicit that it will look beyond legal form and assess the substance and economic reality of development arrangements. Where the dominant purpose of a structure is tax avoidance, the ATO may apply Part IVA (general anti-avoidance provisions), deny deductions, recharacterise transactions, and impose penalties and interest.
Importantly, these reviews are not limited to large developers. Small and mid-sized property developers, family groups, and private companies are equally within scope — particularly where related-party entities are used to fund, develop, or manage projects.
The ATO has also flagged that it is using:
- Land title data
- Financing and related-party loan disclosures
- Tax loss utilisation patterns
- Development timelines versus profit recognition
to identify arrangements that do not align with normal commercial behaviour.
What this means in practice:
Property developers must ensure their structures, funding arrangements, and profit allocations are commercially defensible, properly documented, and consistent with market terms. Simply “copying” a structure used by another developer or adviser does not protect against ATO action if the facts do not support it.
What This Means for Business Owners
Across the board, the ATO’s approach is data-driven, real-time, and less forgiving of late lodgement, under-reporting or aggressive tax positions. Compliance is no longer about avoiding audits — it’s about actively preventing triggers that flag you in the first place.
Business owners should prioritise:
- Timely and accurate lodgements
- Strong record-keeping
- Early engagement with advisors and the ATO
- Transparent, commercial documentation where related parties are involved
The ATO’s enforcement climate in 2025–26 shows no sign of easing.
If your business has accumulated tax debt, or you’re under pressure from ATO notices, contact our team today. We can help you structure financing solutions that pay down liabilities and protect your operations.
