As Australia’s tech and healthcare sectors continue to boom, many fast-growing businesses are attracting more than just customers and investors, they’re also catching the attention of the Australian Taxation Office (ATO).
Rapid growth, complex funding arrangements, and evolving work structures can all create areas of tax risk. Whether it’s R&D tax incentives, contractor agreements, or superannuation obligations, the ATO is becoming increasingly proactive in auditing businesses that show signs of non-compliance, even unintentionally.
At Rubiix Business Accountants, we work closely with tech and healthcare companies navigating growth to ensure they remain compliant while scaling sustainably. Let’s explore the top ATO audit triggers for these industries and how you can stay one step ahead.
At a Glance
Here are the five key areas the ATO is keeping a close eye on in growing tech and healthcare businesses:
- R&D tax incentive claims
- Employee vs contractor arrangements
- Payroll tax and superannuation compliance
- GST and business activity statement (BAS) reporting
- Rapid revenue growth and unexplained variances
1. R&D Tax Incentive Claims
The R&D Tax Incentive is a popular program for tech and healthcare startups, offering significant tax offsets for eligible innovation activities. However, it’s also one of the ATO’s most audited areas.
Common triggers include:
- Claiming non-eligible activities (such as routine testing or product development without technical uncertainty)
- Poor recordkeeping or lack of supporting documentation
- Overestimating R&D expenditure
To reduce risk, ensure that your R&D claims are backed by thorough technical documentation and clear evidence that the work meets the definition of “core” or “supporting” R&D activities.
2. Employee vs Contractor Arrangements
Both the ATO and Fair Work Ombudsman are increasing their scrutiny of contractor arrangements, particularly in the healthcare and tech consulting sectors.
Misclassifying employees as contractors can lead to unpaid super, PAYG withholding issues, and backdated payroll tax liabilities.
To stay compliant, review:
- Whether contractors work under your control and direction
- If they use their own tools, manage their hours, or work exclusively for you
- The existence of written agreements and correct ABN use
A simple review can prevent significant penalties and back-pay obligations down the track.
3. Payroll Tax and Superannuation Compliance
As your business grows and headcount increases, so does the complexity of payroll compliance. The ATO regularly audits businesses that exceed payroll tax thresholds or fail to meet superannuation obligations.
Common red flags include:
- Missed or late super guarantee (SG) payments
- Underreported wages or bonuses
- Not registering for payroll tax when thresholds are met (varies by state)
Ensure your payroll system is accurate and updated regularly, particularly if you’ve expanded into new locations or hired additional staff.
4. GST and BAS Reporting
Incorrect or inconsistent reporting of GST is another frequent ATO audit trigger. Fast-growing tech and healthcare businesses often struggle to maintain consistent reporting practices as transactions and suppliers multiply.
Watch for:
- Claiming GST credits for ineligible expenses
- Failing to report international transactions correctly
- Errors in quarterly BAS lodgements
Regular BAS reconciliations and ATO pre-lodgement checks can help prevent costly mistakes.
5. Rapid Revenue Growth and Unexplained Variances
The ATO uses data matching and analytics to flag businesses with sudden revenue spikes, declining profit margins, or inconsistent reporting trends. These patterns can indicate potential underreporting or unrecorded income.
If your business is experiencing rapid growth, make sure your financial statements reflect that growth accurately. Regular management reports, forecasting and reconciliation are key to demonstrating transparency and control.
Frequently Asked Questions
1. What are the most common ATO audit triggers for small businesses?
The most common include discrepancies in BAS lodgements, unusually high deductions, inconsistent income reporting and superannuation non-compliance.
2. How far back can the ATO audit my business?
Generally, the ATO can review up to four years of records. However, if they suspect fraud or deliberate avoidance, there is no time limit.
3. What happens if I make a genuine mistake on my BAS or tax return?
If it’s an honest mistake and you voluntarily correct it, the ATO may reduce or waive penalties. Transparency and prompt correction go a long way in maintaining goodwill.
4. Are tech startups more likely to be audited?
Yes, particularly those claiming R&D incentives or handling large volumes of contractor payments. The ATO focuses on industries with high innovation activity and evolving business models.
5. How can I prepare for an ATO audit?
Keep accurate records, reconcile accounts regularly, ensure all lodgements are timely, and seek advice from a trusted business accountant. Having a professional on your side during an audit can make the process smoother and less stressful.
Final Thoughts
As your business grows, so do your compliance responsibilities. The ATO isn’t out to penalise growth, it’s ensuring that fast-moving industries like tech and healthcare play by the rules. By staying proactive with your tax and reporting obligations, you can protect your business and focus on scaling confidently.
If you’d like expert guidance on ATO compliance, R&D claims, or payroll health checks, Rubiix Business Accountants can help.
Contact us for a free 30-minute consultation to discuss your business structure and compliance needs.
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Disclaimer: The information in this article is general in nature and does not constitute legal or medical advice. Please consult a qualified adviser for personalised guidance.