Understanding How Many Small Business Owners Make Tax Errors in Australia

According to the ATO’s Small Business Random Enquiry Program (covering 2018–19 through 2020–21), out of a sample of 1,795 small business taxpayers:

• 61% reported correctly.
  
  
• 30% attempted to get it right but made mistakes—often due to poor record keeping, reconciliation errors, or misunderstandings of the tax law.
  
  
• 4% under‑reported income or exaggerated expenses, likely not intentionally.
  
  
• 5% were clearly operating in the shadow economy, deliberately avoiding tax. Importantly, that 5% accounted for about 55% of the total revenue shortfall identified.



https://www.ato.gov.au/about-ato/learn-about-tax-and-the-ato/tax-and-small-business/small-business-random-enquiry-program-findings