How businesses can close out FY24–25 on solid footing and start strong in FY25–26

Many Australian businesses are bracing for increased compliance scrutiny as the financial year draws to a close. The Australian Taxation Office (ATO) has flagged several key focus areas for FY24–25, including overdue tax debts, work-related expenses, capital gains, and rental income. Non-compliance in these areas can lead to substantial penalties, interest charges, and even legal action, as repeated late lodgements can result in increased fines, while unresolved tax debts could trigger garnishee notices or legal proceedings. This serves as a timely reminder to businesses of all sizes: take the end of the financial year (EOFY) seriously or risk facing serious consequences.

Businesses with inconsistent record-keeping, unclear financial workflows, or unpaid obligations are more likely to attract attention. The ATO has invested in advanced data-matching tools and artificial intelligence (AI) to cross-check reported income and deductions against third-party sources, meaning even minor oversights can trigger audit activity or delays in processing.

The most common pain points during EOFY tend to come down to two things: disorganised processes and incomplete information. It's easy to miss valid deductions when receipts are scattered across inboxes or stored on personal devices as manual reconciliation can take days for lean financial teams. Payments to suppliers can also slip through the cracks when approval workflows are unclear or not followed consistently. These issues might seem minor in isolation; however, they often reflect deeper structural problems in how expenses and invoices are managed.

Now is the time to close those gaps. Businesses should start by gathering complete records for income, expenses, assets, and liabilities. Finance personnel need to go beyond general ledgers and profit-and-loss statements, and carefully review reimbursement claims, subscription costs, software expenses, and travel records. The next step is to consolidate the data to get a single, accurate view of payments, especially if the business has used multiple systems to process payments or expenses.

It's important to also check whether claims align with ATO expectations. For example, the ATO has emphasised again that work-from-home deductions must reflect actual usage, not estimates. It also continues to highlight common errors in rental income reporting and capital gains declarations. These areas are under close watch, and discrepancies are harder to defend when documentation is patchy.

Compliance is only one part of the EOFY picture. Cybercriminals target finance teams with tax-themed scams at this time of year. According to the Australian Competition and Consumer Commission (ACCC), Australians lost more than $152 million to payment redirection scams in 2024, up from $91.6 million the previous year, making it one of the top five scam types by financial loss. This highlights the need for tighter controls. Business leaders must review who has approval access, how and where sensitive documents are stored, and the process used to verify vendor details. It's also critical to validate that everyone involved in payments or account management understands these risks and are trained to spot suspicious activity.

Businesses that want to reduce risk and simplify EOFY reporting can make immediate gains by automating expense and invoice management. Automation tools reduce reliance on spreadsheets and email chains while applying consistent rules and approval flows simultaneously, which helps teams process claims faster and with fewer errors. This gives businesses of all sizes clearer visibility into spending and more accurate data for compliance reporting and strategic planning.

Businesses can shift their focus to FY25–26 ahead once EOFY obligations are complete. Notably, e-invoicing will become mandatory for all Commonwealth agencies and their suppliers from 1 July 2025. Adopting this early can help businesses reduce processing times, cut operating costs, and improve cash flow.

The start of the financial year is the ideal time to step back and assess what's working and what needs improvement. Delays in approvals, hard-to-produce reports, or unclear spending are signs of deeper process issues. Now's the time to fix them. EOFY is an opportunity for businesses of all sizes to improve how they manage spending, reporting, and decision-making. Those that invest in better systems now will be better positioned to grow in the year ahead.