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Private Groups Stewardship Group key messages 23 November 2023

Key topics discussed at the Private Groups Stewardship Group meeting 23 November 2023.

Published 16 January 2024

Membership changes

Deputy Commissioner Louise Clarke advised the resignation of Michael Dean from the Private Groups Stewardship Group (PGSG) effective November 2023.

Action items update

20221123-2 – ATO to include the introduction of Comprehensive Risk Reviews into the Next 5,000 Program on the PGSG forward work program in 2023, to discuss observations on how the new process is being received.

This item was discussed at the November meeting and is now closed.

20230308-2 – Members will collate experiences of their clients within the Top 500 program and/or Next 5,000 engagements and bring them to the PGSG as examples to improve the private group experience and refine processes.

This item was discussed at the November meeting and is now closed.

20230308-4 – Members to bring discussion on early engagement back to the PGSG.

The Technical Leadership and Advice service offering will be further explored at the National Tax Liaison Group. Key messages from those meetings will be shared with the PGSG through 2024. This item can therefore be closed.

220309-04 – ATO to provide PGSG members with updates on progress of section 99B draft guidance.

This item was discussed at the November meeting and is now closed.

20230918-1 – An out-of-session discussion on issues raised around corporate residency and intangible migration.

This item will be discussed in early 2024.

20230918-2 – ATO to provide overview of the Modernisation of Trust Administration Systems (MTAS) communication strategy planned for the Tax Practitioners Stewardship Group.

This item will be discussed in early 2024.

Environmental scan

Corporate tax transparency report

On 9 November 2023, the Corporate tax transparency report 2021–22 was released.

With the income threshold set to drop to $100m, there will be an increased number of Privately Owned Wealthy Groups included in the 202223 population

Update on litigation

Bendel v Commissioner of Taxation [2023] AATA 3074External Link

  • On 4 October 2023 the Administrative Appeals Tribunal (AAT) handed down a decision challenging the position in TD 2022/11 on whether unpaid present entitlements constitute a loan for Division 7A purposes.
  • The Commissioner has filed a notice of appeal in the Federal Court. An interim Decision Impact Statement was published on 15 November 2023, further explaining the Commissioner’s administrative approach pending the outcome of the appeal.

Michael John Hayes Trading Pty Ltd as trustee of the MJH Trading Trust v Commissioner of Taxation [2023] AATA 3005External Link

  • AAT decision on whether dividends were part of a dividend stripping operation within the meaning of section 207-155 of the Income Tax Assessment Act 1997 (ITAA 1997) and whether dividends were paid as part of a scheme entered for a tax avoidance purpose – decision set aside and substituted.

Simplot Australia Pty Limited v Commissioner of Taxation [2023] FCA 1115External Link

Federal Court decision on the GST treatment of certain frozen food products.

Integrity declarations

Members were reminded to sign and return integrity declarations as soon as possible. Members advised of delays due to internal processes and confirmed they would submit integrity declarations once cleared.

Reflections on 2023 PGSG achievements and 2024 areas of focus

Members reflected on PGSG achievements for 2023 and suggested key topics of interest for 2024 including:

  • private equity
  • international issues in the private wealth market
  • Next 5,000 and Top 500 programs
  • public advice and guidance, including section 99B and Division 7A products.

Updated website

The updated website is now available as the ATO's default website. Users can expect streamlined navigation, smarter search functionality and a simplified home page.

Members observed some delays and broken links when navigating the website.

Extending the scope of the tax adviser best practice principles

The ATO had a productive meeting with mid-tier firms to explore the potential expansion of the tax adviser best practice principles (principles).

The ATO was encouraged to hear that the firms take good governance seriously and are committed to having robust internal governance controls. Discussion centred on how the existing principles could be adapted to a wider range of firms.

Members discussed the value of expanding the scope of the principles, and current external consultation on the role and powers of the Tax Practitioners Board. The implementation of the principles will need to take the timing and scope of broader developments into account.

Self-managed superannuation fund illegal early access

The ATO is currently undertaking work to estimate the tax gap associated with illegal early access to self-managed super funds (SMSFs). The estimate will be publicly released in due course.

Second Commissioner Jeremy Hirschhorn

Jeremy Hirschhorn addressed the group. The discussion included:

  • reflections on the Organisation for Economic Co-operation and Development Tax Forum which highlighted the importance of stewardship groups in contributing to the tax and superannuation system
  • the ATO's future focus, including cybercrime, reducing collectible debt, addressing unpaid superannuation, and making small business tax compliance more natural
  • the expansion of the Tax Avoidance Taskforce, highlighting the success of the taskforce to date and reflecting community concern that multinationals, large and private groups pay the right amount of tax
  • positive trends in the tax gap across all populations reaffirming the ATO's confidence in the voluntary compliance system, increased levels of information sharing improving ATO modelling, and improved online services
  • an acknowledgement that the ATO must remain transparent with the community about the health of the tax system in light of current challenges within the adviser industry.

Members' comments

Members discussed the ongoing challenge of retaining and attracting talent in such a competitive skills market. This is a key focus area for the ATO and is being addressed through automating processes, outsourcing, prioritising work programs and constantly reviewing and improving processes.

Next 5,000 program and findings report

The ATO led a discussion on the Next 5,000 tax performance program and the findings report that was published in November 2023.

The findings report highlighted most groups willingly engage with the ATO in an open and transparent way. However, the ATO is observing that the population is making compliance errors. The ATO is eager to see groups improve on implementing governance processes, procedures and record keeping. This will help to ensure they report correctly in the future.

The ATO plans to proactively communicate the findings report observations and recommendations to Next 5,000 groups and their advisers to assist them to make improvements to their documented processes, procedures and record keeping. This will improve confidence they are reporting correctly and meeting their tax obligations.

Comprehensive Risk Reviews (CRR) have commenced. The invitation to provide readily available information at the commencement of the CRR has been positively received.

The ATO requested member feedback on its planned communication approach, including which communication channels are the most effective for Next 5,000 clients.

Members’ comments

Members noted a perceived shift from an assurance and justified trust approach to a risk-based approach. This has caused confusion on whether governance will be reviewed.

The ATO clarified that tax governance is still a key component of streamlined assurance reviews in the larger more complex Next 5,000 groups. While the ATO does not specifically review governance in risk-based reviews, it is an important element which impacts whether Next 5,000 groups are compliant.

The ATO will communicate broadly on how Next 5,000 groups can practically improve their processes, procedures and record keeping, helping them to comply in the future.

Members recommended that communications to groups not complying with their tax obligations include targeted, stronger messaging highlighting the impact of non-compliance. Members also suggested regular messaging to assist clients stay ahead of their tax obligations.

The ATO will incorporate suggestions in the planned communication approach. Members expressed interest in collaborating with the ATO on drafting the proposed letters to tax agents and the Next 5,000 population.

Top 500 program and findings report

The ATO led a discussion on the Top 500 tax performance program and the findings report that was published in November 2023. Discussion highlighted:

  • the ATO has rolled out streamlined approaches for tax assurance and governance for groups whose income is predominantly passive and for business activities characterised by high volume, low margin transactions
  • the ATO has published practical guidance for the development of effective tax governance
  • too many Top 500 groups are not ‘getting the basics right’
  • the importance of tax governance, and where the ATO is seeing the most improvement in tax performance against the 4 principles of justified trust
  • the ATO’s view on current drivers and inhibitors of voluntary compliance and engagement with the justified trust program
  • the gradual enhancement of tax governance investment, as reflected in completed reviews
  • the ATO's recently introduced questionnaire template which aids Top 500 groups to address tax governance related queries
  • enhanced tax governance guidance tailored for the smaller segment of the Top 500 population will be available on to address wealth extraction issues, with an emphasis on Division 7A of the ITAA 1997.

Members’ comments

Members discussed their Top 500 experiences and highlighted disparities between program messaging and implementation. Members noted case teams often seek copious amounts of substantiation for transactions that have low materiality, or that do not have a tax impact. The importance of prioritising items for assurance was also discussed.

The ATO advised ongoing support and guidance is provided to case teams. Member concerns will be cascaded through these forums, particularly regarding the need for ongoing communication.

Members suggested Top 500 communications would be more impactful if they focussed on the client's responsibility to maintain good records throughout the year and have information ready ahead of due dates for lodgment. Members also noted that involvement in the program is costly for clients and suggested the use of storytelling with numbers and data to encourage participation.

Members sought to better understand the ATO’s criteria for determining a controlling mind, particularly in circumstances of succession. The ATO commented in general terms but highlighted that ‘control’ needs to be assessed on a case-by-case basis.

Members also noted that Enterprise Risk Management (ERM) transformation programs are occurring more frequently in large private groups. Given the significance and scale of such investment, it is critical large private groups are focused on ensuring IT and GST risk management is considered.

The ATO suggested members provide feedback on Top 500 engagements to be incorporated in nationwide internal sessions.

Action item


Due date

Early 2024



Action item details

Members to provide feedback on Top 500 engagements to be incorporated in nationwide internal sessions.

Draft section 99B

The ATO provided an update on the development of the draft guidance on section 99B of the ITAA 1997.

The ATO is developing a draft compliance approach to explain when it will apply compliance resources to review distributions from non-resident trusts to beneficiaries.

The draft compliance approach will provide practical guidance where an amount is received from a non-resident deceased estate, and on record keeping, to assist clients demonstrate an amount has been paid from the corpus of a non-resident trust.

The aim of the draft guidance is to provide greater clarity and practical certainty around the administration of section 99B. This will make it easier for clients to understand their obligations.

The ATO advised that it is aiming to release the draft guidance for public consultation in mid-2024.

Members’ comments

Members gave feedback on the draft compliance approach and highlighted practicalities taxpayers and their advisers will face when seeking to satisfy the compliance approach.

Action item


Due date




Action item details

Members will provide feedback on the draft compliance approach in early 2024.

Technical issues

Section 115-40

Members noted the limited commentary on section 115-40 of the ITAA 1997 when applied to put and call options. Members highlighted the lack of guidance around a frequently occurring private groups issue where shareholders are looking for liquidity and the put and call options may be excisable beyond the 12-month timeframe.

The ATO noted it is committed to providing further clarity and guidance on this matter. While a taxation determination is deemed suitable for articulating certain parameters around the provision, the ATO proposed expediting the process by offering web guidance in the interim.

Family trust elections

Members discussed the scope and timing thresholds on the ATO’s collection of liabilities arising from previous years’ family trust elections. There is concern the ATO has not previously dedicated compliance resources to this area and there are now cases where there may be liabilities with general interest charges going back 20 years which, if enforced, will dwarf the original liability in many cases.

The ATO stated the issue has been looked at in limitation and it does appear clients have been caught out by the provisions. The ATO is considering the release of guidance to highlight key aspects of the provisions and how they should be applied.

Back-to-back rollovers

Members noted the updated back-to-back capital gains tax rollovers guidance on Members queried the timing and scope of any future tax guidance and whether the ATO has preliminary views on the issues that will be addressed.

The ATO noted back-to-back rollovers pose challenges. The ATO anticipates guidance in the form of a taxation determination will be provided by the end of June 2024. Members will be offered the opportunity to provide feedback on the guidance prior to issue.

Qualified persons rule (45-day holding rule)

Members queried whether there has been a focus on the 45-day holding rule, in the context of trusts and newly introduced beneficiaries.

The ATO recognised the broader issue of entities receiving franked distributions from testamentary trusts without holding an interest in the trust’s corpus or meeting the qualified persons’ rule.

Members proposed a taxation determination to clarify whether beneficiaries, after a family trust election, share the same holding period as the trustee. Instances have arisen where this position is deviated from or when beneficiaries become eligible after the election. Members recommended considering if the trustee’s position at the time of the family trust election applies to beneficiaries, regardless of their eligibility status at that point.

Section 47A

Members queried the ATO's approach and expectations on the provisions set out in section 47A of the ITAA 1997.

The ATO noted there is limited application of and guidance on this provision. The ATO committed to revisiting this issue at future meetings.

Income tax, public advice and guidance

Division 7A roadshow in 2024

The ATO will embark on a Division 7A education campaign and roadshow in 2024.

Through programs of work in Private Wealth and Small Business the ATO has identified a range of breaches of Division 7A of the ITAA 1997. Often these breaches go to more fundamental aspects of Division 7A.

The ATO will partner with professional associations to deliver presentations, webinars and other education products to help advisers and their clients understand their Division 7A obligations.

One of the key messages will be that tax agent and adviser lack of knowledge will not be sufficient to warrant an exercise of the Commissioner of Taxation’s discretion under section 109RB in Division 7A.

Members expressed support for the initiative.

Division 7A draft determination 109G(4)

The ATO confirmed that guidance on whether a corporate trustee can suffer undue hardship for the purposes of section 109G(4) of the ITAA 1997 will be provided in the form of web guidance, rather than a taxation determination.

Draft ruling on earn-out arrangements TR 2007/D10

Draft Taxation Ruling TR 2007/D10 was withdrawn in 2016. However, the withdrawal notice states taxpayers can continue to rely on the withdrawn draft ruling where look-through provisions in subdivision 118-I of the ITAA 1997 do not apply.

As flagged at the September 2023 meeting, following further discussion with stakeholders, the ATO will update the withdrawal notice to remove the reference to continued reliance on TR 2007/D10.

The ATO will engage with clients seeking further guidance about arrangements involving non-look-through earnout arrangements on a one-on-one basis.


Attendees list




Louise Clarke (Co-chair), Private Wealth


Emma Rosenzweig, Superannuation and Employer Obligations


Jenny Lin, Private Wealth


Kasey Macfarlane, Private Wealth


Sahika Jafari, Private Wealth


Michael Anderson

Chartered Accountants Australia and New Zealand

Michael Croker

CPA Australia

Bill Leung

Deloitte Private

Priyanka Subramanyam


Michael Gastevich


Carlo Di Loreto

Fox Private Group

Garry Voigt


Belinda Cheesewright

Law Council of Australia

Tuan Van Le

Oatley Family Group

Sharon Clark

Tax Bar Association

Daniel McInerney

The Tax Institute

Jonathan Ortner (Co-chair)

William Buck

Tim Lyford

7-Eleven Group

Kenny Cheong


Guest list




Amy James-Velagic, Private Wealth


Christopher Ryan, Private Wealth


Jeremy Hirschhorn, ATO Executive


Natasha Kavvadias, Private Wealth


Sahika Jafari, Private Wealth


Scott Parkinson, Private Wealth


Karen Rooke, Office of the Chief Tax Counsel


Apologies list



Spotlight Group Holdings

Leah Edwards