ATO Compliance Trends & Risk 2026 — What Matters Now
Relevant to business owners, trustees and family groups with multiple entities
Core message
The ATO has shifted decisively toward enforcement. Increased funding, data matching and expanded regulatory obligations mean that documentation, governance and consistency of behaviour are now more important than technical structuring.
What has changed
• Significant increase in ATO compliance funding and audit activity
• Interest on ATO debts is no longer tax deductible
• Expanded reporting obligations (AML/CTF, breach reporting)
• Greater scrutiny of trusts, Division 7A, and related party transactions
• Increased reliance on data matching across systems
What this means (practically)
• Structures alone are no longer sufficient — substance must align with documentation
• Historical arrangements are being revisited under new (mostly untested) interpretations
• Poor documentation is now a primary audit trigger
• Cashflow and tax debt management has become more critical
• Firms are being forced into greater due diligence on their clients
Key risk areas
• Trust distributions, documentation and beneficiary entitlements (s100A, UPEs, FTDT)
• Division 7A loans and undocumented arrangements, benefits from company assets
• Rental property claims and interest deductibility, new interpretations on holiday houses
• GST and BAS reporting inconsistencies
• Related party transactions without formal agreements
Immediate considerations
• Ensure all year-end actions are completed before 30 June (not after)
• Review and update all related party agreements (loans, services, leases)
• Reassess trust documentation, elections and distribution processes
• Reduce reliance on ATO debt — consider refinancing where appropriate
• Improve record keeping and ensure consistency across tax, accounting and cash flows
Our view
The dominant theme is a shift from technical optimisation to defensibility. Most issues now arise from mismatch between documentation, intent and actual behaviour. The appropriate response is not more complexity, but greater discipline in how existing structures are operated and recorded. Family groups should consider review of structure and simplification to counter the shifting attitude toward existing arrangements
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Financial Product Advice
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Chancellors Chartered Accountants | Private Wealth Advisory
