Privately owned and wealthy groups remain a major focus for the Australian Taxation Office (ATO) in its 2025–26 focus areas, with heightened scrutiny across tax governance, tax integrity, capital transactions, trust arrangements, and succession planning.
This year, the ATO’s approach is firmly data‑driven, targeting areas where reporting inconsistencies, poor documentation, or non‑commercial arrangements commonly arise. Key focus areas have been identified, ranging from foundational compliance to industry‑specific risks. Proactive governance, updated documentation, and early engagement with advisers will be crucial for groups seeking to minimise ATO review risk in the year ahead.
Understanding the ATO’s 2025–26 Focus Areas for Private Groups
The Australian Taxation Office (ATO) has sharpened its 2025–26 focus areas and compliance priorities for privately owned and wealthy groups for the 2025–26 income year. These priorities reflect trends identified through case reviews, data intelligence, demographic changes, and shifting corporate behaviours. For Australia’s private wealth sector, covering nearly 284,000 groups with 1.3million taxpayer entities, these insights offer an important lens for assessing risk and readiness as we enter 2026.
ATO’s 2025–26 Focus Areas for Private Groups:
- Core tax & compliance issues.
- Use of business money for personal or group purposes (Div 7A).
- Succession planning & wealth transfers.
- Trust arrangements & high‑risk distributions.
- Capital gains tax concessions & restructures.
- Industry‑specific risks.
- International arrangements & foreign beneficiaries.
ATO’s 2025–26 Focus Areas in Detail
1. Core tax & compliance issues:
Foundational compliance is the ATO’s primary risk indicator. Groups continue to be flagged for late lodgment, omitted income, misclassified transactions, and inconsistent reporting cycles. The ATO expects accurate and timely lodgments, correct registrations (PAYG, GST, FBT), proper documentation, and early engagement where assistance is required. Inadequate governance, internal controls and documentation continue to be a growing focus.
2. Use of business money for personal or group purposes (Div 7A):
Division 7A continues to be one of the ATO’s most significant areas of review. Key risks involve private company funds used for non‑business purposes, loans lacking compliant agreements, lifestyle assets used privately, and incorrectly reported repayments.
3. Succession planning & wealth transfers:
Scrutiny continues on restructures, Division 7A implications, asset movements around groups, trust restructures, and tax outcomes from business exits or share sales.
4. Trust arrangements & high‑risk distributions:
The ATO is monitoring trusts and high risk related arrangements, such as circular arrangements, section 100A issues, franking credit misuse, foreign beneficiary distributions, and inadequate trustee resolutions, as well as assessment of the 45 day holding rule. This may also consider the use of tax exempt or concessional entities within groups, as well as SMSFs.
5. Capital gains tax concessions & restructures:
Focus areas include assessment of eligibility for CGT concessions, misuse of rollover relief, pre‑sale restructures, and incorrect categorisation of transactions.
6. Industry‑specific risks:
The ATO has identified certain flagged for higher degrees of review based on the issues identified with other taxpayers. Industries under scrutiny include:
• Professional firms: Expected to lead by example with compliance, also ATO review of tax avoidance schemes or promoter activity.
• Property and construction: Focused on disposals and correct capital v revenue treatments and GST implications.
• Retail: Focused on GST issues, omission of sales and intra group issues.
• Private equity: Given the growing size and scale of private investment, along with the complexity associates with the PE investment lifecycle.
• Retirement villages: Focused on GST and income tax positions, including leasing.
7. International arrangements & foreign beneficiaries:
The ATO is reviewing transfer pricing, unreported cross‑border dealings, trust distributions, and structures obscuring ownership or income flows. This includes looking into Crypto Assets and data matching.
What This Means for Private Groups in 2026
Private groups should use the start of 2026 to take stock and review their approach to tax governance and compliance. It would be timely to consider the ATO focus areas and which may be a risk for your private group. Ensuring proper documentation to validate commercial bases for structures and approaches to tax, any restructures, ensure trust documentation aligns with cash movements, reassess CGT assessments, and strengthen tax reporting systems.
Andersen Australia has a significant private client practice which can assist with assessing your tax risks. Contact our tax team to discuss how we can help you navigate this new era of increased ATO scrutiny and ensure you and your private group are prepared.
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