Our focus
The property and construction industry is a major contributor to Australia's economy, with businesses ranging from sole traders to large businesses. It's also one of the top industries we receive tip-offs about, particularly regarding tax and super compliance concerns.
While most small businesses try to do the right thing, we see ongoing issues in this industry with paying the correct amount of tax and GST compliance.
We want to ensure that small businesses in the property and construction industries, for example, builders, contractors or tradies, understand their tax and super obligations and are reporting and claiming correctly. We will take firm action against those who deliberately choose not to engage with us or comply with their obligations.
Due to mistakes, misunderstanding or deliberate behaviour, we are seeing some small businesses in the property and construction industry:
- omitting income through
- not reporting all income, whether received in cash or money deposited into bank accounts
- incorrectly classifying income from property development
- contractors omitting income reported to the ATO through the taxable payments reporting system
- overclaiming expenses and GST credits
- incorrectly reporting expenses that are private in nature as business expenses, or not apportioning an expense correctly for business and personal use
- not registering for GST when required
- using business funds and assets to support their personal lifestyle, tax-free.
How to get it right
To get it right, you need to report all assessable business income, including cash income and any money deposited to your business and private accounts that is related to your business activities. You also need to correctly report your expenses and business deductions, including correct apportionment of expenses if the asset was used for both business and private purposes.
Over the coming months we will have a specific focus on the property and construction industry. If we suspect you may have omitted income or overclaimed expenses in your tax return or business activity statements (BAS), we may:
- contact you or your tax professional to request you fix a mistake or amend your tax return or adjust or fix your BAS
- contact you or your tax professional to better understand your circumstances and potentially request you amend your tax return or BAS
- conduct a review or audit of your business – penalties and interest may apply.
Example: omitted TPRS income
Ethan is a sole trader. During the 2024 income year most of his work came from a contracting job through Stonewell Property Group Pty Ltd (Stonewell Property Group), who paid him $50,000 (GST inclusive) for a commercial retail fit out.
When preparing his BAS and income tax return, Ethan failed to include the income from Stonewell Property Group. This income was reported to the ATO by Stonewell Property Group through the Taxable Payments Reporting System (TPRS).
Ethan was selected for an audit because he didn't report his TPRS income from Stonewell Property Group. During the audit it was found that he also claimed motor vehicle expenses in both his BAS and income tax return without apportioning it between business and personal use.
As a result, Ethan's income tax return and BAS were amended to reflect the correct income and apportionment of deductions. The ATO issued amended assessments with a tax shortfall for the 2024 income year, along with a 50% base penalty as Ethan made a false and misleading statement when reporting his income and expenses. Interest charges also applied to the shortfall.
End of exampleKeep up to date
Learn more by taking our free self-paced online courses:
- Claiming small business tax deductionsExternal Link
- Goods and services tax (GST)External Link
- Essentials to strengthen your small businessExternal Link provides a suite of self-paced courses that can help you get it right.
- Small business benchmarks can help you compare your business's performance against similar businesses in the same industry.
You can also:
- Subscribe to our free Small business newsletter to get updates that might impact your business.
- Contact your tax professional to obtain advice specific to your business needs.