The ATO’s new monthly GST reporting regime for select small businesses is now in effect — and for affected clients, it’s more than a compliance shift. It’s a clear signal that financial systems are under strain and that the ATO is stepping up enforcement.
Implemented in April 2025, the measure targets approximately 3,500 small businesses with a poor history of GST compliance, particularly those with repeated issues such as non-payment, late or non-lodgement of BAS, and incorrect reporting. While designed to instil better tax habits, this move introduces immediate pressures that many businesses may not be equipped to handle without support.
For advisers, this presents a timely opportunity and a clear responsibility — to step in and support clients before things escalate further.
This is more than just a change in paperwork
The transition from quarterly to monthly GST reporting may seem like a technical adjustment. But for businesses already under financial pressure, it can act as a tipping point.
While monthly lodgements could help some businesses stay on top of obligations, they can also squeeze cash flow dramatically. Uneven revenue, seasonal cycles, or tight margins become even more dangerous when payments are due every month. Without enough in the bank, businesses could quickly find themselves unable to meet obligations, opening the door to rolling defaults.
Moreover, the increased frequency of reporting significantly raises the risk of administrative errors, missed deadlines, and resulting fines. Where a quarterly default previously triggered penalties, businesses now face the very real prospect of monthly fines if they fall behind. Importantly, a series of monthly defaults could also fast-track the issue of Director Penalty Notices (DPNs) — potentially one for every missed month — locking down personal liability for company debts and severely limiting options for directors.
Importantly, businesses are locked into this reporting cycle for at least 12 months – meaning there’s no quick return to previous arrangements, even if circumstances improve.
What this Signals, and why it Matters
Being selected for monthly reporting is not random. It’s a message from the ATO: “We’re watching.” The ‘Getting it Right’ campaign, under which this policy falls, is squarely focused on lifting compliance and preventing tax debts from ballooning.
But for some businesses, this step doesn’t just prompt better habits, it can expose deeper systemic issues: inadequate systems, poor cash flow management, and unmanageable debt. If left unaddressed, these vulnerabilities can spiral into insolvency far faster under the pressure of monthly obligations and penalties.
A pattern of monthly defaults could lead to:
- escalated director liability,
- multiple DPNs,
- frozen or garnisheed bank accounts,
- and an irreversible decline into administration or liquidation.
The stakes are high, and early action is critical.
We view this change as a distress signal in disguise. That’s why early action matters.
How Advisors can help
This is a critical moment for accountants, bookkeepers, brokers, and advisers to take the lead. If you have clients affected by this change — or clients at risk of being selected in future, there are steps you can take immediately:
- Identify clients with prior GST issues. Don’t wait for ATO enforcement. Reach out and help them get ahead of the curve.
- Encourage early review of financial systems. Monthly lodgements demand timely and accurate data. Now is the time to adopt automation tools and implement regular reconciliations.
- Support cash flow planning. Help clients implement rolling 12-month cash flow forecasts to ensure they can meet monthly GST payments without impacting operations.
- Monitor clients regularly. A missed payment under monthly reporting can quickly escalate. Setting up alerts and regular check-ins can help advisors catch issues before they compound.
- Educate on director risks. Make sure directors understand that personal liability now looms larger, and inaction could cost them dearly.
- Refer for expert support. If a client is overwhelmed or showing signs of deeper distress, bring in a specialist. de Jonge Read works with advisors like you to assess risk, implement a restructure where needed, and negotiate with creditors or the ATO when appropriate.
Use this policy as a prompt, not a punishment
The ATO’s new reporting measure is here to stay, and more businesses may be added if patterns of non-compliance continue. But for us advisors, this isn’t just about compliance — it’s about catching early warning signs and guiding clients to safety.
If you’re working with clients who have recently been moved to monthly GST reporting, or are concerned they could be next — now is the time to act. de Jonge Read is here to support you with insight, strategy, and direct solutions tailored to each client’s situation. Let’s work together to ensure this change becomes a turning point for recovery — not the start of a decline.
Should you have clients or associates that you know are struggling with financial issues or need assistance in reviewing their business affairs in preparation for what’s around the corner, our team of Strategists would be pleased to discuss options that are available on how to best design and implement insolvency strategies. Contact us now on p. 1300 765 080 | ua.mo1747856800c.arj1747856800d@ofn1747856800i1747856800
Did you know?
Phoenixing is another name of business restructure. Read more about business restructures and when this can be an option for you.
