Family groups and private clients know that staying ahead of the ATO’s compliance radar is more than just great housekeeping, it’s a strategic advantage.

Each year, the ATO Compliance Focus highlights areas where family groups and private clients should pay close attention, and 2025–26 is no exception. Whether you’re managing intergenerational wealth, running a family business, or navigating complex trust structures, understanding where the ATO is looking next can help you make smarter decisions and avoid some expensive surprises! 

In this article, we break down the ATO’s latest compliance priorities, highlight real-world examples, and share practical next steps to keep your tax matters in top shape.

Key ATO Compliance Priorities for 2025–26 

Understanding the ATO Compliance Focus can help family groups and private clients identify potential risks, strengthen governance practices, and maintain compliance with evolving tax obligations.

1. Use of Business Money for Personal or Group Purposes 

• The ATO is closely monitoring situations where business funds or assets are used for personal expenses or transferred between entities within a group. 

• Division 7A remains a key focus, especially regarding shareholder loans, minimum yearly repayments, and arrangements designed to circumvent Division 7A rules. 

📌 Example: A family company pays for a shareholder’s private holiday. If not properly documented and repaid, this could be treated as an unfranked dividend under Division 7A. 

2. Succession Planning and Asset Transfers 

• With an ageing demographic, more family groups are restructuring, disposing of assets, or transferring wealth to the next generation. 

• The ATO is scrutinising the tax consequences of these activities, including eligibility for concessions, exemptions, and rollovers. 

📌 Example: Transferring business assets to a family trust without reviewing pre-CGT status or meeting small business CGT concession requirements can trigger unexpected tax liabilities. 

3. Trust Distributions and Arrangements 

• The ATO is targeting higher-risk trust arrangements, especially distributions to lower-taxed beneficiaries where the economic benefit flows elsewhere. 

• There is a focus on compliance with section 100A (reimbursement agreements) and the correct application of family trust distribution tax (FTDT). 

📌 Example: Distributing trust income to an adult child at a lower tax rate, but the funds are used by parents, may attract ATO scrutiny under section 100A. 

4. Industry-Specific Risks 

• The ATO is paying close attention to property, construction, private equity, and international dealings. 

• The ATO continues to review, particularly where businesses have complex arrangements involving deposits, progress payments, milestone billing or contracts that span multiple financial years. Ensuring income is recognised in the correct period, with appropriate supporting documentation, is an important compliance focus. 

📌 Example: Misapplying GST credits on motor vehicles used for both business and private purposes or failing to recognise fringe benefits provided to employees or associates. 

5. Reporting and Documentation 

• Incomplete or incorrect reporting of income, deductions, and trust distributions remains a common issue. 

• The ATO expects robust governance, internal controls, and documentation to support all transactions and tax positions. 

📌 Example: Failing to report a shareholder loan or omitting income from a related entity can result in penalties and interest. 

What the ATO Compliance Focus Means for You

• Review your use of business funds: Ensure all transactions between entities and individuals are properly documented and comply with Division 7A. 
  
• Plan succession carefully: Seek specialist advice before restructuring or transferring assets to ensure eligibility for concessions and to avoid unexpected tax outcomes. 
  
• Check trust arrangements: Make sure trust distributions are genuine and comply with current ATO guidance, especially regarding section 100A and FTDT. 
  
• Strengthen governance: Maintain clear records, robust internal controls, and seek professional advice for complex transactions. 
  
• Stay informed: Keep up to date with ATO guidance and industry-specific risks relevant to your group. 

Next Steps / Andersen Perspective

To stay ahead of the ATO’s 2025–26 compliance focus, it is important to review your group’s structures, transactions and documentation to ensure they meet current regulatory expectations.  

Proactively engaging with your tax and legal advisers can help you identify and address any gaps or risks before they become issues. Keeping up to date with ATO developments and best practices, such as subscribing to relevant updates, will help you remain compliant and prepared. For tailored advice and support, you can contact Andersen’s private client specialists, who are ready to provide guidance specific to your circumstances. 

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