Each year, the ATO identifies key areas of focus based on the risks and issues identified through their data collection, risk detection and analysis, and case work. 

The ATO are putting more focus into Medium and emerging private groups:

• private groups linked to Australian resident individuals who, together with their associates, control wealth between $5 million and $50 million; and

• businesses with an annual turnover of more than $10 million, that are not public or foreign owned and are not linked to a high wealth private group.

Foundational Issues

Registration, Lodgement, and Payment

• Late lodgement of tax returns, FBT returns, or activity statements.
• Failure to pay tax debts on time or engage with the ATO.

Incorrect Reporting

• Omitted income and sales for income tax and GST.
• Ineligible R&D claims and incorrect base rate entity status.

Division 7A

• Unreported shareholder loans and non-compliant loan agreements.
• Failure to meet repayment requirements or apply correct interest rates.
• Inadequate record-keeping and reborrowing arrangements.

Capital Gains Tax (CGT)

• Incorrect eligibility for small business CGT concessions and miscalculation of CGT discounts.
• Inaccurate market value substitution for related-party transactions.
• Incorrect non-resident access to concessions.

Property and Construction

• Misclassification of capital vs. revenue on property disposals.
• Failure to report sales or GST correctly.

Other Transactions

• Non-arm’s length income in SMSFs and misinterpreted family trust elections.
• Failure to include foreign trust distributions (Section 99B).
• Discrepancies in franking account balances and compliance with the 45-day holding rule.

Emerging or Evolving Risks

Incorrect Reporting

• Over-claimed deductions by trusts reducing net income.
• R&D claims ineligible for certain industry sectors.

Other Emerging Areas

• Tax losses.
• Inappropriate share buybacks.
• Thin capitalisation.
• Cryptocurrency tax issues.
• Superannuation balance exceeding the $3 million cap.

Targeted Focus Areas

Succession Planning

• Addressing risks related to the ageing demographic and succession planning.

Private Equity

• Managing risks throughout the private equity lifecycle, from pre-acquisition to exit.

GST Focus: Retail and Construction

• Reporting errors on GST supplies, acquisitions, and goods.
• Inaccurate commercial adjustments.
• Intra-group transactions.