The ATO publishes its compliance priorities every year. Most small business owners don't read them. That's a mistake, because it tells you exactly where scrutiny is going to land.
This year, a few areas are getting particular attention.
Work-related expenses are always on the list, but the ATO has been increasingly specific about home office claims, car expense claims, and the gap between what people claim and what their industry benchmarks suggest they should. If your deductions look unusual relative to similar businesses, you're more likely to get a letter.
Cash economy businesses, trades, hospitality, retail, are getting more attention through data matching. The ATO receives data from banks, payment platforms, and state revenue offices and cross-references it against lodged returns. If income reported doesn't match deposits, that inconsistency gets flagged.
Rental property deductions are being reviewed more closely, particularly interest deductions and repairs versus capital improvements. If you have an investment property alongside your business, it's worth making sure that's clean.
None of this means you should claim less than you're entitled to. It means your records need to support whatever you're claiming. Good documentation isn't just good admin, it's your protection if the ATO ever asks questions.
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