Top 5 Tax Mistakes Tax Mistakes in Australia & New Zealand

When it comes to running a small business, tax compliance is often overlooked, until it becomes a serious problem. Whether you’re in Brisbane, Sydney, Melbourne, or Perth, or across the Tasman in Auckland, Wellington, Hamilton, Christchurch, or Queenstown, small business owners face similar tax traps that can trigger ATO or IRD scrutiny.

At IR Legal, we’ve been navigating the complexities of tax law for over 24 years, helping businesses avoid costly tax audits, resolve tax disputes, and reduce exposure to serious tax penalties. Our team of experienced tax lawyers has seen firsthand how these common mistakes can derail even the most promising ventures.

Here are the Top 5 Tax Mistakes Small Businesses Make, and how to avoid them.

1. Misclassifying Income and Expenses

It’s critical to correctly classify your income and expenses. In Australia, the ATO closely monitors deductions, particularly those related to home offices, motor vehicles, and entertainment. In New Zealand, the IRD applies similar scrutiny, especially around GST claims.

Common Issue: Claiming personal expenses as business-related or underreporting income
Fix: Keep detailed records and separate personal and business accounts. Engage a qualified accountant and work with a tax lawyer if you're unsure.

2. Poor Record Keeping

Both the ATO and IRD require businesses to keep accurate records for at least 5-7 years. Failure to do so can result in hefty tax penalties or limit your ability to defend yourself during a tax audit.

Common Issue: Missing receipts or failing to back up digital records
Fix: Use accounting software with cloud storage and ensure regular backups. Store physical documents securely.

3. Incorrect GST/FBT Reporting

Goods and Services Tax (GST) and Fringe Benefits Tax (FBT) are often misunderstood. Reporting errors can trigger automatic red flags with the ATO or IRD.

Common Issue: Not registering for GST when required or failing to include fringe benefits in tax filings.
Fix: Understand thresholds (e.g., AUD $75,000 NZ $60,000 turnover for GST). If in doubt, consult a tax disputes specialist.

4. Ignoring Superannuation/KiwiSaver Obligations

Employers in Australia must contribute to employees’ superannuation, while New Zealand businesses are responsible for KiwiSaver deductions. Failing to comply can result in audits and legal action.

Common Issue: Not making contributions on time or failing to enrol eligible staff.
Fix: Set calendar reminders and ensure payroll software handles contributions correctly.

5. Delaying Action on Tax Debts or Disputes

Many small businesses bury their heads in the sand when faced with a tax audit or debt. This only worsens the situation. Both the ATO and IRD have mechanisms for resolving disputes or negotiating payment plans, but you need to act early and engage an experienced Tax lawyer.

Common Issue: Ignoring ATO/IRD letters or defaulting on payment arrangements
Fix: Contact an experienced tax lawyer immediately. At IR Legal, we specialise in resolving tax disputes quickly and efficiently.

Get Expert Help Before It’s Too Late

Tax mistakes can be costly, but they don’t have to be fatal to your business. With over 24 years of experience in Business Tax, Tax Disputes, Tax Negotiations and Tax Audits, IR Legal has successfully helped businesses across Australia and New Zealand deal with tax complexities head-on.

Whether you’re based in Brisbane, Melbourne, Perth, or Sydney, or operating from Auckland, Christchurch, Hamilton, or Wellington, our team can guide you through the compliance minefield and protect your business from unnecessary penalties.

📞 Contact us today at www.irlegal.lawyer to schedule a confidential consultation with a seasoned tax lawyer.

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