Unfortunately – This is no April Fool’s joke!
Beginning 1 April 2025, the Australian Taxation Office (ATO) will implement a significant change to the way small businesses with a history of non-compliance report GST. If your business has previously reported Goods and Services Tax (GST) on a quarterly basis, you could be moved to monthly reporting starting as early as next year. This shift is part of the ATO’s broader efforts to improve compliance and reduce tax-related debt.
Who Will Be Affected By This Change?
This move to monthly GST-reporting is in an effort to target businesses that have struggled with meeting their tax obligations. The ATO’s decision is aimed at ‘promoting better financial management’ and ‘helping businesses stay on top of their tax duties’. Businesses that have demonstrated non-compliance in the past—such as late or non-payment of taxes, failure to lodge required returns, or incorrect reporting—will be affected by this change.
The ATO will notify businesses in writing if they are subject to the transition. This new requirement is outlined in section 27-15(1)(c) of the A New Tax System (Goods and Services Tax) Act 1999.
How Will This Change Affect Your Business?
For some small businesses, monthly reporting could see benefits such as improved processes and financial monitoring. With more frequent reporting, businesses will be prompted to keep a closer eye on their cash flow and financial obligations. This might help you avoid the burden of large quarterly tax instalments and assist in better cash flow management, especially if you have previously struggled with keeping up with tax obligations.
However with increased frequency of GST reporting, it’s important to be aware that this could also bring increased compliance costs and time spent on administrative work. For businesses already grappling with financial challenges, it’s important to ensure you are correctly budgeting and efficiently managing your cash flow, as the shift to monthly payments could put some pressure on day-to-day operations.
What Does This Mean for Directors?
For company directors, it’s important to note the implications of failing to meet the new reporting requirements.
Directors who rely on safe harbour provisions—protection from personal liability in cases of insolvency—must ensure their businesses are complying with the new monthly reporting rules. If a business fails to meet the new GST reporting obligations, it could jeopardise the director’s safe harbour status, potentially leading to personal liability for the company’s debts.
For directors considering restructuring options, the move to monthly reporting could serve as an early warning sign that the business is at risk of insolvency. If you think your business may be impacted by this change, it’s important to seek professional restructuring advice. Taking action early can potentially help steer your business away from financial trouble, or in more severe cases, provide a better chance at recovery.
Having proper governance systems in place and seeking timely advice is crucial for directors to remain compliant and protect themselves from potential legal risks.
What Should Affected Businesses Do Next?
If your business is one of those impacted by the ATO’s move to monthly GST reporting, it’s essential to engage professional advice as soon as possible. Get in touch with us to understand the full scope of the changes and explore your options for managing your tax obligations. Early planning and expert guidance can help you navigate these challenges and ensure that your business remains compliant with ATO requirements.
Whether you want to understand how the shift to monthly GST reporting might affect your business, need help managing your tax obligations, or are looking to improve your overall financial practices, our team is here to guide you every step of the way.
With extensive experience in tax and business management, BISCosgrove offers expert guidance to help your business thrive under the new reporting requirements.
We specialise in all areas of small business accounting and compliance, including:
✔️ GST Reporting & Tax Planning
✔️ Cash Flow Management
✔️ Financial Record Keeping & Compliance
✔️ Restructuring & Professional Advice
Unsure of your next steps? Reach out to us today for tailored advice to ensure your business doesn’t just comply, but thrives.
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The material and contents provided in this publication are general and informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.
