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ATO areas of focus on businesses for the coming year

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As we move into 2024, the ATO has highlighted three areas of focus for businesses: taking steps to address cyber security and increased protection of personal data, addressing the growth in the collectable debt book – particularly for small businesses – and improving overall tax performance and stamping out the shadow economy. The takeaway message for businesses, especially small businesses, for this year is to be proactive and engaged with the ATO in terms of any unpaid tax or super debts and keeping data secure.  

With increased cyber-crimes, scams and hacks occurring in Australia in recent times, like any other large organisation the ATO has taken additional steps to address cyber security and increase protection of personal data to deal with an unprecedented rise in identity-related fraud attempts. For all businesses, the ATO has introduced “client-to-agent linking”, which requires all entities with ABNs (excluding sole traders) to digitally nominate their agent through ATO’s secure online services before the agent can access any data. This will cover approximately 4.7 million businesses and will only apply if businesses engage a new agent, change their existing agent, or want to provide additional authorisation for their existing agent. 

For all individuals interacting with the tax system, the ATO encourages the use of myGovID. This coincides with the government announcing a tightening of the way in which individuals access their myGov account. Individuals who use their myGovID to access the ATO’s services will need to use that myGovID for future logins from now on. In other words, it will not be possible to access an ATO account without it. 

myGovID is an app that proves an individual’s digital identity. Once set up, the app can be used to access government online services without having to prove identity or remember passwords. This can be used for personal or business services, although the myGovID must be linked to an ABN through the relationship authorisation manager to allow users to act on behalf of the business. Anyone aged over 15 years who has access to a smart device and has a personal email address can set up the service. Protecting the system and taxpayers against fraud will continue to be a key theme for the ATO. 

In 2024, the ATO will also be seeking to address the growth in the collectable debt book. Currently, the collectable component of debt sits at about $50 billion and consists of mostly self-assessed debt, with small businesses owing 67% of this. This does not include disputed debt, which is treated separately. According to the ATO, during the pandemic it took a different audit position, chased fewer lodgments and recovered less debt. This has led to a concerning behavioural pattern from some businesses after the pandemic where they deprioritise paying tax and super and increasingly rely on unpaid tax and super to prop up cashflow. 

While the ATO notes that it is seeking to engage with those businesses to help them understand and pay tax debts and employee super, it is also using its full arsenal to protect employees, clients and customers. One of the ways the ATO is seeking to level the playing field on uncooperative businesses is the reporting of debt information to credit reporting bureaus. Since 1 July 2023, it has disclosed the debts of more than 10,500 businesses that have significantly overdue undisputed tax debts of at least $100,000. 

Staying on the topic of small businesses, the ATO will be seeking to improve tax performance in 2024. Even though the tax performance of small businesses is currently running at around 87%, the ATO notes that there is a small minority of dishonest businesses operating wholly or partly in the shadow economy that is contributing to the underperformance. To eliminate businesses operating in the shadow economy and reduce honest mistakes by small businesses, the ATO is seeking to build a digital-first ecosystem which will move tax reporting closer to the tax event and have seamless tax and reporting from business source to the ATO.