|
Action item |
20251111-1 Family trust distributions tax (FTDT), General Interest Charge (GIC) remission |
|---|---|
|
Description |
ATO to consider if there would be any circumstances where we would remit 80% GIC where taxpayers hadn't proactively self-reviewed prior to being notified of an ATO review but acted immediately to file FTDT payment advice form and pay the FTDT after being notified of a review. |
|
Responsibility |
ATO |
|
Status |
Closed The ATO announced in August 2025 that the ATO may consider it fair and reasonable to remit GIC up until 31 December 2026 where an entity has taken reasonable steps to address outstanding or unidentified FTDT liabilities. GIC may be remitted by 80% in cases where the taxpayer has proactively self-reviewed their FTDT liability (before a review has commenced), lodged the FTDT payment advice form and paid the FTDT. There may be partial remission (less than 80%) where the entity has made a voluntary disclosure of a FTDT liability during the early stages of a review (prior to an audit), and a FTDT payment advice form has been lodged and FTDT paid. |
Environmental scan
Practical compliance guideline
Private Wealth (PW) has been working on a draft practical compliance guideline (PCG) Significant Global Entities – ATO compliance approach for privately owned and wealthy groups outlining our compliance approach to the reporting of significant global entity (SGE) status for entities that are members of privately owned and wealthy groups, private groups.
PW sought member feedback on the draft PCG at the Private Groups Stewardship Group (PGSG) meeting on 24 July 2025.
Since the meeting in July, we have decided that the content of the draft PCG will be published as web guidance.
The web guidance is designed to assist entities who are members of a private group self-assess and report their SGE status. The tailored web guidance will outline our reporting and record-keeping expectations of taxpayers. We will notify PGSG members when we publish the web guidance.
Corporate tax transparency report
On 2 October 2025, the Corporate Tax Transparency report for the 2023–24 income year was published.
Research and development tax incentive transparency report 2022–23
On 25 September 2025, the latest Research and Development (R&D) tax incentive transparency report was published for the 2022–23 income year. Data from 12,956 companies revealed expenditure totalling $16.2 billion in R&D claims in the 2022–23 year.
ATO annual report
On 31 October 2025, the 2024–25 ATO annual report was published. $636.3 billion in net tax was collected, 4.2% more than 2023–24. Our key focus areas included:
- Continuing to strengthen the integrity of the system and protect revenue.
- Improving payment performance and stopping the growth in debt.
- Improving the digital tax experience for small business.
What attracts our attention web material
Our Areas of focus page was refreshed in September 2025, to reflect the ATO's priority focus areas for 2025–26 page. A recording of a webinar to accompany the refreshed guidance is available on that page.
Family trusts distribution tax GIC remission
Members queried the situations where a taxpayer 's request a remission of GIC on family trusts distributions tax and how the ATO would approach remission. The ATO referred to published guidance and stated that the 80% remission may be applied where taxpayers proactively self-review their affairs prior to being notified of a review. Partial remission may be granted where taxpayers act quickly after notification but the extent to which GIC may be revised will depend on the circumstances of each case.
Members highlighted challenges for smaller tax agents in retrieving records from transactions up to 10 years old and noted that agents often cannot identify issues in a taxpayer’s affairs until the ATO initiates a review.
Recent public advice and guidance
Members discussed recent public advice and guidance impacting the private wealth market, including:
Taxation Determination TD 2025/6 Income tax: does section 109U of the Income Tax Assessment Act 1936 only apply to arrangements where a private company gives a guarantee to another private company?
This TD finalises Draft Taxation Determination TD 2024/D3 Income tax: Division 7A – does section 109U of the Income Tax Assessment Act 1936 only apply to arrangements where a private company gives a guarantee to another private company?
A public advice and guidance compendium was prepared, compiling responses to comments received on the Draft Taxation Determination: TD 2025/6EC.
Recent litigation
Members discussed recent litigation impacting the private wealth market, including:
- Commissioner of Taxation v BendelExternal Link
- Merchant & Anor v Commissioner of Taxation
- VZFS v Commissioner of TaxationExternal Link
- XLZH v Commissioner of TaxationExternal Link
Next 5,000 program
The Next 5,000 Program has removed a mandated 1-month notification period from all future Comprehensive Review products. This change was previously discussed at the 9 September 2025 PGSG meeting and published to ato.gov.au in September 2025. This provides a similar experience for private groups that are subject to a review across the privately owned and wealthy groups population.
The ATO gave an overview of what is being seen in terms of compliance within the Next 5,000 population. The main observation is that we continue to see errors in record keeping and reporting because of inadequate tax governance. Members asked if the tax issues identified within the Next 5,000 population had increased or decreased over the past 5 years. The ATO advised that the identification of these issues have been trending upward during this period, largely due to ongoing basic errors across groups. The ATO is seeking for this trend to reverse.
Members queried which financial years are normally the focus of a review, with the response being reviews typically focus on the last 2 financial years where lodgment had occurred. Currently, new reviews are generally focusing on the 2023–24 and 2024–25 financial years.
Members asked if the focus of the Next 5,000 reviews was on the existence or the quality of a group’s governance framework. The ATO responded that when a review identifies tax risks, we will highlight how tax governance could have helped prevent these issues. As part of the reviews, we reiterated we will engage in discussions about the benefits of tax governance and how it can support groups in managing their obligations effectively. Members recommended that when the ATO communicates about what concerns them in the population that they are provided detailed and practical examples of how the risks manifest and how tax governance can mitigate the risk, to better support taxpayer understanding.
Medium and emerging private groups program
The medium and emerging (M&E) private groups program takes a risk-based approach in deciding what compliance activities to undertake and to improve tax performance. We have observed that M&E private groups continue to:
- fail to report income
- extract wealth from group entities without paying the requisite tax
- incorrectly claim capital gains tax concessions
- engage in arrangements using trusts where integrity rules potentially apply
- incorrectly claim the R&D tax offset
- have significant non-compliance in the property and construction sector.
In 2026 financial year the M&E private groups program will continue to focus on these areas of non-compliance. In addition, the compliance program will align with tax risks outlined in the current areas of focus for 2025–26 private groups including private equity participants and incorrect reporting of cryptocurrency transactions.
The M&E private groups program is developing a plan to provide support and awareness to private groups experiencing growth from small business and entering the M&E population, M&E new entrants. M&E new entrants transitioning from the startup phase of their business lifecycle and experiencing growth (in income, assets or size of group), often have associated increasing complexity with their tax affairs and may not have appropriate systems, advice or awareness to manage the taxation obligations of their growing private group.
Members were invited to provide feedback on proposed tax health check resource focused on providing education to M&E new entrants, as well an associated targeted email campaign. The tax health check resource covers tax compliance issues the ATO sees M&E new entrants get wrong and is pitched to enable a taxpayer with a non-tax background to understand tax issues that may apply to their growing private group.
Members were supportive of the strategy and agreed the resource was a worthwhile initiative, in particular, the need for a high-level resource that can be understood by a non-tax person enabling them to have a discussion with their tax agent. Members suggested the ATO consider exploring different channels to raise awareness in addition to including the resource on the ATO website. Members suggested reiterating that taxpayers are responsible for their tax affairs and cannot outsource this responsibility to tax agents.
Members queried whether the tax agents representing private groups where basic errors are identified are referred to the Tax Practitioners Board (TPB). The ATO advised that there is an expectation that tax agents have a fundamental understanding of tax issues for the clients they represent, and where systemic issues with a tax agents' competency are identified, we will involve the TPB. We will also leverage the work being undertaken in the Private Wealth Adviser Program to engage proactively with advisers where we see common compliance concerns across a number of their clients, to work with them to address these issues for their clients.
Top 500 program
The Top 500 Findings Report for 2024–25 will be published on 27 November 2025 and will include the program outcomes, key risks affecting Top 500 groups and our future priorities for 2025–26. Key findings for the 2024–25 year are:
- The income tax of $835.11 million paid by Top 500 entities was tax assured. This result encompasses assurance activities relating to the 2018 to 2024 income years.
- Income tax liabilities of $388.5 million were raised, with $23.3 million from voluntary disclosures. Many liabilities arose from basic errors highlighting the importance of tax governance in avoiding costly errors.
- Thirty-six Top 500 groups were in justified trust, an increase of 4 from the previous year and 5 Top 500 groups were in provisional justified trust, an increase of 3 from the previous year.
Future priorities include:
- Reviewing our tax governance guidance on ato.gov.au and develop new tools for groups to self-assess their tax governance. This will support groups in developing and embedding effective tax governance to reduce the risk of errors, improve compliance, and help groups to achieve justified trust.
- Continue identifying and reviewing all significant, atypical transactions through the Top 500 and commercial deals programs, ensuring these transactions are consistently subject to thorough review and tax assurance.
- Direct additional resources to bring engagements up to date, being the last year lodged. With fewer Top 500 groups in the program after groups exit due to the April 2025 program changes, we will allocate more staff to Top 500 engagements and seek to expedite the assurance process. Groups that have not yet invested in governance, or are not fully assured, will be a priority to ensure that compliance issues are identified and addressed promptly.
- Commence engagements with new Top 500 groups. We have identified several groups that have grown significantly in wealth and turnover, leading to their inclusion in the Top 500 population.
- Ensuring all entities in a Top 500 group have up-to-date payments and lodgments, which is our expectation of Australia’s wealthiest groups, as well as the expectation of the government and Australian community.
Members suggested it would be beneficial to understand the tax issues that relate to the liabilities raised in the program and the ATO agreed to review how this information could be incorporated into the next Top 500 Findings Report and other messages to the population.
Payday Super
On 9 October, the government introduced Payday superannuation legislation into parliament and obtained Royal Assent on 6 November 2025. The intention is it will take effect from 1 July 2026.
Key changes for Payday Super are available.
Draft guidance has been published on our compliance approach for employers for the first year of Payday Super. Draft Practical Compliance Guideline PCG 2025/D5 Payday Super – first year ATO compliance approach sets out the things that will be considered when deciding how the ATO will apply compliance resources to investigate employers in relation to the first year of Payday Super. The feedback period closed on 7 November 2025.
The Small Business Superannuation Clearing House (SBSCH) will be closed from 1 July 2026 and was closed for new registrants from 1 October 2025.
The ATO requested feedback from members about employer readiness to Payday Super. Members commented that it was probably too early to assess but explained that there are many considerations for businesses in complying with Payday Super. The proposed compliance approach will recognise that employers who try to do the right thing and resolve any issues quickly from 1 July 2026 to 30 June 2027 should not be the focus of ATO compliance action.
Members queried why the ATO’s SBSCH is being closed. The ATO explained that the government decided to close it from 1 July 2026 as it was considered no longer fit for purpose in a Payday Super environment and given the advances in commercial clearing houses since the inception of the ATO's SBSCH. The last day for payment instructions is 30 June 2026, and a technical working group is in place to ensure current users transition smoothly to alternatives.
Regulatory reform initiatives
On 4 July 2025, the Treasurer and Minister for Finance wrote to a few agency heads inviting them to outline actions that they were taking that contribute to increase productivity, economic growth and budget sustainability. Responses including the ATO’s have been published on the Department of Finance’s websiteExternal Link.
The ATO’s response outlined its aspiration to streamline business experience, delivering the simplification benefits akin to those achieved for individual taxpayers over the past 2 decades. The response highlighted initiatives to streamline tax administration for businesses that are already underway or will be implemented.
While many of the initiatives outlined in the letter have been piloted for the small business population, we are now exploring opportunities to streamline tax administration for other businesses including those in privately owned and wealthy groups.
The ATO is interested in understanding from members:
- What the opportunities, limitations and required adjustments might be for privately owned and wealthy groups to adopt some of the current initiatives.
- If there are other opportunities or initiatives to streamline tax administration that the ATO should consider.
Members and the ATO discussed:
- Complexities that may arise due to the nature of private groups, including several year-end transactions, the use of trusts, and having related entities that remain separate legal entities for tax purposes.
- The potential role eInvoicing might play.
- 'Natural systems' might vary between private groups who have different accounting systems and software ranging from more common software through to bespoke systems
- The importance of ensuring human oversight, while making some of the more administrative tax tasks easier.
The ATO noted that this move is not towards removing the human from the decision making in tax administration but rather simplifying the process and calculations that would be required, thereby producing a more efficient and less burdensome tax system.
The ATO also noted that it was looking for initiatives that will not require legislative change and members commented that in principle they like the concept of having a system where tax information is required to be entered only once and used to meet tax obligations.
Technical Issues
The ATO advised a Draft Practical Compliance Guideline Recognition of income under property development agreements involving long-term construction contracts – ATO compliance approach will be published in December 2025 and will be open for community consultation. The draft guideline will set out our proposed compliance approach to long-term construction contract arrangements (projects that span a period of greater than one year) in the property and construction industry.
Members queried whether there were any test cases being considered to test the Commissioner of Taxations view on long term constructions contracts. The ATO advised there were several potential test cases in the pipeline.
Members were advised that in addition to Draft Practical Compliance Guideline Back-to-back CGT roll-overs – ATO compliance approach, which is expected to be published in December 2025, the ATO will also release PAG to cover specific provisions such as subdivisions 122A and 122M of the Income Tax Assessment Act 1997 (ITAA 1997). The PAG's will articulate the circumstances of when the Commissioner considers a scheme involving back-to-back rollers has been entered into for the dominant purpose of obtaining a tax benefit to which Part IVA would apply. The PCG is expected to be published in the first quarter of 2026.
Members agreed PAG would beneficial as it will provide an understanding of where the ATO will focus its compliance activities.
Members were also advised the web guidance will issue shortly regarding the 45-day holding rule and franked distributions.
Members were advised that the Commissioner has filed an appeal in relation to the Administrative Review Tribunal decision of XLZH and Commissioner of TaxationExternal Link. Members queried if Taxation ruling IT 2340 Income tax: capital gains: deemed acquisition of assets by a taxpayer after 19 September 1985 where a change occurs in the underlying ownership of assets acquired by the taxpayer on or before that date would be updated. The ATO advised that it plans to withdraw IT 2340 and replace it with more modern and contemporary guidance once the appeal process is finalised.
End of year wrap up
Members and the ATO provided their reflections about this year's PGSG meetings.
Members expressed the view that the engagement between members and the ATO has been positive, and the members feel heard. They explained that the PGSG is worthwhile as it allows for robust and wide-ranging discussions noting that this year more items were actioned than in previous periods.
The ATO acknowledged it appreciates the honesty and openness of members, and that their feedback helps to shape how we design our strategies for engaging with and supporting private groups.
Attendees
|
Organisation |
Member |
|---|---|
|
ATO |
Kasey Macfarlane (Co-chair), Private Wealth |
|
ATO |
Jenny Lin, Private Wealth |
|
Accru Felsers |
Brett Cox |
|
Alvarez & Marsal |
Dang Kha |
|
BDO |
Michael Anderson |
|
Chartered Accountants Australia and New Zealand |
Karen Liew |
|
EY |
Priyanka Subramanyam |
|
HLB Mann Judd |
Gaurav Chitnis |
|
KPMG |
Belinda Cheesewright |
|
Law Council of Australia |
Tuan Van Le |
|
Moore Australia |
Varun Kumar |
|
Mutual Trust |
George Psarrakos |
|
Piper Alderman |
Megan Bishop |
|
Pitcher Partners |
Alexis Kokkinos |
|
Tax Bar Association |
James Strong |
|
The Tax Institute |
Jonathan Ortner (Co-chair) |
|
William Buck |
Tim Lyford |
|
Workpac |
Rachel Tyler |
Guest attendees
|
Organisation |
Attendee |
|---|---|
|
ATO |
Adrian Zuccarini, Office of the Chief Tax Counsel |
|
ATO |
Andrew Demonte, Private Wealth |
|
ATO |
Brock Spicer, Private Wealth |
|
ATO |
David Hall, Private Wealth |
|
ATO |
Fiona Hinrichsen, Private Wealth |
|
ATO |
Glenn Cooper, Private Wealth |
|
ATO |
Hoa Wood, Regulatory Reform |
|
ATO |
Nadia Alfonsi, Regulatory Reform |
|
ATO |
Priyasheel Jalota, Private Wealth |
|
ATO |
Usha Narain, Superannuation and Employer Obligations |
Apologies list
|
Organisation |
Member |
|---|---|
|
ATO |
Louise Clarke (Co-Chair), Private Wealth |
|
ATO |
Grant Brodie, Individuals and Intermediaries |
|
CPA Australia |
Jenny Wong |
|
John Fairfax Group |
Rob Jackson |
|
Oatley Family Group |
Sharon Clark |