ATO GST reporting changes

The Australian Taxation Office (ATO) from the 1 April 2025 will move certain non-compliant small businesses from quarterly to monthly GST reporting as outlined in A New Tax System (Goods and Services Tax) Act 1999, paragraph 27-15(1)(c).  

The ATO considers a small business non-compliant if it:

• Lodging Business Activity Statements (BAS) late or failing to lodge altogether

• Making late payments or not paying GST obligations

• Providing incorrect or inconsistent tax information

The non-compliant small businesses have also often not responded to previous communications from the ATO or have failed to address its outstanding obligations.  The ATO will notify small businesses in writing.

If a small business believes it has been incorrectly identified, it can challenge the ATO’s decision by lodging an objection.  Objections must be submitted within a certain time frame, supported by relevant evidence.

Many small businesses may find monthly GST reporting has benefits, including:

• Improve cash flow management through smaller, regular GST payments, which the business can manage easier than larger quarterly amounts, which could assist with budgeting more effectively.

• Timelier financial position insights, as monthly reporting should provide a more current view of financial performance, and therefore supporting better business decisions.

• Reconciling GST monthly will allow the business to deal with a smaller volume of transactions compared to quarterly GST reporting, and therefore simplify the process and make it easier to identify and correct any discrepancies.

• The business may already operate on a monthly cycle for invoicing and payments, and therefore, GST reporting can integrate more with existing workflows.

• Potentially reduce penalties as the regular monthly cycle may assist the small business to avoid falling behind and incurring penalties for late lodgements or payments.

Given the benefits above, even without a compliance issue, a small business may proactively choose to switch to monthly GST reporting.

However, if a small business does transition from quarterly to monthly GST reporting, it may need to consider the following:

• Increase in administration workload and costs as monthly BAS submissions require more frequent bookkeeping and reporting, moving from 4 to 12 lodgements per year.

• Cash flow planning as the business may need to adjust its budgeting to account for more frequent GST payments or refunds.

• Deadlines for monthly BAS are due by the 21st day of the following month (e.g., July BAS is due August 21st).

Small Businesses should take the following steps

• Check if it has received ATO correspondence notifying about a change in reporting frequency.

• Review the BAS lodgement cycle and assess if monthly reporting could benefit its business.

• Consult with your accountant or tax advisor to ensure compliance

When a small business ensures its ATO lodgments are up to date and compliant, it may then understand its tax debt position better, which could be significant, and the business may not have the funds or cash flow to make the payment, or it could take a long time to pay it down.

The ATO may consider a payment plan, but if the ATO is not agreeable to a payment plan, the business could consider a small business restructuring (SBR) appointment.

For a business to be eligible for an SBR, the following criteria apply:

• Operating through a company structure

• Liabilities of less than $1 million.

• Employee entitlements are up to date.

• Tax lodgments are up to date.

• The SBR process has not previously been used.

The SBR process lasts 35 business days (extendable by 10 business days). The main steps in the process, from the directors and their advisors, are:

• Engage an SBR practitioner who is qualified to administer (all registered liquidators are entitled to act and be appointed as a restructuring practitioner).

• Collaborate with the SBR practitioner to develop a strategic plan.

The SBR practitioner then:

• Validates the plan with ATO and other creditors.

• Certifies the restructuring plan and presents it to creditors.

• Has creditors' vote (excluding related creditors).

• Implements restructuring plan upon approval.

For further information regarding the SBR process and eligibility, contact your local Worrells principal.

Quarterly to monthly GST reporting | Australian Taxation Office