Reduce GST and indirect tax filing risk with more consistent, audit-ready processes.
Highlights
- Indirect tax compliance – GST, BAS reporting, and cross-border obligations – is growing more complex and less forgiving of manual errors.
- ATO’s Justified Trust program has raised the bar: it’s no longer enough to report the right figures. Businesses must now demonstrate, with objective evidence, how they arrived at them.
- From 1 July 2025, General Interest Charge on ATO underpayments is no longer tax-deductible, raising the real cost of GST errors.
- AI-powered automation and cloud platforms help tax teams move from reactive processes to confident, audit-ready compliance.
Why indirect tax compliance is under greater scrutiny
The ATO no longer just checks whether your GST figures are correct. Under its Justified Trust program – now covering Top 100, Top 1,000, and Top 500 businesses – it expects organisations to demonstrate, with objective evidence, how they arrived at them. Businesses that can’t show their work don’t get the benefit of the doubt; they get a Stage 1 rating and a return visit.
Most Australian indirect tax teams are not set up for that standard. A Thomson Reuters survey found 58% of senior tax leaders still rely heavily on spreadsheets – which produce figures, but not the audit trail the ATO now requires. The cost of getting it wrong has also risen: from 1 July 2025, the General Interest Charge is no longer tax-deductible, and a GST shortfall can attract penalties of 25–75% of the shortfall amount depending on conduct.
The nine challenges below are familiar. What has changed is the standard against which they’re being measured.
Where Australian indirect tax teams feel the pressure
These issues are familiar. What has changed is the speed, scrutiny, and data volume tax teams are expected to manage.
1. Complexity keeps growing
GST doesn’t sit alone. Cross-border rules, customs and excise duties, and state-based taxes all interact – and all carry different rules, exemptions, and filing cadences. As businesses grow, so does the surface area of their indirect tax exposure. At the same time, the ATO is increasing its focus on the systems and controls behind those outcomes. Expectations around IT controls (MLC4) and the shift toward e-Invoicing mean tax teams must manage not just tax rules, but the integrity of the data and technology that drive them.
2. Manual processes and the high cost of human error
When tax teams rely on spreadsheets, they manually export sales data and spend hours cross-referencing, reformatting, and keying data into a master compliance spreadsheet with hundreds of tabs. The process is slow, opaque, and leaves room for errors that compound quietly until they surface at the wrong moment. It also makes it difficult to demonstrate the kind of data integrity and system controls the ATO now expects under its Justified Trust framework. The 58% figure tracks directly with what the ATO’s own Justified Trust findings reports have observed: governance, systems, and controls remain the number-one GST risk in the large market.
3. GST classification decisions across the tax lifecycle
Determining whether a supply is taxable, GST-free, or input-taxed, and whether input tax credits apply, requires consistent judgement applied at scale. As product catalogues grow and business models change, maintaining that consistency manually becomes increasingly difficult, and the risk of misclassification grows with it. The ATO’s Justified Trust reviews specifically monitor GST classification – including the treatment of food, health products, and mixed supplies – and classification errors are among the most common triggers for adjusted assurance ratings. Not to mention the costly subsequent remediation work thereafter.
4. The volume and velocity of transaction data
Even well-resourced teams can be overwhelmed by the sheer amount of data; sorting through it traps valuable tax professionals in a reactive, defensive work, rather than enabling advisory work that proactively supports business decisions.
5. More frequent reporting requirements
For businesses that lodge BAS monthly, tighter reporting cycles compress timelines and leave less room for manual fixes. The practical problem is a timing mismatch: ERP systems typically close several days after a reporting period ends, but BAS deadlines don’t flex. For teams running manual reconciliations, that gap is where errors get made and where the ATO’s data-matching capabilities – which cross-reference BAS figures against Single Touch Payroll, third-party income data, and industry benchmarks – are most likely to surface discrepancies.
6. No end-to-end visibility
Effective management is impossible without clear, timely data. Yet, most tax teams are forced to work with data that is already out of date and consolidating financial information from a collection of disparate systems.
7. Data silos and integration headaches
Disconnected systems are the root cause of most visibility problems. The “integrations” that do exist are often brittle, custom-coded connections built on legacy systems and maintained by an overworked IT department. Data that lives in finance, tax, and ERP systems rarely flows cleanly between them.
8. Manual reconciliation and compliance processes
Even with consolidated data, a critical challenge remains in reconciliation. Aligning BAS figures to source transactions, downloading data from multiple ERP and billing systems, and checking invoices before lodgment, all done manually, takes time that tax teams don’t have to spare.
9. Heightened audit exposure and penalties
The ATO’s Justified Trust program has fundamentally changed what a successful audit defence looks like. The program rates businesses on a four-level scale from High Assurance to Red Flag, and governance, systems, and controls are assessed as a distinct category. Reaching a Stage 3 rating – where controls are not just designed but demonstrably operating in practice – requires consistent, traceable evidence linking reported figures to source transactions. , supported by reliable systems and data controls, not just manual reconciliations. The ATO has been explicit: it wants proof of “lived governance,” not a governance policy sitting in a drawer. Defending a tax position with a collection of conflicting spreadsheets is a losing position in that context. An audit becomes an archaeological dig through old emails, invoices, and reports, at a time when the ATO has more data-matching capability than ever before.
The path forward for indirect tax
Most of these pressures come down to how data is managed, reviewed, and reported. Improving those processes, particularly through automation and better data systems designs, reduces manual effort and improves consistency across indirect tax workflows, while also strengthening the systems and controls needed to meet ATO expectations.
The practical difference better systems make is not abstract. A team that has automated its BAS reconciliation can trace any reported figure back to source transactions on demand – which is exactly what a Justified Trust review requires (e.g. MLC 6). A team still running that reconciliation manually cannot make the same guarantee, and the ATO’s own findings data shows that Stage 1 governance ratings (the lowest) are consistently the main reason businesses fail to achieve overall high assurance.
When routine compliance activity requires less manual intervention, tax professionals can spend more time reviewing exceptions and advising on the decisions that actually require their expertise – GST classification calls on new products, input tax credit positions, cross-border treatment questions where professional judgement matters, and now increasingly, collaboration with IT teams. That’s a meaningful shift in how the tax function adds value to the business.
The teams best positioned for the ATO’s current compliance environment aren’t necessarily the largest or most sophisticated. They’re the ones who can demonstrate, consistently and on short notice, that their GST figures are correct and that they know exactly how they got there.
