Most Australian business owners are paying thousands more in tax than they need to. Not because they're doing anything wrong — but because they're making simple mistakes that add up over time.
After working with over 1,000 business clients, we've identified the 7 most costly mistakes. Fix these, and you could save anywhere from $5,000 to $50,000+ per year.
1Mixing Personal and Business Expenses
This is the ATO's #1 audit trigger. When you use your business account for personal purchases — or claim personal expenses as business deductions — you're waving a red flag.
The cost: Disallowed deductions plus penalties of 25-75% of the tax shortfall. We've seen business owners hit with $20,000+ in back taxes and penalties.
The fix: Separate bank accounts, separate cards. If you do use business funds for personal items, record them as drawings — never as expenses.
2Poor Record Keeping
No receipts = no deductions. It's that simple. The ATO requires you to substantiate every claim, and "I definitely bought it" doesn't count.
The cost: We estimate the average SME loses $10,000-$50,000 in legitimate deductions annually due to poor records.
The fix: Use Xero or a similar cloud system. Photograph receipts immediately. Reconcile monthly, not yearly.
3Missing Legitimate Deductions
Most business owners claim the obvious expenses but miss the less obvious ones. Home office, motor vehicle, superannuation timing, prepaid expenses — there's a long list.
The cost: $5,000-$30,000 in unnecessary tax every year.
The fix: Work with an accountant who proactively reviews your situation, not one who just processes what you give them.
4Wrong Business Structure
Operating as a sole trader when you should be a company? You could be paying 47% tax instead of 25%. That's a massive difference.
The cost: A sole trader earning $200k pays roughly $60k in tax. A company structure might pay $50k — that's $10,000+ saved every year.
The fix: Review your structure when you hit $150k+ profit. Don't wait until it's too late — restructuring mid-year triggers CGT and stamp duty.
5Ignoring Superannuation Obligations
Late super isn't just a compliance issue — it becomes non-deductible and attracts the Superannuation Guarantee Charge (SGC). Plus, directors can be held personally liable.
The cost: $20,000-$100,000+ in penalties for serial non-compliance. The ATO is actively pursuing this with Single Touch Payroll data.
The fix: Automate super payments. Pay monthly, not quarterly. Use a clearing house.
6Poor BAS/GST Management
Late BAS lodgments attract penalties of $313-$1,570 per statement. Late payment adds interest at ~11%. And incorrect GST claims can trigger audits.
The cost: $2,000-$15,000 in penalties and interest annually.
The fix: Monthly reconciliation. Review BAS before lodgment. Make sure your accounting basis (cash vs accrual) is consistent.
7No Tax Planning (Reactive Instead of Proactive)
If you only think about tax at tax time, you've already missed the boat. Tax is calculated on what happened — not what could have been.
The cost: We saved one client $160,000 in CGT through proactive planning. Without it, they would have paid the full amount.
The fix: Quarterly tax planning meetings. Year-end review in May, not June. Work with an accountant who thinks ahead.
Want to know which mistakes you're making?
Book a free 30-minute Tax Strategy Session. We'll review your situation and identify at least one way to reduce your tax — or your time costs nothing.
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