ATO’s 2025 Priorities for Private Groups (Feb 25 Tax Update)

Published on 4 February 2025 by Drew Pflaum
Categories: Insights & Updates

Relevant For:

Private business owners and high net worth individuals, especially those navigating succession or trust arrangements.

Key Points:

ATO is prioritising reducing tax debt across private groups.
Succession plans involving reorganisations may face extra scrutiny.
Tailored tax governance expected for different group sizes.
Family trust elections often misused, risking extra tax.
On-time lodgement is critical to avoid compliance issues.

Full Article:

The Australian Taxation Office (ATO) is sharpening its focus on private groups as we move into 2025.

Deputy Commissioner Louise Clarke has emphasised several priority areas, including reducing outstanding tax debts, scrutinising succession planning strategies and clarifying the varying standards of tax governance required for different group sizes.

Below are key insights and practical steps you can take to help keep your affairs compliant and support your long-term objectives.

1. Reducing the ATO’s Debt Book

High unpaid tax debts within smaller private groups have prompted the ATO to push for timely repayments. If you owe back taxes, consider proactive strategies to address these obligations. For instance:

Engage with the ATO early: Setting up a payment plan can help you regain control and avoid further penalties.
Review cash flow: Strengthen your budgeting processes to allocate funds for tax liabilities.

Addressing debts promptly not only keeps you compliant but also makes it easier to focus on broader business improvements.

2. Scrutiny of Succession Planning and Restructures

With a growing number of ageing business owners transferring assets or control to the next generation, the ATO is closely watching reorganisations linked to estate and succession plans.

Particular concerns include:

Division 7A compliance: Loan settlements and asset transfers can trigger Division 7A issues, so ensure your loan agreements and repayments align with the legislation.
Trust deed amendments: Amending deeds might affect tax outcomes, so seek professional advice before making changes.
Timing of lodgements: Delays in lodging tax returns, especially when citing restructure complexities, may draw additional ATO attention.

A clear succession plan, underpinned by sound professional advice, can help avoid unexpected tax consequences.

3. Tailored Tax Governance

The ATO is assessing how “tax governance” should look across businesses of different sizes and wealth levels.

While billion-dollar enterprises might need sophisticated governance frameworks, smaller groups in the ATO’s Next 5,000 or with a net wealth closer to $5–20 million should still adopt robust yet proportionate processes.

4. Family Trust Distributions Tax (FTDT)

Family trusts remain central to many wealth transfer and succession strategies. However, misapplied family trust elections and interposed entity elections can lead to unexpected bills.

5. Education and Awareness

The ATO aims to boost understanding of complex rules, such as Division 7A and family trust distributions. Clarke notes that recent campaigns have successfully raised awareness, and more initiatives are planned.

In Summary

Overall, the ATO’s 2025 agenda underscores the importance of forward planning, responsible governance and timely action.

For private groups and high net worth individuals alike, addressing emerging tax obligations is an essential part of building a secure and sustainable future. If you have any concerns or questions, consider seeking guidance from Munro’s trusted professionals who can offer tailored solutions—ensuring you remain in a safe pair of hands while you move confidently towards your goals.