ATO Areas of Focus for Privately Owned and Wealthy Groups – 2025–26
- Alvin Fung
- Nov 14
- 4 min read
Follow us on LinkedIn for the latest industry updates and trending news.
The Australian Taxation Office (ATO) has released its compliance focus areas for privately owned and wealthy groups for 2025–26. These areas are based on issues identified through the ATO’s intelligence collection, risk analysis and case work. While the ATO aims to improve overall tax performance across this population, additional attention and resources will be directed to the following priority areas.
Core Tax and Compliance Issues
The ATO continues to observe risks that arise from inadequate governance, documentation or advice. All private groups are expected to maintain sufficient records to support their tax positions and recognise when specialist advice is required. As groups expand or change, their approach to identifying and managing tax risks should also develop.
Key risks and issues include:
Failure to register for obligations such as PAYG withholding and GST where required.
Choosing an incorrect accounting basis or reporting cycle.
Late lodgment of tax returns, activity statements, FBT returns and taxable payments annual reports.
Late payment of tax debts or not engaging early when support is needed.
Incomplete reporting of returns, activity statements and schedules (including shareholder loans, assets and liabilities).
Omitted or underreported income, sales or fringe benefits.
Companies incorrectly claiming base rate entity status.
Incorrect or overclaimed deductions, GST credits, fuel-tax credits and R&D tax incentive claims, including where eligibility or documentation is insufficient.
Trusts overclaiming deductions to reduce net income.
Businesses claiming ineligible R&D expenditure or activities.
The ATO applies a data-driven approach to identify these risks and will continue to monitor them through ongoing engagement.
Capital gains tax (CGT) – the ATO is focusing on reducing instances of taxpayers claiming concessions without meeting eligibility, and on restructuring designed to access concessions.
Specific concerns include:
Inappropriate application of the CGT discount.
Claiming small business CGT concessions without meeting the requirements.
Misuse of the small business restructure rollover.
Restructuring to obtain concessions not otherwise available.
Misapplication of Division 855 of the ITAA 1997 to disregard capital gains for foreign beneficiaries, including incorrect use of sections 855-10 or 855-40.
Trust
The ATO continues to review private groups with higher-risk trust arrangements or tax planning outside the ordinary course of business or family dealings.
Focus areas include:
Distributions to lower-taxed beneficiaries where economic benefits flow elsewhere.
Circular trust distributions where tax has not been paid on some or all of a distribution (trustee beneficiary non-disclosure tax).
Family trusts distributing outside the family group, triggering family trust distribution tax (FTDT).
Franked dividend distributions where beneficiaries claim the franking-credit offset without meeting the 45-day holding rule, including where corporate beneficiaries are newly incorporated.
Relevant ATO guidance includes PCG 2022/2, TR 2022/4 and TA 2022/1.
Using Business Money for Other Purpose
Private groups often operate through multiple entities. Transactions between entities may have tax consequences unless the entities are within a tax-consolidated or GST group. The ATO continues to focus on the use of company funds or assets for personal or other group purposes where transactions are not properly recorded or characterised.
Division 7A – continuing areas of concern include:
Inadequate records and unreported shareholder loans.
Non-complying loan agreements.
Failure to make minimum yearly repayments or apply the correct benchmark interest rate.
Repayments made through further loans or re-borrowings from the same company.
Arrangements that attempt to avoid Division 7A through guarantees of third-party loans by private companies.
Recent guidance includes TD 2025/5, TA 2024/2 and draft TD 2024/D3. The ATO will continue to review requests for discretion under section 109RB, particularly where breaches are not the result of honest mistakes or inadvertent omissions.
Lifestyle Assets
The ATO identifies cases where private pursuits or hobby-like activities are treated as business activities.
Issues include:
Using company assets for private purposes without recognising Division 7A consequences.
Claiming deductions or offsets that are not allowable.
Claiming GST credits on assets without private-use apportionment.
Failing to recognise fringe benefits provided to employees or associates.
Succession Planning
The ATO continues to focus on tax risks arising from succession and wealth-transfer activities. These may occur when mature family businesses are sold, passed to the next generation or wealth is distributed.
Common issues include:
Movement of assets within a group.
Restructuring of family-member interests.
Accessing concessions, exemptions and rollovers.
Failing to review the pre-CGT status of assets.
Settlement of shareholder or associate loans.
Use of trusts to transfer wealth.
Specific Industries or Activities in Focus
Advisers and professional firms – the ATO will continue the Private Wealth Adviser Program to ensure advisers meet their own obligations and lead by example. It will focus on compliance with PCG 2021/4 (allocation of professional-firm profits), non-lodgment of partnership returns and high-risk adviser conduct, including contingency-based R&D or GST refund arrangements.
Property and construction – ongoing focus on property disposals, renovations and developments.
Key issues include:
Correct capital-versus-revenue classification.
GST treatment under going-concern and margin-scheme provisions.
Non-arm’s-length intra-group dealings and omitted income identified through the Taxable Payments Reporting System.
Private equity – the Private Equity Program covers all stages of investment (pre-acquisition to exit) and the associated tax risks for investors, funds and target entities.
Retail – attention to GST reporting errors, particularly on intra-group transactions, voucher sales and warranty payments.
Cross-border transactions – focus areas include intangible-asset migration, significant global entity (SGE) status, related-party financing, thin-capitalisation, controlled-foreign-company (CFC) compliance and disclosure of international-related-party dealings.
Crypto assets – continued focus on correct reporting of crypto-asset transactions. The ATO’s Crypto Assets Data-Matching Program compares reported data with information from service providers.
Use of tax-exempt or concessionally taxed entities – review of arrangements where private groups use self-managed super funds or income-tax-exempt entities (including ancillary funds) to access unintended tax benefits.
Retirement villages – review of GST and income-tax positions, including GST-free provisions, increasing adjustments, related-party valuations and land-lease structures.
GST refund fraud – ongoing focus on arrangements designed to obtain improper GST refunds, such as artificial or contrived intra-group transactions or false invoicing, as described in TA 2025/2.
Next Steps for Private Groups
The ATO’s compliance work is supported by data analytics and intelligence. Private groups should review their governance frameworks, ensure inter-entity transactions are properly documented and confirm eligibility before accessing concessions or exemptions. Early engagement with advisers or the ATO can assist in resolving uncertainties and avoiding future compliance issues.
This summary is based on the ATO publication “Areas of Focus 2025–26” (updated 16 October 2025) and is provided for general information only. It should not be relied upon as advice. For guidance specific to your circumstances, please contact your usual adviser.
