In September, the ATO announced that it will be increasing scrutiny on the tax affairs of privately owned and high-net worth family groups during the 2025 – 26 financial year.
The ATO has stated that these groups are expected to be paying the correct amount of tax across all areas, particularly income tax and superannuation. To monitor compliance, the ATO will be using data analytics, risk reviews, and targeted examinations.
The ATO has identified several priority areas where compliance issues commonly arise:
Meeting compliance obligations
The ATO will be checking that groups lodge all tax returns and activity statements on time, pay the correct amount of tax, and maintain accurate and complete records.
Correct use of Capital Gains Tax Concessions
Discounts, exemptions, and rollovers for Capital Gains Tax must be applied correctly. Incorrect use of these concessions may trigger detailed review.
Trusts and distributions
The ATO will focus on whether trusts are distributing funds to the correct beneficiaries and complying with all trust deed requirements and tax rules.
Use of private company money
Using company funds for personal benefit without proper reporting or Division 7A compliance remains a key focus.
Succession and wealth transfers
Business exits, restructures, inter-generational wealth transfers, and other significant transactions can create tax risks if not documented and executed properly.
Who is the ATO looking at
According to the ATO, a group is more likely to face review or audit if it:
- Fails to lodge tax returns or activity statements on time, or does not lodge at all
- Uses overly complex ownership structures that obscure who benefit from income or assets
- Engages in international transactions that are incorrectly reported
- Accesses company money or assets without paying the appropriate tax
- Undertakes business succession, asset transfers, or restructures that may generate tax risks
- Operates in industries identified as higher-risk, including property, construction, private equity, retail, and international investment
The ATO have identified they will be looking to the following industries and transaction types:
- Property & Construction: Reporting of property income, GST obligations, and intra-group transactions
- Private Equity: Monitoring investments from acquisition through to disposal
- Retail: GST errors, under-reported income, and misclassified sales
- International Transactions: Correct handling of cross-border dealings overseas reporting obligations
- Crypto Assets: Proper reporting of Crypto transactions and avoiding incorrect GST refund claims
If your group may be exposed to any of these risk areas, now is a good time to review your tax and governance processes, maintain clear records of major decisions and transactions, ensure all returns and payments are lodged and made on time and seek professional advice early to identify and manage any risks.
Taking a proactive approach can help reduce the likelihood of ATO review and ensure your group meets its tax obligations confidently and correctly.