Our focus for privately owned and wealthy groups
Our key areas of focus are based on the risks and issues identified through our intelligence collection, risk detection and analysis and case work.
While we're focused on improving tax performance across all tax and superannuation compliance obligations for the privately owned wealthy groups population, the following priority areas are where we'll be directing our attention and investing additional resources.
Core tax and compliance issues
During our engagements with private groups, we frequently observe risks and issues that have arisen due to inadequate governance, internal controls or professional advice.
While processes and procedures will differ depending on a group’s size, structure and industry, all private groups are expected to maintain appropriate documentation to support their transactions and tax positions. It's also important to recognise when specialist advice is required. As groups expand or evolve their business and investment strategies, their approach to identifying and managing tax risks should also evolve.
Our Tax governance guide for privately owned groups provides practical guidance to help private groups embed effective tax governance practices.
The following are core tax and compliance risks and issues we intend to focus on for privately owned wealthy groups.
Registration, lodgment and payment
All taxpayers, including those in privately owned and wealthy groups, are expected to meet key tax obligations that support transparency and effective engagement with the tax system. These include:
- registering for obligations, such as PAYG withholding and GST, where required
- choosing the correct accounting basis and reporting cycles
- lodging tax returns, activity statements, fringe benefits tax (FBT) returns and Taxable payments annual reports on time
- paying tax debts when due and engaging early with us where more tailored support is needed.
Reporting
Issues we continue to see, which often arise due to inadequate internal controls, include:
- incomplete reporting of tax returns, activity statements and schedules (including information labels, such as shareholder loans, assets and liabilities)
- omitted or underreported income, sales or fringe benefits
- companies incorrectly claiming base rate entity status
- incorrect or overclaimed deductions, GST credits, fuel tax credits and research and development (R&D) tax incentive, where not entitled – this includes situations where the legislative requirements for the entitlement aren't met and where there's insufficient evidence to substantiate claims, for example
- trusts overclaiming deductions to reduce net income
- businesses claiming for ineligible R&D expenditure or activities.
We take a data-driven approach to identifying potential risks and will continue to monitor for these risks through our engagements.
Capital gains tax (CGT)
There are a number of concessions, exemptions and rollovers that may result in capital gains being reduced, disregarded or deferred. We're focused on:
- reducing the instances of taxpayers claiming concessions without considering and meeting the eligibility requirements
- engaging with those restructuring in order to access the concessions.
Risk and issues we're focused on include:
- inappropriately applying the CGT discount
- claiming small business CGT concessions without eligibility requirements being met
- misusing the small business restructure rollover
- restructuring to access concessions they otherwise wouldn't have been eligible for
- trusts inappropriately applying Division 855 of the Income Tax Assessment Act 1997 (ITAA 1997) to disregard capital gains for foreign beneficiaries – we've identified trusts misapplying the CGT exemptions for foreign residents under sections 855-10 or 855-40 of the ITAA 1997 to avoid tax payable on the capital gain.
Trusts
Our attention remains on private groups with:
- higher-risk trust arrangements or distributions
- tax planning outside the ordinary course of genuine business or family dealings
- arrangements that reflect a misinterpretation or disregard of the law.
Our focus areas include:
- distributions to lower-taxed beneficiaries where economic benefits flow elsewhere as this behaviour can be exploiting mismatches, inappropriately reducing trust income or tax avoidance. For more information, see
- PCG 2022/2 Section 100A reimbursement agreements – ATO compliance approach
- TR 2022/4 Income tax: section 100A reimbursement agreements
- TA 2022/1 Parents benefitting from the trust entitlements of their children over 18 years of age
- circular trust distributions where tax hasn't been paid on some, or all, of a distribution, to ensure compliance with trustee beneficiary non-disclosure tax (TBNT)
- family trusts distributing outside the family group, triggering family trust distribution tax (FTDT) – we're concerned there's a lack of awareness about the compounding nature of FTDT, which is resulting in significant liabilities, so we want to help taxpayers get it right and prevent future FTDT arising
- franked dividend distributions where beneficiaries claim the franking credit tax offset to reduce their tax liability without meeting the 45-day holding rule – of particular concern are newly-incorporated corporate beneficiaries that may not meet the 45-day holding rule.
Using business money for other purposes
Private groups often operate through multiple legal entities. While engagement with us may occur at a group level, it’s important to remember that, unless part of a tax consolidated group, multiple entry consolidated group or GST group, transactions between entities in a private group may attract tax and be subject to specific taxing provisions.
It’s important for private groups and their advisers to recognise that using business funds or assets for other purposes – whether personal or across entities within a group – can trigger significant tax consequences. In some instances, we also see opportunistic behaviours intended to avoid these consequences.
We continue our focus on arrangements where private company money or other assets are used for personal or other group purposes, without the transactions being reported and characterised correctly for tax purposes.
Division 7A
We continue to see private groups not complying with their obligations under Division 7A. We're focused on:
- inadequate record keeping
- unreported shareholder loans
- non-complying loan agreements
- failing to make minimum yearly repayments (including not applying the correct benchmark interest rate)
- arrangements where minimum yearly repayments are made either from another loan or a subsequent reborrowing from the same company – for more information, see
- TD 2025/5 Income tax: disregarding certain payments under section 109R of the Income Tax Assessment Act 1936 in determining how much of a loan has been repaid in situations where notional loans are involved
- arrangements to circumvent Division 7A through the guaranteeing by private companies of third-party loans – for more information, see
- TA 2024/2 Arrangements to circumvent Division 7A of the Income Tax Assessment Act 1936 through the guaranteeing by private companies of third-party loans
- draft Determination TD 2024/D3 Income tax: Division 7A – does section 109U of the Income Tax Assessment Act 1936only apply to arrangements where a private company gives a guarantee to another private company?
We'll also continue to scrutinise requests for the exercise of the Commissioner's discretion in section 109RB to disregard the operation of Division 7A or to allow a deemed dividend to be franked, particularly where the breach was not the result of an honest mistake or inadvertent omission.
For more information, see Division 7A Myths debunked.
Lifestyle assets
We see lifestyle assets being used when a private pursuit or 'hobby-like activity' is mischaracterised as a business activity. We often identify these where a taxpayer has been accumulating or improving assets without sufficient income reported in tax returns to demonstrate they have the financial means to fund them. Purchasing assets for use through another business in the group or related entities can lead to taxpayers:
- failing to recognise the application of Division 7A where assets have been provided to a shareholder or their associates
- claiming deductions or offsets that the taxpayer may not be entitled to
- claiming GST credits on motor vehicles and other assets without correctly apportioning for private use
- failing to recognise fringe benefits provided to employees and their associates.
Succession planning
We continue our focus on tax risks arising from the increase in succession planning activities as private groups restructure, dispose of assets or transfer wealth.
This may be through mature family-controlled businesses being sold or passed on to the next generation, or the accumulated wealth from those businesses being transferred.
Transactions and issues we commonly see that facilitate succession planning can include:
- movement of assets around the group
- restructure of family member interests
- accessing concessions, exemptions and rollovers
- entities failing to review the pre-CGT status of assets
- settlement of loans to shareholders or associates (Division 7A loans)
- use of trusts to transfer wealth.
For more information, see Succession planning tax risks.
Specific industries or activities in focus
Tax advisers and professional firms
Advisers play an important role in influencing the tax performance of their clients and in strengthening integrity of the tax system.
Through our Private Wealth Adviser Program, we'll continue to ensure advisers meet their own tax obligations. This reflects our expectation that advisers lead by example.
In addition to the foundational issues applicable to all private groups, we'll focus on:
- professional firms who fail to lodge partnership returns or statements of distributions
- compliance with PCG 2021/4 Allocation of professional firm profits – ATO compliance approach – we'll take action where we identify high-risk arrangements that reduce an individual professional practitioner's tax liability
- intermediaries (including R&D and GST advisers) who either
- promote tax avoidance or exploitation schemes
- encourage their clients to take high-risk tax positions and positions contrary to ATO guidance, including R&D, GST or fuel tax credit refund arrangements where adviser fees are charged on a contingency basis.
Property and construction
Our focus remains on private groups operating in the property and construction industry that have a higher risk of misclassifying their real property transactions due to misunderstanding or disregarding the law.
Areas of focus include:
- disposals of property, in particular we're currently seeing increased activity in relation to property renovation (flipping), residential suburban block development and large-scale subdivision
- capital versus revenue – while most try to do the right thing, we're seeing non-compliance ranging from misclassification to disregarding the law – we want to ensure a level playing field
- GST on disposal of real property, including the application of going concern or margin scheme – we're concerned about the lack of awareness around increasing adjustments, eligibility and calculation of the margin scheme – we want to help taxpayers get it right and understand their obligations
- non-arm’s length dealings between entities within the same private group to reduce their taxable income or incorrect reporting of real property sales or omitted income within the group – private groups may be higher risk, where they have ongoing real property sales and sustained losses or minimal taxable income
- failure to lodge or report sales or income (or both) as identified by the Taxable payments reporting system, particularly where taxpayers have received income as a subcontractor and should be meeting their reporting and compliance obligations to the ATO.
Private equity
In recognition of the growing size and scale of private capital investment in Australia, we've established a Private Equity Program focusing on tax risks associated with transactions and activities of Australian-based private equity firms and their associated private equity participants. These participants include investors, funds, target entities, owners of domestic private equity firms and family offices that undertake or participate in private equity activities.
Our focus includes all stages of the private equity investment lifecycle: pre-acquisition, acquisition, holding, pre-exit, and exit.
Retail
We continue to focus on GST risks within the retail industry where we've observed that GST reporting errors often occur from a lack of appropriate systems and controls. These risks typically increase during periods of business growth or when there are changes to the business structure or operating model. Specific focus areas include:
- transactions between entities within the same private group
- omission of income from sales
- misclassification of voucher sales and warranty payments
- claiming input tax credits for non-creditable acquisitions.
Cross-border transactions
We've observed a number of privately owned wealthy groups engaging in diverse cross-border transactions without understanding or being aware of their reporting obligations. Risks and issues related to cross-border transactions include:
- intangible migration arrangements
- incorrect self-assessment of significant global entity (SGE) status
- related-party financing, thin capitalisation and debt deduction creation rules
- controlled foreign company (CFC) compliance (see common CFC errors)
- failure to disclose international related-party dealings in the international dealings schedule.
For more information, see Private Wealth International Program.
Crypto assets
We're focused on ensuring crypto asset transactions are reported correctly. Our specific focus areas include:
- crypto asset investors omitting or incorrectly reporting capital gains or losses from crypto transactions
- crypto asset businesses omitting or incorrectly reporting income and expenses.
Our Crypto assets data-matching program matches what private groups report in their tax return with data on crypto asset transactions and accounts from service providers.
Use of tax-exempt or concessionally taxed entities
While there are many reasons for having a self-managed super fund or not-for-profit organisation, we'll focus on arrangements where private groups inappropriately use tax-exempt or concessionally-taxed entities and structures in order to minimise or avoid tax.
This includes private groups:
- inappropriately using self-managed super funds to access the concessional tax rate
- inappropriately setting up or using income tax exempt vehicles, including ancillary funds, to access tax concessions and private benefits they otherwise would not be able to access.
Private groups need to consider the potential tax consequences for entities within their group that may arise from these arrangements.
Retirement villages
We continue our focus on retirement villages based on insights from our engagements to date. We review both GST and income tax positions taken through the retirement village lifecycle. Areas we're focused on include:
- incorrect application of GST-free provisions
- omission or incorrect calculation of the GST increasing adjustment when purchasing a retirement village as a GST-free going concern
- related-party transactions and incorrect valuations
- land-lease structures.
For more information, see Retirement villages and tax.
GST refund fraud
We're maintaining a strong focus on arrangements designed to improperly obtain GST refunds, particularly those involving artificial and contrived transactions between entities within the same private group, such as those described in TA 2025/2 Arrangements designed to improperly obtain goods and services tax refunds.
These arrangements will generally involve the manipulation of structures, reporting, timing, or non-payment of GST obligations, and may include either:
- false or exaggerated invoicing
- mismatched accounting methods
- the appearance of high-value transactions where no genuine economic activity has occurred.
Our compliance efforts are informed by intelligence and data analytics, and we're working across the system to detect and disrupt these arrangements early.