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The ATO has released its compliance priorities for privately owned and wealthy groups for the 2025–26 income year. These areas of focus reflect insights gathered from case work, risk analysis and data intelligence and signal increased scrutiny across several key tax and governance issues.
Core tax and compliance risks
The ATO will continue to monitor governance failures and poor internal controls leading to common issues such as incorrect or incomplete lodgment, omitted income, overclaimed deductions and GST credits, and inappropriate access to small business and R&D concessions. Proper documentation, timely lodgment and appropriate use of professional advice remain critical.
Capital gains tax (CGT)
There is increased attention on CGT concessions, with a focus on incorrect claims and restructures designed to access benefits that would not otherwise be available. The ATO has also flagged concerns with trusts inappropriately disregarding capital gains for foreign beneficiaries under Division 855.
Trust arrangements
High-risk trust distributions, circular arrangements, and misapplication of section 100A remain under active review. The ATO is also concerned about misuse of franking credits and family trust distributions outside the family group, potentially triggering family trust distribution tax.
Use of business assets and Division 7A
The ATO is targeting arrangements where private company funds or assets are used for personal or intra-group purposes without proper tax treatment. Ongoing compliance concerns under Division 7A include unreported loans, inadequate agreements, and misuse of repayments or guarantees.
Succession planning
Increased activity around business exits, wealth transfers and restructures has prompted closer examination of tax consequences. The ATO is watching for inappropriate access to CGT concessions, Division 7A issues and misuse of trust structures.
Industry-specific risks
The ATO has identified high-risk behaviour in several sectors:
- Professional firms: Non-compliance with PCG 2021/4, lodgment failures, and aggressive tax positions promoted by advisers.
- Property and construction: Misclassification of property sales, incorrect use of the margin scheme or going concern exemptions, and intra-group dealings to shift income.
- Retail: GST errors from poor systems or controls, particularly during growth or business changes.
- Private equity: Focus on tax risks throughout the investment lifecycle.
- Retirement villages: Scrutiny of GST and income tax treatments, including related-party dealings and valuation issues.
Emerging areas
The ATO is also focusing on:
- Crypto assets: Ensuring accurate reporting of income, gains and expenses by both investors and businesses.
- Cross-border activity: Increased attention on related-party financing, CFC compliance, and intangible migration.
- Use of tax-exempt structures: Reviewing the inappropriate use of SMSFs and not-for-profit vehicles to access concessions or avoid tax.
- GST refund fraud: Ongoing compliance action against contrived arrangements within private groups designed to generate improper refunds.
Tax agents should review these areas with clients and ensure robust governance and accurate reporting across all entities within a private group. The ATO’s approach remains data-driven and will involve early intervention and targeted engagement where risks are identified.
