Missed lodgements, vague tax strategies, poor record-keeping, and lack of communication are red flags that your accountant may be increasing your ATO compliance risk. In 2025, the Australian Tax Office’s data matching programs and risk profiling algorithms are more sophisticated than ever, cross-referencing BAS, tax returns, payroll, superannuation, and fringe benefits data to detect discrepancies.
The wrong accountant can cost you more than just missed deductions; they can put you in the ATO’s audit spotlight. Late BAS lodgements, incomplete records, or aggressive tax tactics can trigger penalties, Director Penalty Notices, and long-term compliance issues that damage your business reputation and cash flow.
According to the ATO’s 2024–25 Small Business Compliance Update, top triggers for audit include repeated late lodgements, unexplained GST variances, and unsupported deductions.
Here are five warning signs your accountant may be putting you at risk, and how to protect your business through transparent processes, proper documentation, and year-round oversight.
Sign 1: They Lodge Late or Not at All
Consistently missing BAS or income tax return deadlines is one of the fastest ways to damage your ATO compliance history. Each late lodgement adds penalties, increases your ATO risk profile score, and can trigger reviews that extend to other areas of your business — including superannuation guarantee obligations, PAYG withholding, and FBT reporting.
As of 1 July 2024, the ATO’s Failure to Lodge (FTL) penalty for small businesses starts at $313 per 28-day period, capped at $1,565 per lodgement. Larger entities can face penalties in the tens of thousands. Repeated non-compliance can also jeopardise your eligibility for ATO payment plans and lodgement deferrals.
Our approach: We use structured Tax Compliance workflows and ATO Online Services for Business monitoring to ensure every lodgement, whether quarterly or annual, is tracked and submitted on time, every time.
Even a single late lodgement can harm your compliance record. A pattern of delays sends a compliance red flag to the ATO, prompting them to scrutinise other obligations and potentially conduct a desk audit or full review.
Sign 2: They Don’t Explain What They’ve Lodged
Signing off on a Business Activity Statement (BAS) or income tax return without knowing exactly what’s in it is like approving a legal contract without reading the terms, you’re still personally responsible for the outcome under ATO law.
If your accountant can’t clearly explain each lodgement, you may be unknowingly approving errors, unsupported deductions, or GST misclassifications that could trigger ATO audit activity or penalty notices.
Every lodgement should be accompanied by:
- A summary of key figures such as GST payable, PAYG withholding amounts, and taxable income.
- Notes on any significant year-to-year changes or anomalies in your accounts.
- Copies of submitted forms for your own records, in line with the ATO’s record-keeping requirements (minimum retention: five years).
Our Tax Advisory service includes a pre-lodgement review where we walk clients through each figure and provide source documentation for transparency. This ensures that you, the legal taxpayer, fully understand what’s being reported on your behalf.
Failing to review or question a lodgement puts all legal and financial liability back on you, even if the mistake originated with your accountant. Taking the time to check the details before submission isn’t just best practice; it’s essential ATO risk management.
Sign 3: They Don’t Keep Adequate Records
The ATO requires all businesses to maintain complete and accurate records for at least five years, and in some cases, even longer for certain transactions or asset purchases. In 2025, the ATO’s audit-readiness program actively checks for missing or inconsistent documentation, often before initiating an audit.
If your accountant isn’t helping you maintain an organised, easily accessible record trail, you may struggle to:
- Substantiate deductions during an ATO review
- Prove GST claims or PAYG reporting accuracy
- Demonstrate compliance with superannuation guarantee obligations
Poor record-keeping is one of the top triggers for ATO desk audits and compliance reviews, as it suggests your business may be misreporting or omitting transactions.
Proper record-keeping goes beyond tossing receipts into a drawer. It includes:
- Accurate bank reconciliations completed monthly
- Supporting documents for every expense, asset purchase, and claim
- A clear separation between business and personal expenses
- Digital backup of all records in case of system failure or physical damage
We help clients implement cloud-based compliance systems like Xero, Hubdoc, and Dext that automatically capture invoices, receipts, and bank feeds, creating a secure digital audit trail.
This is built into our Tax Compliance service, ensuring every transaction is matched to verifiable source documentation. Having this structure not only satisfies ATO requirements, it also strengthens your ability to make strategic decisions based on reliable financial data.
Sign 4: They Suggest Risky or Vague Tax Strategies
When an accountant promises unusually large tax refunds or hints they can “make things disappear”, it’s a major red flag. The ATO’s 2025 Tax Avoidance Taskforce is actively targeting aggressive tax minimisation schemes, including:
- Sham deductions without evidence
- Inflated work-related expense claims
- Misuse of trust distributions or personal services income rules
- Artificially shifting income or expenses across entities to avoid tax
If deductions or claims aren’t backed by clear documentation and legitimate business purpose, you could face:
- ATO audits and extended reviews into past returns
- Administrative penalties of up to 75% of the tax shortfall for intentional disregard
- Reputational damage that can affect future lender and investor confidence
Safe tax planning should be:
- Based on current ATO guidance and tax legislation
- Supported by source documents and clear paper trails
- Fully explained so you understand both benefits and risks
Our Tax Advisory approach prioritises compliance-first strategies while still identifying legitimate tax savings, from optimising your income structuring to leveraging approved incentives like the R&D Tax Incentive.
Accepting vague or undocumented tax strategies shifts the legal burden entirely onto you if the ATO challenges a claim. A reputable advisor will always be transparent, conservative where necessary, and evidence-backed.
Sign 5: They Don’t Stay in Touch
If your accountant only contacts you at tax time, they’re not actively helping you manage ongoing ATO risk. Compliance issues often develop gradually, and without regular check-ins, small discrepancies in GST reporting, PAYG withholding, or superannuation guarantee can escalate into serious problems by year-end.
In 2025, the ATO is moving toward real-time compliance monitoring, using data feeds from:
- Single Touch Payroll (STP Phase 2) submissions
- BAS lodgements
- Superannuation clearing houses
- Banking and merchant facility reports
This means errors or omissions can be detected within weeks, not months, and proactive corrections are far less costly than post-audit adjustments.
Best practice for SME compliance management:
- Quarterly or monthly reviews of BAS data, payroll, and superannuation to catch discrepancies early
- Regular updates to your tax strategy based on business changes, new legislation, or ATO rulings
- Year-round advisory support to align cash flow planning with upcoming tax liabilities
Our CFO Services combine compliance oversight with forward-looking financial strategy, ensuring that your tax position is monitored, adjusted, and optimised every quarter, not just during the annual scramble.
By keeping the conversation active all year, you reduce your ATO risk profile, resolve potential issues quickly, and position your business for smoother audits (or avoid them altogether).
How to Protect Yourself from ATO Risk
Even if your accountant manages your tax obligations, you, as the business owner, remain legally responsible for meeting ATO compliance requirements. Building your own safeguards ensures you’re never blindsided by penalties, audits, or reviews.
Practical steps for 2025:
- Use cloud accounting software with built-in audit trails
- Platforms like Xero, MYOB Advanced, or QuickBooks Online offer real-time reconciliation, secure backups, and automated ATO data feeds.
- Ensure all transactions have linked source documents.
- Retain complete compliance documentation
- Keep signed BAS statements, tax return copies, and all ATO correspondence for at least five years.
- Store these digitally with metadata for easy retrieval during audits.
- Understand your obligations
- Know your GST registration thresholds, PAYG withholding requirements, and superannuation deadlines.
- Don’t assume they’re being handled, verify lodgement dates in the ATO Online Services for Business portal.
- Verify your tax practitioner’s registration
- Check they are registered with the Tax Practitioners Board (TPB) to ensure they are legally authorised to act on your behalf.
- Schedule regular compliance check-ins
- Through Tax Compliance or CFO Services, review lodgements, strategy, and upcoming obligations quarterly.
- Use these sessions to update your financial plan and identify risks early.
By maintaining your own independent compliance record and working with an advisor who provides full transparency, you add an extra layer of ATO risk protection. This proactive approach not only helps you pass audits, it also builds stronger financial governance for long-term stability.
Final Thoughts & Next Steps
Protecting your business from ATO risk in 2025 is about more than simply lodging on time, it’s about working with an advisor who delivers proactive tax management, transparent communication, and a year-round risk mitigation strategy.
The right accountant will:
- Strengthen your compliance profile
- Monitor ATO updates and enforcement trends
- Identify opportunities for legitimate tax savings
- Ensure your reporting is accurate, supported, and audit-ready
If you’ve recognised any of the five warning signs in your current accounting setup, now is the time to reassess. Delaying action can increase your audit risk score, expose you to costly penalties, and weaken your position with lenders or investors.
Our Tax Compliance and Tax Advisory services combine precision, documentation, and strategic insight to safeguard your business while optimising your tax position.
Book your free 30-minute ATO Risk Review today to:
- Identify weak points in your current compliance process
- Reinforce your record-keeping and reporting framework
- Align your tax strategy with the latest ATO compliance priorities for 2025
Stay compliant. Stay prepared. Stay ahead of the ATO.
Schedule a FREE 30-minute consultation today to discover how we can help you make strategic decisions and streamline your business operations.
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Disclaimer: We endeavour to make sure the information provided in this guidance is up to date and accurate. Please note, that the information is only intended to be a guide, with a general overview of information. This guidance is not a comprehensive document and should not be interpreted as legal advice or tax advice. The information is general in nature. You should seek the assistance of a professional opinion for any legal and tax issues related to your personal circumstances.
