ATO Areas of Focus for Private Groups – 2025 Update

Private groups continue to attract focused ATO attention due to their scale, complexity and the volume of high-value transactions occurring within this segment.

The ATO has reinforced that its approach for 2025 remains intelligence-led and data-driven, with particular focus where governance or reporting weaknesses are evident.

Key statistics shaping the ATO’s focus

271,700 private groups operating across Australia
$2.6 billion tax gap for high-wealth individuals and medium businesses
80% of private group heads aged over 50, driving increased succession activity

Foundational compliance remains the entry point

The ATO continues to stress that most compliance concerns arise from gaps in governance, systems and documentation rather than deliberate behaviour.

Registration for the correct obligations, timely lodgment and payment, and complete and accurate reporting across income tax and GST remain the primary indicators of risk.

Professional firms and advisers are a particular focus. In FY23, approximately 170,000 professional firms distributed around $60 billion in profits, and PCG 2021/4 is fully effective for FY25 lodgments, reinforcing expectations around appropriate profit allocation and adviser conduct.

Emerging and evolving risk areas

The ATO has highlighted a number of areas where risk is increasing as private groups grow, restructure or diversify.

These include incorrect reporting of trust deductions, R&D claims and GST credits, particularly where employee allowances are involved. In the CGT space, there is heightened scrutiny of Division 149 and pre-CGT assets, especially following changes in ownership or control.

Additional areas under observation include trust loss trafficking, inappropriate use of private ancillary funds, share buybacks, thin capitalisation and related-party financing arrangements, and cryptocurrency-based business models.

Use of business funds and Division 7A

The use of business money or assets for personal or other group purposes remains a consistent area of concern.

Division 7A issues continue to arise from inadequate record keeping, unreported shareholder loans, non-complying loan agreements and failures to meet minimum yearly repayment requirements.

Lifestyle assets remain a particular focus where private use is not correctly identified or reported.

Succession planning and targeted activity

Succession planning remains a key focus for 2025, reflecting the ageing private group demographic.

The ATO commonly sees risk arise through asset movements within groups, restructures of family interests, use of concessions and rollovers, and failures to reassess pre-CGT asset status or address Division 7A loans as part of succession arrangements.

The ATO has also confirmed continued focus on property and construction, private equity, retail GST, cross-border transactions and retirement villages, particularly where transactions are high-value or structurally complex.

What private groups should take from this

The ATO’s approach for 2025 is increasingly targeted, preventative and data-driven.

For private groups, the most effective response remains practical and forward-looking: keep core obligations up to date, review higher-risk areas as structures evolve, and ensure transactions are commercially grounded, well documented and capable of being clearly explained if reviewed.