Picture Dave. He runs a successful plumbing business, works long hours and wouldn’t dream of cheating the tax man.

On Saturday morning, he ducks in for groceries and taps the business card because it’s the first one in his wallet. On the way home, he fills up the family car with the same card. A customer pays $200 cash for a small job, and it goes straight into his wallet. He means to record it on Monday, but Monday gets away from him.

None of it feels like a big deal. Then, months later, the ATO starts asking questions.

Dave's habits will be familiar to many busy business owners. Most people who run into trouble aren’t trying to pull a fast one. The line between personal and business spending simply blurs over time.

That matters because the ATO is stepping up its compliance action against businesses that leave out income, overclaim expenses and GST credits, or use business money to pay for private costs. The common mistakes it continues to see include:

• not reporting all business income, including cash sales and contractor income
• paying workers in cash to avoid tax and super obligations
• claiming private expenses as business deductions, or claiming GST credits incorrectly
• using business bank accounts, credit cards or assets for private expenses
• not keeping accurate records of business transactions

These aren’t small numbers either. The ATO reports that its audits uncovered more than $210 million in unpaid tax in the 2026 income year. It also issued more than $50 million in penalties to businesses that deliberately left out or under-reported income, such as cash payments.

The good news is that the fix is simple: keep business and personal spending separate. Use one card for the business and another for everything else. Record cash sales as they happen. If a private cost does land on the business account, flag it straight away so it isn’t claimed as a business expense.

Dave’s groceries might only be a small purchase, but small habits can become a big problem when the ATO comes knocking.

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Please also note that many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances. Should you have any further questions, please get in touch with us for assistance with your SMSF, business, bookkeeping and tax requirements. All rights reserved. Brought to you by RGA Business and Tax Accountants. Liability Limited by a scheme approved under Professional Standards Legislation.