In October 2026, the ATO finally told us how much tax it reckons Australia came up short in 2023/24. Its estimate was $72.7 billion with small business income tax accounting for around $36 billion. Add the income tax gap for individuals outside business and the national GST gap to that and those three account for $59.7 billion between them.
2023/24 was so long ago I can barely remember what was keeping me busy back then but for the ATO, it’s a $72.7 billion clue about where to look next.
To be fair, most businesses the ATO looked at got it right or genuinely tried to. Even so, missing income accounted for around 70% of the small business income tax gap before the ATO’s compliance work. It says it will keep targeting deliberate avoidance through its shadow economy program. If you’re the tradie who keeps losing jobs to the bloke who asks “Do you need an invoice?”, you might welcome the scrutiny.
There’s a commercial cost too. Apply for a loan or put the business up for sale and suddenly you want to mention every sale, right down to the last dollar. The bank wants to see how you’ll cover repayments and the buyer wants to see the profit. Once they’ve read the accounts, it’s a little late for “We actually make more than that.”
Ask your accountant first “Looking at these figures, what would you say my business earns?” If their answer is lower than yours, find out why. Is there income missing, did the business pick up a few personal bills or is the profit thinner than you thought?
The ATO can match card payments against sales on your BAS, compare payroll records with super received by employees’ funds and see house purchases through state and territory property records. The catch is that you don’t get to pick the next question. You might be ready to explain the card takings but if the review turns to how you paid for the house, you’ll be glad you kept the records, because we’ve already established how much you and I remember about 2023/24.