ATO shifts non-compliant small businesses to monthly GST reporting

Tax Compliance & Accounting

March 31, 2025

ATO shifts non-compliant small businesses to monthly GST reporting

The Australian Taxation Office (ATO) has introduced a major change to GST reporting as part of its Getting it right campaign. From 1 April 2025, around 3,500 small businesses with a history of late lodgements, incorrect reporting, or unpaid GST will be moved from quarterly to monthly GST reporting.

This change is part of the ATO’s broader strategy to improve GST compliance and encourage better financial practices across the small business sector.

Why is the ATO introducing monthly GST reporting?

The ATO aims to improve compliance and cash flow management by requiring more frequent reporting from businesses that have fallen behind. The shift is intended to help non-compliant businesses:

Stay up to date with their GST obligations.
Better manage cash flow.
Avoid escalating debt due to late payments and lodgements.

While this move aims to encourage better financial habits, it is worth noting that for many small businesses, cash flow challenges are often the underlying cause of missed deadlines and non-compliance.

Who will be affected?

Approximately 3,500 small businesses will be selected for the change, with the ATO directly notifying both business owners and their tax agents. Once shifted to monthly GST reporting, the requirement will apply for at least 12 months.

Businesses in high-risk industries will also be under increased scrutiny, including:

Building and construction
Cleaning
Courier and road freight
Information technology (IT)
Security, investigation, and surveillance

What does this mean for small businesses?

There are several important implications to consider:

Earlier payment deadlines: Monthly reporting will bring forward GST payments, compared to quarterly BAS cycles.
Increased risk of interest charges: Lodging monthly BAS but not paying on time could result in more frequent General Interest Charges (GIC).
Higher administrative workload: Businesses will need to lodge 12 BAS statements annually instead of 4.
Greater penalty exposure: More frequent lodgements increase the risk of Failure to Lodge (FTL) penalties.
PAYG withholding risks: If PAYG reporting also becomes monthly, there is a higher risk of Director Penalty Notices for unpaid PAYG liabilities.

Need help navigating these changes?

If you’re concerned about the impact of monthly GST reporting or would like to review your compliance processes, LDB’s tax specialists can help. We work with small businesses across Melbourne and Australia to navigate complex ATO requirements and manage cash flow effectively.