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Private Groups Stewardship Group key messages 1 September 2022

Key topics discussed at the Private Groups Stewardship Group meeting 1 September 2022.

Last updated 7 November 2022

Key topics discussed at the Private Groups Stewardship Group meeting 1 September 2022

Action item update

20220607-1 – ATO to provide members with the agreed principles for Top 500 engagements for review and to provide feedback

The action item has been closed. The agreed principles for Top 500 engagements were issued to members with a request for feedback.

20220607-2 – ATO to provide members with a draft communications plan for the planned release of guidance on the principles of revenue vs capital to review and provide feedback

Draft web content is pending finalisation and will be issued to members for feedback out of session.

20220607-3 – Professional association representatives, including CA ANZ and CPA to provide the ATO with insights and feedback about the best way to ensure planned ATO messages about Division 7A and section 109R obtain optimal coverage

The action item has been closed. Members provided feedback.

Environmental scan

The group discussed their observations and insights on current issues relevant to the Private Wealth market, including:

  • Treasury's Multinational Tax Integrity and Tax TransparencyExternal Link consultation paper – members' interest in how far the tax transparency proposals might extend beyond significant global entities into large private groups, and the potential for increased compliance costs
  • community perceptions on the tax compliance of Australia’s largest companies, particularly where media reports do not acknowledge the tax concessions that are available by law, and the importance of the ATO providing appropriate factual context
  • the government’s Jobs Summit and the potential role of tax incentives to get more people into the workplace
  • continued pressures on the profession regarding resourcing and skills shortages
  • the government’s increased interest in superannuation.

Second Commissioner update

Second Commissioner Jeremy Hirschhorn discussed with members issues that are important to them and their clients. Key items discussed included:

  • the important role of the ATO stewardship groups
  • the Australian taxation system's high performance in comparison to international tax systems with a high level of importance placed on voluntary compliance
  • tax gap measures indicating a 91% compliance rate (93% with the 2% gained through compliance activities) – the ATO’s focus is on increasing the 91% through  
    • increasing the good attitude towards compliance and making it easier to pay tax
    • digitisation
  • tax gaps providing a better way to report on the health of the system and confirm high tax compliance rates
  • ATO’s participation in the Joint Chiefs of Global Tax Enforcement with USA, UK, Canada, Netherlands for criminal activities working well
  • our focus and achievement not being defined only by audit outcomes (financial metrics), but also on attaining assurance.

Top 500 program update

Assistant Commissioner Scott Parkinson led a discussion on the Top 500 program.

The key items discussed included the soon to be released Top 500 findings report. Aspects of the report highlighted were:

  • the number of Top 500 groups in Justified Trust, particularly with anomalies in the data used in the 2021 report
  • the ATO’s observations about investment in tax governance by the Top 500 population and how we intend to respond to help Top 500 groups understand what is required
  • the ATO stating its intention to be more differentiated in its approach; that is, the ATO will continue to be service orientated with groups who demonstrate that they want to comply, but more intense in our engagements with Top 500 groups who do not wish to engage openly and transparently.

Adjustments to our assurance approach for Top 500 clients who carry on high volume, low margin businesses, or whose income is predominantly passive in nature will result in a simplified experience for client groups and/or entities who fall into those categories.

The mandatory items for tax governance were provided prior to the Private Group Stewardship Group (PGSG) meeting. It was agreed that given the depth of the topic that a specific out-of-session discussion should follow. Key items for further discussion regarding tax governance are to be based on the pre-reading materials that were provided, and include:

  • When reviewing the approach taken by a Top 500 privately owned group in implementing tax governance, we consider how the seven principles of effective tax governance have been applied in the context of the group. All 7 principles are considered with an increased emphasis on the first 4 principles:    
  • It is recommended that Top 500 groups have an overarching tax governance framework in place that is fit for purpose and includes:  
    • specific roles and responsibilities
    • structure around the management of lodgments and payments
    • a list of the tax issues that Top 500 groups are required to manage
    • a policy governing how and when to seek external advice
    • policies and procedures to ensure that there are high levels of integrity around the information that the group reports for accounting and tax.

Members' comments

  • There are concerns in the private wealth market regarding the ATO’s approach to the use of audited financial statements in assurance reviews; particularly whether the probative value of audited financial reports was being given due consideration in assurance engagements. The ATO confirmed that additional guidance has been provided to ATO staff on how to utilise audited financial statements in assurance reviews, and that our approach largely addresses the concerns raised by PGSG members.
  • Taxpayers want timely and transparent interactions with the ATO, and responsiveness remains a problem.
  • The statement of agreed principles should include information on how the ATO will engage with the client throughout the process (including transparent communication and clarity on timeframes). More information is needed on how the client will be supported throughout process and a clear pathway to compliance. The ATO agreed to incorporate feedback into the report.

It was agreed that the ATO would convene an out-of-session meeting with members to continue the dialogue on tax governance for the Top 500 program.

Action item


Due date

As soon as possible


ATO | Scott Parkinson

Action item details

ATO to take steps to amend the statement of agreed principles


Action item


Due date

As soon as possible


ATO | Scott Parkinson

Action item details

ATO to convene a special purpose out-of-session PGSG meeting to continue the dialogue on tax governance for the Top 500 program

Retirement villages – consideration of current issues

Assistant Commissioners Jenny Lin and Amy James-Velagic informed members of the commencement of preliminary scoping in relation to retirement villages including:

  • understanding the industry demographics
  • identifying potential current GST and income tax issues
  • identifying areas requiring further ATO guidance to make it easier for the Private Wealth market to comply with their tax obligations.

The ATO will conduct scoping activities to better understand this evolving industry. Key issues being considered include:

  • the most current and emerging business/operating models
  • the lifecycle of retirement villages
  • understanding the population
  • identifying reliable demographics data.

Members' comments

Retirement villages are a key issue for professional associations (both income tax and GST).

The ATO noted that consultation is continuing, including through ATO Stewardship groups and industry experts. Following the preliminary scoping, the ATO may consider convening a PGSG consultation working group to gain further insights from industry experts if required.

Action item


Due date

8 November 2022


Non-ATO members

Action item details

Members to consider their firms and/or networks to identify subject matter experts to participate in any potential future PGSG consultation working group and send nominations to the ATO

Income Tax, Public Advice and Guidance

Assistant Commissioner Kasey MacFarlane presented an overview of key advice and guidance products relevant to the private wealth market.

Recently Published Public Advice and Guidance

  • Final Taxation Determinations about CGT for non-resident beneficiaries and Trusts were published to on 31 August. The ATO’s view expressed in the final determinations is aligned with the views previously expressed in Draft Tax Determination TD 2019/D6 and TD 2019/D7 and the Full Federal Court’s decision in Peter Greensill Family Co Pty Ltd (Trustee) v Commissioner of Taxation [2021] FCAFC 99.
  • For more information see  
    • Taxation Determination TD 2022/12 Income tax: is the source concept in Division 6 of Part III of the Income Tax Assessment Act 1936 relevant in determining whether a non-resident beneficiary of a resident trust, or trustee for that trust, is assessed on an amount of trust capital gain arising under Subdivision 115-C of the Income Tax Assessment Act 1997? published on 31 August 2022.
    • Taxation Determination TD 2022/13 Income tax: does Subdivision 855–A (or subsection 768–915(1)) of the Income Tax Assessment Act 1997 disregard a capital gain that a foreign resident (or temporary resident) beneficiary of a resident non-fixed trust has because of subsection 115-215(3)? published on 31 August 2022.

Other items

  • Finalisation of the suite of public advice and guidance products about section 100A remains a priority. A PGSG out-of-session consultation meeting has been scheduled for Wednesday 14 September 2022 to discuss and seek members' feedback, with planned publication of the final public advice and guidance by the end of the 2022 calendar year.
  • The ATO plans to publish some web guidance and issue some communications about Division 7A and section 109R reborrowing arrangements. We are seeing some instances where further loans or borrowings are undertaken to meet minimum repayments for existing Division 7A loans due to a lack of awareness that section 109R may apply to disregard those payments. The ATO will seek feedback from PGSG members out of session shortly and prior to publication.
  • The ATO will also be seeking out-of-session feedback about web guidance that we plan to publish about the characterisation of receipts as revenue or capital in relation to property development arrangements.
  • The ATO is developing some web guidance and support tools to help individual professional practitioners to consider, and risk assess their particular arrangements in accordance with Practical Compliance Guideline PCG 2021/4 Allocation of professional firm profits - ATO compliance approach.
  • Development of guidance about the application of section 99B in relation to particular payments received from trusts is progressing. Previously the ATO has advised that this guidance is planned to be published prior to the end of 2022. However, due to other priority matters, publication of this guidance will be delayed until the latter half of the 2023 financial year.

Priority draft public rulings for finalisation

Assistant Commissioners Karen Rooke and Kasey MacFarlane discussed 2 draft public rulings members had identified for finalisation.

Draft Taxation Ruling TR 2012/D1 Income tax: meaning of 'income of the trust estate' in Division 6 of Part III of the Income Tax Assessment Act 1936 and related provisions

The ATO noted:

  • Feedback during initial consultation on the draft called for a delay in finalising while the then government was considering reform of Division 6.
  • Since release of the draft there has been judicial support, in Federal Commissioner of Taxation v Thomas, for the position taken in relation to franking credits.
  • It was noted in discussion that the draft communicates the Commissioner’s views to the community, and the consensus of the meeting was that there was not a pressing need to give priority to finalising the draft.

Draft Taxation Ruling TR 2004/D25 Income tax: capital gains: meaning of the words 'absolutely entitled to a CGT asset as against the trustee of a trust' as used in Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997

The ATO noted:

  • The concept of ‘absolute entitlement’ presents difficult legal issues. The difficulties have been confirmed by successive court decisions since the release of the draft ruling.
  • As a result of these decisions the draft ruling cannot be finalised in current form.
  • Legislative solutions have been explored in the past.
  • Withdrawing the draft could be misleading and potentially give the community the impression that the issue is no longer of concern.
  • Replacing the draft with an alternative product is difficult within the current legal framework.

Next 5,000 program

Refocused approach and consultation

Assistant Commissioner Amy James-Velagic led a discussion on the refocused approach for the Next 5,000 program, including:

  • the key focus areas for 2022–23
  • the introduction of additional comprehensive risk reviews
  • consultation on key aspects of the Next 5,000 program for the 2023 financial year.

The program will evolve from coverage-based work to a targeted approach, identifying key focus areas with case selection appropriate to the situation. While this is a shift to a targeted approach, given the extension of the program, the broad majority of the population is still expected to be engaged.

A key aspect of a more targeted approach in our streamline assurance reviews or engagements, involves case selection targeting our priority focus areas.

Streamline assurance reviews will continue for larger and/or more complex groups within the Next 5,000 population. Engagements will continue with the notification process following consistent positive external feedback.

The different types of engagements for the 2023 financial year will be:

  • streamlined assurance reviews
  • comprehensive risk reviews
  • specific reviews
  • audits.

This approach will continue to provide assurance that Australia’s wealthiest individuals and their private groups are paying the right amount of tax in respect of their significant transactions, events, and activities.

Members comments

  • Clients need to know what product to expect – provide some clarity to taxpayers on what they can expect to prioritise their resources.
  • Notifying clients early for comprehensive risk reviews would be useful as they can prepare – will know the impact and the resources required.

ATO noted:

  • We are considering how to design the comprehensive risk reviews to align to a similar experience to the streamlined assurance reviews. For example, this may include asking Next 5,000 private groups to provide their financial reports upfront (voluntarily). Similar to the streamlined assurance reviews, this would enable a productive initial meeting which could be focussed on better understanding the business and the information we need. A tailored ‘Request for Information’ will issue detailing the information required.
  • Managing transition of groups between the Top 500 and Next 5,000 is incorporated into our programs.

Client experience survey and adviser meetings

Senior Director Ashleigh Larner provided an overview of results of recent feedback from Next 5,000 client experience survey and annual adviser meetings.

The client experience survey (recently focussed on the streamlined assurance reviews) measures:

  • client satisfaction with their engagement experience within the program
  • to what degree our interactions improve understanding of the right thing to do and provide certainty for clients
  • the impact our engagements have on improving the tax governance of Next 5,000 groups
  • the level of capability and quality of service provided by our people.

Survey results include:

  • 25% response rate (around the average rate for survey results)
  • 94% satisfaction rate

Advisers provided feedback in 3 categories, in the adviser sessions:

  • General feedback  
    • There was mixed feedback of the comprehensive risk review which will be introduced in early 2023.
    • The early notification period is helpful.
    • There is a risk of clients not doing governance at all if ATO’s does not continue to focus on this
  • Common feedback  
    • The 3-month early notification period for streamlined assurance reviews is helpful and useful.
    • The next action strategy, which has resulted in a low escalation to audit, is demonstrating that this strategy is working to collaboratively resolve issues.
  • Specific feedback  
    • The way ATO requests information has changed with large volumes of information being requested upfront and how we can focus more on what is required.
    • The time taken to finalise streamlined assurance reviews is drawn out.
    • The value of the initial meeting where technical matters are discussed is contentious.

Action item


Due date

When the next survey results have been obtained


ATO | PGSG Secretariat

Action item details

ATO to provide members with a further view of Next 5,000 client experience survey results


Attendees list




Louise Clarke (Co-Chair), Private Wealth


Emma Rosenzweig, Superannuation and Employer Obligations


Kasey MacFarlane, Private Wealth


Jenny Lin, Private Wealth

Chartered Accountants Australia and New Zealand

Michael Croker

CPA Australia

Elinor Kasapidis (Co-Chair)

Deloitte Private

Michael Gastevich

Fox Private Group

Garry Voight

Greenwoods & Herbert Smith Freehills

Andrew White

KPMG Australia

Belinda Cheesewright

Law Council of Australia

Angela Lee

Lowy Family Group

John Fanning

PwC Private Clients

Michael Dean

The Tax Institute

Jonathan Ortner

7-Eleven Group

Kenny Cheong


Apologies list



Arnold Bloch Leibler

Paul Sokolowski

Independent member

Paul Brassil

Oatley Family Group

Sharon Clark

Tax Bar Association

Terry Murphy KC

The Tax Institute

Chris Wookey