The Australian Tax Office (ATO) has announced that, over the coming months, it will contact certain rapidly growing small businesses. In this article, we explain what’s happening, what to expect, and how we can support you through the process if you get a call. 

Why is the ATO contacting these businesses? 

The ATO is targeting recently expanded businesses that now fall under the “medium and emerging private groups” category. This includes: 

  • Private groups linked to Australian resident individuals who, together with their associates, control wealth between $5 million and $50 million. 
  • Businesses with an annual turnover of more than $10 million that are not public or foreign-owned and not linked to a high-wealth private group. 

The ATO wants to better understand the tax risks and issues these growing businesses face. They’ll be reviewing four key areas: 

  1. Trusts: Businesses with trusts in their structure should review their governance and be aware of trust activities that may attract ATO attention. 
  2. Division 7A loans: If your business has Division 7A arrangements (loans from a private company to shareholders or associates), make sure you’re conducting annual checks for compliance. Watch out for incorrect reporting, non-compliant loan agreements, incorrect interest rates, and reborrowing to make repayments. 
  3. CGT concessions: If you’re restructuring and planning to access CGT concessions, double-check your eligibility each year before applying. 
  4. Income reporting: If you’ve made a mistake or have yet to report all your income, amend your return as soon as possible. 

        What happens if the ATO contacts my business? 

        If you receive a call or letter from the ATO, don’t panic. They’ll likely ask for more information about your business’s tax affairs related to the areas above. The most important thing is to be proactive in your response. 

        That’s where we come in. We’re here to help you understand the ATO’s requirements and ensure your business meets its obligations. We can assist with reviewing your trust and loan arrangements, checking your CGT concession eligibility and ensuring your income reporting is accurate. 

        Next steps 

        If the ATO contacts you, reach out to us right away and we’ll guide you through the process. In the meantime, it’s a good idea to review your business structure and arrangements, especially if you’ve experienced significant growth recently. 

        Received a call from the ATO? We can help  

        If the ATO has contacted you about your trusts, 7A loans or CGT concessions, please don’t hesitate to get in touch.  

        You can reach out to us by:   

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        This article was written by Tax and Business Services Director Kylie McEwan 

        Disclaimer: The information provided in this article is factual in nature and objectively ascertainable and, therefore, does not constitute financial product advice. Importantly, the factual information that has been supplied does not take into account your personal circumstances, objectives or goals.