Private Groups Stewardship Group key messages 16 July 2026

Environmental scan

ATO Strategy 2026–30 was released 22 June 2026. The strategy outlines 5 strategic shifts to take the ATO forward towards 2030:

simplifying the tax experience so doing the right thing is the easiest option
closing the payment gap so we collect what is rightfully due
strengthening the system so it operates fairly and as intended
partnering across the ecosystem to build a more connected tax system
equipping a future-ready workforce to succeed in a changing environment.

The strategy also outlines an aspiration for 2030 to evolve the tax system for wealthy individuals and their related entities to a system where: complex structures are more transparent; reporting, lodgment and payment occur accurately and on time; and data enables earlier assurance reducing opportunities for tax arbitrage. Clear expectations and aligned payment cycles ensure accurate reporting regardless of complexity.

The Australian National Audit Office published its audit report on the Australian Taxation Office Management of Small Business Collectable DebtExternal Link with the ATO agreeing to all recommendations.

Tax Ombudsman’s Review into the ATO’s administration of Director Penalty Notices (DPN) is due to commence this month.

The review will explore how the ATO uses and administers DPNs and any opportunities to improve its approach.

Federal Budget

The ATO facilitated a discussion on the proposed implementation of recent Federal Budget measures, including providing an overview on anticipated governance arrangements, consultation approaches and delivery considerations. Participants discussed some of the technical and administrative impacts of the proposed capital gains tax (CGT) and trust measures.

We advised that implementation of each measure will be led by the business line with primary responsibility for the most impacted taxpayer segment. For example, the trust measure will be led by Private Wealth. For implementation we will adopt our usual practice of establishing a core design team for each measure, comprising of representatives from all impacted business lines to oversee design and delivery.

Existing stewardship groups will be used to support consultation on the measures. Consultation will generally be conducted through the stewardship group most closely aligned to the impacted taxpayer segment, with additional stakeholders engaged as required to explore specialist issues and emerging risks.

The Digital Partnership Office will engage with digital service providers to help them understand the measures and prepare for building systems to deliver any new services necessary under the measures.

Members noted that there is currently a great deal of uncertainty in relation to the trust measure, including:

the scope of the rollover provisions
the impact of rolling out of discretionary trusts on existing asset protection arrangements
the interaction of the rollover with existing anti-avoidance provisions.

Members emphasised the importance of providing certainty as early as possible to support compliance and consistent administration. Members noted:

The importance of balancing policy integrity objectives with practical implementation outcomes, particularly where measures may encourage taxpayers to restructure their entities and their operating models.
That discretionary trusts are commonly used for a range of non-tax reasons, including asset protection, succession planning and commercial flexibility, and raised concerns that these features may not always be preserved if discretionary trusts rollover into companies.
That the interaction between the trust measure and the proposed CGT changes could give rise to complex outcomes for private groups. Members considered that several Private Wealth-specific issues may not be fully explored through broader consultation forums, for example, the National Tax Liaison Group and would benefit from dedicated discussion.

Members further advised the Australian Small Business and Family Enterprise Ombudsman was already receiving enquiries relating to trust restructuring options following the Budget announcement. Members observed that these enquiries may involve complex tax technical matters that extend beyond the Ombudsman's role and will require clear referral pathways and guidance materials.

The ATO agreed to engage with the Australian Small Business and Family Enterprise Ombudsman to support early understanding of the measure and available guidance pathways.

To support continued consultation the ATO agreed to hold 2 out of session meetings before our meeting in September, to:

identify and explore CGT and trust interaction issues relevant to private groups
consider trust restructuring and rollover issues, including how existing rollover provisions and administrative approaches may support legitimate restructures while appropriately managing integrity risks.

Members reiterated the importance of early consultation, clear communication and timely guidance to support taxpayers, advisers and digital service providers as the measures progress through policy and legislative design.

Action items

Action item	20260716-1 Contact the Australian Small Business and Family Enterprise Ombudsman
Description	ATO to contact the Australian Small Business and Family Enterprise Ombudsman to let them know the ATO will assist with guidance, direction and referral pathways for small business queries about the new measures.
Responsibility	ATO
Status	Open

Action item	20260716-2 Organise an out-of-session CGT interaction session.
Description	The session will focus on interaction issues, particularly those relevant to Private Wealth, and operate as a listening/feedback-gathering session.
Responsibility	ATO
Status	Open

Action item	20260716-3 Organise out-of-session discussion on trust restructuring and rollover issues
Description	The session will focus on whether existing rollovers could support movement from trust structures into corporate groups and whether any transitional or safe harbour-style approach may be possible.
Responsibility	ATO
Status	Open

Private equity

The ATO’s Private Equity Program is part of a broader suite of work focused on addressing tax risks associated with private capital investment in Australia. The program covers domestic and international private equity firms and their associated participants across the investment lifecycle, from pre-acquisition through to exit.

We are considering a range of tax risks and issues arising through our engagement and compliance activities. In particular, we are reviewing arrangements where private equity firms push down expenses relating to the acquisition of a target to the target entity, with the target claiming a deduction for blackhole expenditure under section 40-880 of the Income Tax Assessment Act 1997 (ITAA 1997). We are considering issuing public advice and guidance to outline our concerns with this arrangement.

Members expressed concern regarding the scope of what expenses may be captured. We noted that concern generally lies with the push down of expenses by a firm that are referrable to the fund’s acquisition of a target to the target itself. Members said that the facts and circumstances of an arrangement need to be considered, including the timing of the expenses.

Other tax risks and issues including funding arrangements and international risks (such as withholding obligations), profit distributions and returns of capital, consolidation allocable cost amount calculations and Division 855 of the ITAA 1997 are being considered., as well as risks associated with disposal events and fund vehicle eligibility.

Members discussed Managed Investment Trusts (MIT) eligibility in respect of private equity structures. Members noted that multiple fund vehicles, including MITs, may invest alongside each other in a target, and commented that whether a trading business is controlled by a firm and its fund vehicles will depend on the facts and circumstances of each arrangement.

Work is progressing to understand trends and issues arising in relation to other aspects of domestic private capital investment by private groups, including private credit.

In respect of private credit, members noted that the ATO’s focus should have regard to the different arrangements within the industry. Members highlighted that ordinary lending arrangements may be less risky whereas more complex arrangements, such as participation loans, may present greater risk.

Disputed debt posture

Disputed debt (debt subject to objection, review and appeal) remains a significant component of ATO debt, with privately owned and wealthy groups accounting for a material proportion of disputed debt.

As per PS LA 2011/4 Collection and recovery of disputed debt the ATO expects large business and wealthy group taxpayers to actively manage disputed debt obligations while disputes are being resolved. This generally means payment in full or a 50:50 arrangement.

We emphasised that this approach to disputed debt is not a new policy and clarified that existence of a dispute does not prevent us from taking appropriate recovery action in respect of the undisputed debt owed by the taxpayer.

Through the Better Payment Outcomes Project, we are focused on disputed debt and improving consistency in our approach from compliance to objection to litigation.

In response to a member query about whether a specialised area manages 50:50 arrangements, it was noted that the Better Payment Outcomes Project is intended to help taxpayers engage with the right area to discuss payment or other disputed debt arrangements.

Members queried the treatment of disputed family trust distribution tax. We confirmed that where the taxpayer is disputing the liability, it would be treated as disputed debt. Also confirmed is that the current focus for family trust distribution tax disputes remains on voluntary disclosures and working with taxpayers to resolve disputes in an expeditious manner.

We encourage members to familiarise themselves with PS LA 2011/4 and discuss disputed debt expectations with clients early in the dispute process. We intend to publish an article to assist practitioners in creating awareness of expectations regarding dispute debt.

Top 500 program

The 2026 Top 500 program survey shows overall satisfaction increased to 70%, the highest level since 2022, with most respondents reporting they were treated professionally and respectfully during their engagement with the ATO.

The program is helping private groups understand the importance of tax governance, with over 80% of respondents indicating that the Top 500 program has helped them understand how effective tax governance supports groups to meet their tax obligations.

We will use feedback on timeliness, communication and program delivery to inform ongoing improvements to the Top 500 program.

Members agreed that the program has improved, particularly compared with earlier years.

Members agreed that continuity of ATO staff is important.

It was noted that positive feedback was stronger where the same ATO team stayed involved with a group. Less positive feedback tended to arise where engagements were transferred between teams or case officers.

There was acknowledgement that some transfers are unavoidable because of resourcing and regional distribution of Top 500 groups, but we advised we have tried to manage this carefully, particularly by not moving groups that were actively working through issues unless necessary.

Private Wealth is also reviewing guidance currently on ato.gov.au regarding tax governance.

The proposed updates will be positioned as guidance for all privately owned and wealthy groups. However, they will remain most relevant to Top 500 groups, given the requirements of effective tax governance to achieve justified trust.

Members acknowledged that the examples in the draft guidance are useful, particularly because many private groups do not know where to start when preparing a tax governance framework.

However, members also questioned whether this might reopen an old issue, that is, why should private groups invest time and money into producing governance documentation?

The concern was that some private groups, especially those with smaller internal teams, may see the guidance as requiring them to produce a 'manual' that sits on a shelf.

Our response was that the focus is not meant to be creating entirely new processes. Instead, for many groups, it should be about documenting existing governance practices and showing that those processes are followed.

Family trust distribution tax – follow up discussion

Members raised a range of concerns about the practical operation of the family trust distribution tax (FTDT) rules, particularly where historical elections, trust structures and ordinary commercial arrangements do not align neatly with the legislative framework. The discussion highlighted that many issues are not necessarily driven by deliberate mischief, but by legacy arrangements, incomplete records, technical uncertainty and the complexity of applying the rules across family groups, trusts, companies and interposed entities.

Members expressed concern that the rules can produce disproportionate or unintended outcomes, including uncertainty around the validity of elections, the treatment of interest-free loans, the consequences of historical errors, and potential double-tax or franking credit impacts. A key theme was the need for clearer public guidance and practical examples so taxpayers, advisers and ATO case teams can apply the rules consistently and distinguish genuine compliance risks from ordinary commercial or administrative issues.

The ATO recognised that the FTDT issues are technically complex, fact-dependent and difficult to resolve in the abstract, particularly where historical elections, trust structures and interposed entities are involved.

We confirmed our view that an interest-free loan from a trust to a beneficiary may, in some circumstances, give rise to a distribution for the purposes of the trust loss rules but only to the extent that the value of the interest-free loan exceeds the value or amount of consideration given in return: see example 3 in TD 2017/20.

We reiterated, a genuine error in a family trust election form may be corrected where there is sufficient contemporaneous evidence supporting a conclusion that there was a genuine error, such as a typological mistake. In contrast, where a trustee makes a choice to name a particular individual in their family trust election and then later regrets that decision, our view is that a valid choice was made and it cannot be 'corrected'.

In relation to phantom elections, historical records and portal inconsistencies, we will work with taxpayers to assess the available evidence and determine whether an election was made and, if so, its content.

We are reviewing our position on the validity of retrospective elections where the conditions in subsection 272–80(4A) are not satisfied.

We acknowledge that there was uncertainty in relation to technical issues currently the subject of litigation before the courts. However, we are unable to comment on those matters currently but will provide further guidance once the proceedings have concluded.

The removal of some web content may have caused confusion, however additional guidance and examples will be provided to explain the ATOs view more clearly.

Recent public advice and guidance

Members discussed recent public advice and guidance impacting the private wealth market, including:

Debt deduction creation rules and Division 7A
Draft Practical Compliance Guideline PCG 2026/D2 Application of Part IVA to property development arrangements involving long-term construction contracts – ATO compliance approach
Loans by private companies
Taxation Determination TD 2026/3 Income tax: when does a private or public ancillary fund 'provide' a 'benefit'?
Decision Impact Statement Commissioner of Taxation v Morton [2026] FCAFC 31
Decision Impact Statement Commissioner of Taxation v Bendel [2026] HCA 18.

Recent litigation

Members discussed recent litigation impacting the private wealth market, including:

Members raised several issues in relation to the downstream effects of the High Court decision in Bendel.

Key issues for members included:

Practical uncertainty for advisers, especially in explaining what taxpayers should do with existing structures and historical arrangements.
Need for clear post-Bendel guidance, including the ATO’s compliance approach to legacy arrangements, Subdivision EA and related integrity provisions.

We have issued a Decision Impact Statement confirming the High Court position that UPEs are not loans for Division 7A purposes.

We confirmed that where taxpayers followed earlier ATO guidance and converted UPEs into, or treated them as, complying Division 7A loans, those arrangements are now loans and cannot simply be unwound without consequences.

Following the High Court’s comments, Subdivision EA may still have a role even though the UPE is not a loan under section 109D.

The ATO noted that section 100A may still need to be considered from a risk perspective, consistent with its interim position and would consider the practical question raised about when a UPE is paid or satisfied for Subdivision EA purposes.

Action item update

Action item	20250319-2 Private equity
Description	ATO to consider opportunities for additional public advice and guidance in relation to private equity and arrange an out-of-session discussion on potential topics.
Responsibility	ATO
Status	Closed. Update being presented at today’s meeting.

Action item	20260324-1 MTAS feedback
Description	Members to provide further feedback, via PrivateGroupsStewardshipGroup@ato.gov.au, on the impact of label and validation changes in the updated Trust return, particularly for trusts with over 200 beneficiaries.
Responsibility	PGSG members
Status	Closed

Action item	20260324-2 GIC remission guidance
Description	ATO to consider more detailed guidance for advisors about the updated GIC remission process for taxpayers and tax professionals.
Responsibility	ATO
Status	Open – Guidance for taxpayers, How to request a remission of interest and failure to lodge penalties was published in April 2026. Guidance for tax professionals is in progress.

Action item	20260324-3 GIC communication feedback.
Description	Members to provide feedback via PrivateGroupsStewardshipGroup@ato.gov.au on effective approaches to communicating the updated GIC remission requirements to tax professionals and taxpayers.
Responsibility	PGSG members
Status	Closed

Action item	20260324-3 Family trust distributions tax
Description	Members to email their technical questions and viewpoints surrounding Family trust distributions tax to the external co-chair, who will collate and forward to PrivateGroupsStewardshipGroup@ato.gov.au
Responsibility	PGSG members
Status	Closed. Questions provided to ATO for discussion at today’s meeting.

Attendees

Attendees list
Organisation	Member
ATO	Louise Clarke, (Co-chair), Private Wealth
ATO	Carolynne McQuay, Private Wealth
ATO	Grant Brodie, Individuals and Intermediaries
ATO	Jenny Lin, Private Wealth
Accru Felsers	Brett Cox
Alvarez & Marsal	Dang Kha
BDO	Michael Anderson
CPA Australia	Jenny Wong
EY	Priyanka Subramanyam
KPMG	Belinda Cheesewright
Law Council of Australia	Tuan Van Le
Moore Australia	Varun Kumar
Mutual Trust	George Psarrakos
Oatley Family Group	Sharon Clark
Piper Alderman	Megan Bishop
Pitcher Partners	Alexis Kokkinos
Tax Bar Association	James Strong
The Tax Institute	Jonathan Ortner (Co-chair)
William Buck	Tim Lyford

Guest attendees

Guest attendees list
Organisation	Attendee
ATO	Aaron Bennett, Public Groups
ATO	Adrian Zuccarini, Private Wealth
ATO	Daniel Nesci, Objections and Review
ATO	Jeneata Segaram, Private Wealth
ATO	Joseph Gurren, Private Wealth
ATO	Kacey Jardine, Private Wealth
ATO	Maree Caulfield, Private Wealth
ATO	Nicholas Bell, Private Wealth
ATO	Vesna Circosta, Private Wealth
Chartered Accountants Australia and New Zealand	Susan Franks

Apologies

Apologies list
Organisation	Member
Chartered Accountants Australia and New Zealand	Karen Liew
HLB Mann Judd	Gaurav Chitnis
John Fairfax Group	Rob Jackson