ATO late lodgement penalty: up to $364 per 28 days, capped at $1,820 per document · interest 11.43% p.a. compounding daily · See how to remit them →
The three issues that decide hospitality reviews
1. Cash and the benchmarks. The ATO publishes small business benchmarks for cafes and restaurants - cost of sales and expense ratios by turnover band - and operators reporting outside them are selected for review by formula. A venue whose declared takings imply impossible margins is the classic default assessment candidate: the ATO estimates takings from purchases and benchmarks, and the estimate is never in your favour. The defence is boring and structural - every register Z-read reconciled, POS-to-bank matching, and catching up before the benchmark letter arrives, because voluntary always prices better.
2. Wages, tips and the payroll stack. Hospitality award complexity - penalty rates, casual loading, junior rates - plus cash-era habits meet Single Touch Payroll's per-pay visibility badly. Tips are the recurring surprise: card tips passed to staff run through payroll as income, and unbanked cash wages are the fastest route from a tax problem to a super guarantee charge problem, with the super component attaching to directors personally. A wage catch-up - payroll corrections, super guarantee statements, award back-checks - is standard scope in a hospitality engagement.
3. Food GST. The GST-free and taxable food line runs through the middle of your menu: bread is GST-free, the croissant is taxable, and the takeaway salad is treated differently from the dine-in one. Miscoded POS categories quietly corrupt every BAS for years, in either direction. A category-level review of the POS GST mapping is a two-hour job that fixes every future quarter and frames any back-period corrections on your initiative rather than an auditor's.
The catch-up, hospitality edition
Same spine as every catch-up: reconstruct from POS and bank data, since both survive and lost paperwork does not matter; lodge BAS oldest-first because that is the director-liability clock; returns behind them; remission on the voluntary disclosure; then the payment plan or restructure on real numbers. Hospitality is the small business restructuring regime's most common user, and eligibility requires the lodgments done first.
Frequently asked questions
The ATO says my cafe's figures do not match industry benchmarks - what now?
Are tips taxable in a restaurant?
We are four BAS behind - how bad is that?
Is all our food GST-free or taxable?
General information only - not personal tax, financial or legal advice. Consider your own circumstances or speak to a registered tax agent. Remission of penalties or interest and payment plans are decisions of the ATO and outcomes can't be guaranteed.