The Australian Taxation Office (ATO) recognises that when small business owners are busy running their operations, understanding and managing tax obligations can sometimes take a back seat. While the ATO acknowledges that most small businesses work hard to meet their tax and superannuation obligations, it also understands that mistakes can still occur.

The ATO has identified several common areas where sole traders are making errors:

      Not reporting all income — including income earned outside the business, such as side hustles, cash jobs, or payments in-kind/barter transactions (for example, receiving goods or services in exchange for work).

      Overclaiming expenses — such as claiming the personal-use portion of business expenses or overstating the cost of goods sold and other deductions.

      Incorrectly calculating business losses.

      Incorrectly offsetting losses from non-commercial business activities against other income sources.

      Incorrectly claiming PAYG withholding refunds.

      Misreporting personal services income (PSI) to gain inappropriate tax benefits.

      Failing to register for GST when required — for example, if operating in the taxi or ride-sourcing industry, or when turnover reaches (or is expected to reach) the GST threshold.

      Not maintaining accurate and complete business records.

Tax agents can refer to the ATO’s “Tax Time Toolkit for Small Business” (QC 59613) for further guidance. The toolkit provides helpful links and resources covering business income, deductions, and record-keeping to assist clients in meeting their tax obligations correctly.

Please contact us directly if you need any help with this.

(Source: Information extract from The NTAA's October 2025 Tax Advisers' Voice)