Tax return season for the 2025-26 year has opened, and the ATO is checking more of your numbers automatically than ever before. If what you report doesn’t match what banks, employers and digital platforms have already told them, the system flags it. That happens whether or not anyone at the ATO ever looks at your file by hand.
So the smart move this year is the same as always, just with less room for error: keep good records, back up every claim, and make sure your return lines up with what third parties have already reported. Here’s where the ATO is focusing, and how to stay on the right side of it.
Data matching is doing the heavy lifting
The ATO now cross-checks returns against bank interest, employer reporting through Single Touch Payroll, share and crypto trades, rental income, and payments from digital platforms like ride-share, delivery and short-stay rentals. A lot of this happens close to real time.
For you, that means the ATO often already knows a number before you report it. If your return says something different, you get a discrepancy notice. The fix is boring but reliable: match your return to what’s been reported about you, and keep the records that explain anything that looks unusual.
Work-related deductions still get the most attention
Inflated or unsubstantiated deductions remain the ATO’s top target for individuals. If you claim it, you need to be able to prove it: a receipt, a logbook, a diary, an invoice. A round-number estimate with nothing behind it is exactly what gets pulled up.
Claim what you’re genuinely entitled to, and hold the evidence for each one. If you can’t show how you worked a figure out, it’s safer to leave it off than to guess.
Small amounts of income you left off
Omitted income is a common trigger, and it doesn’t have to be large. A bit of bank interest, a side gig paid through an app, a dividend you forgot about: data matching picks these up. Leaving small amounts off looks careless at best, and it’s the kind of gap that invites a closer look at the rest of your return.
Pull together every income source before you lodge. If money came in during the year, it belongs on the return.
Contractor payments and GST mismatches
For businesses, the ATO is comparing what you pay contractors against what those contractors declare. Construction and cleaning are named focus areas this year. When the two sides don’t line up, both ends get questions.
The same goes for GST. Reporting GST incorrectly, or claiming credits you’re not entitled to, is a well-worn audit trigger. Claim GST credits only where you hold a valid tax invoice and the purchase genuinely relates to your business. Good bookkeeping through the year, with Xero kept up to date and reconciled, is what keeps your BAS and your return consistent.
Super obligations
Missed or late super for your employees is on the watch list too, and the penalties for getting it wrong are steep. Pay it on time, pay the right amount, and keep the records that show you did.
The safe position
None of this is complicated once your records are in order. The businesses and individuals who sail through are the ones who can substantiate every claim and whose returns match what’s already been reported about them.
That’s where good bookkeeping through the year pays off. If your records are tidy, your bank feeds are reconciled in Xero, and your income and GST are captured as you go, tax time is a review rather than a scramble. If they’re not, this is the year to fix that, because the ATO’s data matching leaves very little to chance.
We can take this off your plate
We handle taxation, bookkeeping and statutory compliance for small businesses and franchises right across Victoria, and getting your return right the first time is what we do. We’ll prepare your 2025-26 return, review what you’ve got, and make sure every claim stands up before it’s lodged.
Book a free first consultation or call us on 1300 226 722. We’ll go through your situation and prepare and review your return with you.
This article is general information only and doesn’t take your personal circumstances into account. For advice specific to you, please get in touch.
This article is part of our complete 2026-27 guide to small business tax in Australia.
