Topic: Spotlight turns to business revenue

Last reviewed: 18/12/2025

Focus: Accounting Practice Analysis

Business Revenue Spotlight: ATO Focus 2025

Australian accounting practices should treat the current “spotlight turns to business revenue” theme as a clear compliance signal: the ATO is intensifying scrutiny on whether business income is being correctly identified, correctly timed, and fully reported, particularly where data-matching indicates a gap between what a business receives (banking and platform receipts) and what is returned in BAS/IAS and income tax returns. In practice, this means revenue completeness testing is no longer optional—it is now a core risk area across small business, private groups, and digitally enabled business models (platform sales, online booking apps, card processors, and marketplace payouts).

Featured Answer: The “spotlight” on business revenue means the ATO is actively using third‑party data, banking and payment flows, and GST/BAS analytics to identify under‑reported or incorrectly treated revenue. Australian accountants should respond by strengthening revenue recognition policies, tightening GST and BAS controls, and performing bank-to-revenue reconciliation and data-matching checks as part of routine compliance.

What does “spotlight turns to business revenue” mean for Australian businesses in 2025?

It means revenue reporting is a priority compliance area and the ATO is increasingly able to verify business income independently of the tax return. This is driven by enhanced data-matching programs, improved analytics, and the practical reality that many businesses now receive income via traceable electronic channels.

From an Australian accounting practice perspective, the risk is rarely “no records at all”—it is more commonly:

Revenue captured in bank deposits but not mapped to sales (mispostings to loans, transfers, suspense, or balance sheet clearing accounts)
Incorrect GST treatment (e.g., GST omitted, GST applied when not applicable, mixed supplies not apportioned)
Timing issues (cash vs accrual confusion; cut-off errors around year-end)
Platform and processor complexity (Stripe/Square/PayPal/Amazon/Shopify payouts net of fees, refunds, chargebacks)
Personal and business funds being mixed (drawings and reimbursements masking revenue)

Why is the ATO focusing on business revenue now?

The ATO focus exists because revenue is the largest driver of tax outcomes, and it is the easiest area for the ATO to test using external data.

ATO compliance approaches increasingly rely on:

Third-party data matching and anomaly detection (e.g., merchant facilities, platforms, government data sets)
BAS and GST analytic comparisons across periods and industry benchmarks
Cross-checking bank inflows and payment processor settlements against reported sales

It should be noted that the ATO’s compliance framework is supported by its general administration powers and the legislative requirements for accurate self-assessment, record-keeping, and correct reporting under Australia’s tax system.

What are the most common business revenue errors Australian accountants are seeing?

The most common errors are not “technical tax tricks”—they are workflow breakdowns and systems gaps.

1) What are the most frequent revenue completeness problems?

They are typically caused by weak reconciliation discipline and inconsistent coding.

Sales receipts coded to:
Split deposits not analysed (merchant settlement bundles multiple days of sales)
Refunds and chargebacks not netted correctly (revenue overstated or GST misstated)

2) What are the most frequent GST errors tied to revenue?

They are typically classification and evidence issues.

GST not applied to taxable supplies
GST applied to GST-free supplies (or input-taxed supplies) incorrectly
Mixed supplies not apportioned (single invoice containing taxable and GST-free components)
Incorrect attribution to BAS period (particularly when invoices are raised in one period and payment is received in another)

Under the A New Tax System (Goods and Services Tax) Act 1999, GST consequences depend on the nature of the supply and attribution rules. ATO guidance on GST classification and BAS reporting should be applied consistently and documented.

3) What are the most frequent timing and year-end cut-off errors?

They are caused by inconsistent application of accounting method and cut-off testing.

Cash basis GST used, but income tax prepared on accrual without proper adjustments (or vice versa)
Sales invoices raised pre-30 June but incorrectly deferred (or omitted)
Deposits received pre-30 June treated as next year revenue without justification
Unbilled revenue not recognised where accrual basis should apply

The Income Tax Assessment Act 1997 and ATO rulings and guidance on derivation of income and accounting methods should be considered when determining when income is derived, particularly for professional services and long/short-term contracts. Where judgment is required, the file should include a defensible position and consistent methodology year-to-year.

How does the ATO detect under-reported business revenue?

The ATO detects under-reported revenue by comparing what should exist (economic activity, bank flows, platform data, industry norms) to what is reported (BAS/IAS and tax returns).

Data matching for merchant and platform receipts
Review of BAS labels (e.g., G1 sales) movement patterns and ratio analysis
Bank deposit analysis where deposits exceed reported revenue
Industry benchmark comparisons and variance flags
Audit focus on high-risk categories (cash-intensive, high-volume micro transactions, platform-based businesses)

Practically, if reported revenue does not reconcile to banking and platform statements (after adjusting for GST, refunds, tips, merchant fees, transfers, and loan proceeds), it is likely to attract ATO questions.

What does “good practice” look like for revenue compliance in Australia?

Good practice means documented revenue policies, strong reconciliations, and evidence-backed GST decisions.

What controls should accountants implement in monthly and quarter-end workflows?

A defensible control set usually includes:

Bank-to-revenue reconciliation:
Merchant facility reconciliation:
GST reasonableness checks:
Cut-off procedures:
Exception reporting:

What records does the ATO expect businesses to keep?

The ATO expects records that explain the transaction and support the tax position, generally including:

Source documents (tax invoices, recipient created tax invoices where applicable, contracts)
POS reports and daily takings summaries
Bank statements and merchant settlement statements
Platform payout statements and transaction exports
Documentation supporting GST treatment (especially for GST-free or mixed supplies)

ATO record-keeping guidance should be followed, and practices should ensure records are retained and are accessible for review.

How do revenue issues differ by business model (real-world scenarios)?

They differ significantly, and accountants should tailor procedures by industry and revenue channel.

Scenario 1: Café using Square with tips and refunds

The most common failure is treating Square payouts as “sales” without reconciling tips, fees, and refunds.

Sales (POS) reconciled to:
Tips treated according to the client’s payroll and reporting approach, with consistent documentation

Scenario 2: Trades business with progress payments and retention amounts

The common failure is incorrect cut-off and GST attribution for progress claims.

Track invoices and progress claims to contract milestones
Confirm GST classification and attribution
Ensure retention amounts are treated consistently and supported by contract terms

Scenario 3: Shopify eCommerce with PayPal and Stripe

The common failure is revenue being booked net of fees or mismatched due to multi-currency and platform timing.

Use platform order reports as the primary sales subledger
Reconcile to:
Confirm GST treatment for Australian vs export sales and evidence for GST-free export treatment where claimed

What is the accountant’s role in preventing revenue under-reporting?

The accountant’s role is to design and evidence a compliance process that would withstand ATO review.

Establishing a clear revenue recognition basis (cash vs accrual for income tax, and the appropriate GST attribution method)
Ensuring BAS and year-end tax reconcile to books and banking
Documenting positions on GST-free, input-taxed, and mixed supplies (including rationale and evidence)
Reviewing unusual journals impacting revenue (particularly manual entries near year-end)
Implementing systematic reconciliation workflows that reduce manual error risk

Consideration must be given to professional standards, documentation quality, and consistency across periods, especially where judgments have material impact.

How can automation reduce revenue risk and improve ATO defensibility?

Automation reduces revenue risk by making completeness testing routine and shrinking the gap where human error hides.

From a practice workflow perspective, the greatest risk reducer is fast, repeatable reconciliation and exception handling.

Automated bank reconciliation reduces the time cost of revenue completeness checks
AI-powered reconciliation improves consistency of transaction coding (and highlights exceptions)
Automated working papers support audit-ready evidence trails for BAS and year-end

How does MyLedger compare for revenue controls vs Xero, MYOB and QuickBooks?

MyLedger is positioned as an accounting automation software purpose-built for Australian practices, with specific strengths in automated bank reconciliation, working paper automation, and ATO integration accounting software workflows.

Is MyLedger better than Xero for revenue completeness and reconciliation?

For revenue completeness workflows, MyLedger typically outperforms Xero on speed and automation depth.

Reconciliation speed: MyLedger = 10–15 minutes per client, Xero = commonly 3–4 hours where transaction volumes are high and coding is inconsistent
Automation level: MyLedger = AI auto-categorisation of about 90% immediately (then learns patterns), Xero = rules and suggestions but heavier manual review for many practices
Working papers: MyLedger = automated working papers (including BAS reconciliation and tax working paper tools), Xero = typically relies on external workpapers or manual Excel processes
ATO integration: MyLedger = direct ATO portal integration and ATO statement/transaction import, Xero = integrations exist but are not a full ATO portal replacement
Pricing model (practice lens): MyLedger = expected $99–199/month unlimited clients (free during beta), Xero = per-client subscriptions (often effectively $50–70/client/month at scale)

How does MyLedger compare to MYOB for revenue-focused compliance work?

MyLedger is generally stronger where the practice wants AI-driven throughput and standardised workpapers.

Automation: MyLedger = AI-powered reconciliation and document intelligence, MYOB = more traditional workflows with less end-to-end automation
ATO-centric workflows: MyLedger = built around ATO data import and compliance steps, MYOB = compliance capable but typically less automated in working paper generation
Practice scalability: MyLedger = designed to help handle about 40% more clients without adding staff, MYOB = scalability depends heavily on manual processes

How does MyLedger compare to QuickBooks for Australian revenue and GST controls?

For Australian GST, BAS, and ATO-linked processes, MyLedger is typically the more purpose-built option.

Australian focus: MyLedger = built specifically for Australian accounting practices, QuickBooks = broader global small business focus
BAS and GST controls: MyLedger = BAS summary and GST enforcement built into workflows, QuickBooks = GST capable but often requires tighter manual oversight for practice-level standardisation
ATO integration: MyLedger = deeper ATO portal integration, QuickBooks = generally more limited ATO portal linkage

What ROI can a practice expect from tightening revenue controls with automation?

The ROI is typically immediate because reconciliation time is the biggest hidden cost in revenue assurance.

If a 50-client practice saves 2.5 hours per client per month by moving from 3 hours to 15 minutes on high-volume reconciliations:
Cost comparison:

This is why “how to automate bank reconciliation” has become a strategic question: it is not only efficiency—it is compliance defensibility at scale.

How should practices respond now (step-by-step)?

A practice-ready response is to implement a repeatable revenue assurance workflow across all clients.

Identify revenue channels per client:
Set and document the revenue recognition and GST method:
Build a monthly/quarterly revenue completeness reconciliation:
Run exception checks:
Lock in working papers:
Use automation to reduce rework:

Next Steps: How Fedix can help with revenue compliance

Fedix’s MyLedger is designed for Australian accounting practices that need automated bank reconciliation, ATO integration accounting software capabilities, and automated working papers to make revenue assurance fast and repeatable.

Consider a pilot using MyLedger’s AutoRecon to move reconciliations from 3–4 hours to 10–15 minutes per client (about 90% faster)
Standardise GST and BAS reconciliation using MyLedger’s built-in BAS summary and GST enforcement
Reduce file risk with ATO statement import and workflow-based working papers (including Division 7A automation where relevant)

Learn more at home.fedix.ai and evaluate whether MyLedger is the right Xero alternative for high-throughput compliance work in Australia.

Frequently Asked Questions

Q: What does the ATO mean when it focuses on “business revenue”?

It means the ATO is actively testing whether sales and other business income are completely and correctly reported, using third-party data, bank and merchant flows, and BAS analytics to identify discrepancies.

Q: What is the fastest way to detect under-reported revenue in a small business client?

The fastest method is a bank-to-revenue reconciliation that ties gross sales reports (POS/platform) to merchant settlements and bank deposits, adjusting for fees, refunds, chargebacks, and timing differences.

Q: Are platform payouts (e.g., Shopify/Stripe) the same as revenue?

No. Platform or processor payouts are usually net of fees and may include timing differences; revenue should be based on gross sales (orders/invoices) with fees recorded separately, supported by the platform’s transaction reporting.

Q: Is MyLedger better than Xero for automated bank reconciliation in Australia?

For practice workflows focused on throughput and revenue completeness, MyLedger is typically superior because it targets about a 90% time reduction (10–15 minutes vs 3–4 hours), uses AI-powered categorisation, and automates working papers and ATO-linked steps that are often more manual in Xero.

Q: Does MyLedger have ATO integration accounting software features?

Yes. MyLedger includes direct ATO portal integration features such as importing ATO statements and transactions, and due date and lodgment-related data access, which supports stronger BAS and revenue compliance workflows.

Disclaimer: This content is general information for Australian accounting and tax practitioners as of December 2025 and does not constitute legal or tax advice. Tax outcomes depend on specific facts and may change due to legislative amendments or updated ATO guidance. Professional advice should be obtained for client-specific circumstances.