Summary
- The ATO (“Over-claiming expenses and GST credits”, updated 1 July 2026) is targeting small businesses that claim expenses or GST credits they aren’t entitled to — including unsupported claims, private expenses miscoded as business, incorrect claims where GST is not in the price, and poor record-keeping that prevents substantiation. [ato.gov.au]
- The 2026 crackdown extends to individual taxpayers: red flags include unusually high work-related deductions without records, home-office claims not aligned with actual usage, and vehicle claims without logbooks. Enhanced data-matching allows the ATO to detect discrepancies earlier and open reviews before refunds are issued. [ibtimes.com.au], [mysupertax.com.au]
- Practically: keep valid tax invoices (supplier, ABN, GST amount, description), apportion mixed business/private use, reconcile POS/merchant facilities with accounting software, and correct errors early via BAS revisions. Repayment plus interest and penalties can quickly outweigh any short-term cashflow benefit. [ato.gov.au], [nanakaccou…nts.com.au]
Article
The ATO has refreshed its guidance on “Over-claiming expenses and GST credits”, signalling a sharper focus on small-business claims that don’t meet the rules. The core message is unchanged but the enforcement posture is stronger: business deductions must directly relate to earning business income, not be private, and be supported by valid records; where use is mixed, only the business portion is claimable. [ato.gov.au]
Common errors the ATO is calling out:
- Overclaiming — unsupported claims and inflated expense or GST-credit figures in tax returns and BAS;
- Incorrect claims — GST credits claimed where GST is not in the price (e.g. GST-free supplies, imported services not properly imported);
- Private expenses wrongly claimed as business deductions or not apportioned;
- Poor record-keeping — leaving the business unable to substantiate its position. [ato.gov.au]
The ATO’s example — Sebastian’s Scallop Bay Bistro — is instructive: two merchant facilities (Tyro and Square), but only one linked to accounting software, so cash sales and Square receipts weren’t recorded; a tax agent unaware of the second account prepared BAS and returns on incomplete information; the 2022–23 audit surfaced multiple issues. [ato.gov.au]
Wider IBTimes reporting frames this within the broader 2026 ATO compliance push: enhanced data-matching, expanded review of self-managed super funds, updated advice on Pillar Two and thin capitalisation, and — crucially for individual taxpayers — red flags on high work-related deductions without records, home-office claims not aligned with actual usage and vehicle claims lacking logbooks. Practitioners such as Nanak Accountants and My Super Tax emphasise that even honest businesses can trip the ATO’s fraud-detection filters through duplicate transactions, missing invoices, incorrect GST coding, or large refunds with low sales — a pattern that pre-issue reviews now catch faster than in previous years. [ibtimes.com.au], [mysupertax.com.au]
What to do now: institute a pre-lodgement BAS review in Xero/MYOB/QuickBooks; retain a valid tax invoice for every input credit; apportion mixed-use spend with reasonable methodology; and correct errors early through BAS amendments rather than waiting to be found.
Sources
- ATO – Over-claiming expenses and GST credits (updated 1 July 2026)
- IBTimes – ATO Crackdown 2026
- ATO – Claiming GST credits
- Nanak Accountants – GST Refund Fraud Warning 2026
- My Super Tax – Small GST mistakes attract ATO attention
- Gotax – Why the ATO reviews tax deduction claims 2026
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