The ATO Is Stepping Up: What Business Owners Need to Watch in 2025–26

Tim Roff
7 days ago
2 min read

The ATO has become far more proactive. With better data, real-time reporting, and stronger enforcement, it can now spot issues faster — and act on them sooner.

For business owners, that means less room for error and far less tolerance for “we’ll fix it later.”

Here are the key areas on their radar:

Division 7A: Company Funds Are Not a Free-for-All

If you’re taking money out of your company without a proper loan agreement, you’re exposed.

Without the right structure — including documented terms, interest, and repayments — the ATO can treat those withdrawals as unfranked dividends. That means tax payable, often without the cash to cover it.

Informal drawings and “temporary” loans are exactly what trigger attention here.

Section 100A: Trust Distributions Must Stack Up

The ATO is looking beyond paperwork and into what’s actually happening.

If trust income is distributed to one person but benefits someone else, expect scrutiny. These arrangements can be challenged and taxed at the top marginal rate.

It’s no longer about how it looks — it’s about whether it reflects reality.

Data Matching: Everything Needs to Align

The ATO is cross-checking your numbers across:

Income tax returns
GST (BAS)
TPAR (Taxable Payments Annual Report)
Single Touch Payroll

If they don’t tell the same story, it raises flags.

Even small inconsistencies can trigger a review — not always because of wrongdoing, but because the systems don’t line up. Consistency is now critical.

Director Penalty Notices: This Can Get Personal

Unpaid PAYG, GST, or super isn’t just a business problem — it can become your personal liability as a director.

And stepping down doesn’t automatically protect you.

DPNs are one of the ATO’s strongest enforcement tools, and they’re being used more often. If you’re behind, acting early makes a big difference.

Payday Super: Cash Flow Is About to Tighten

From 1 July 2026, super must be paid at the same time as wages — not quarterly.

That means:

Less flexibility with cash flow
Greater reliance on accurate payroll systems
Faster detection of missed payments

If your business has relied on timing gaps, it’s time to adjust.

Bottom Line

An ATO review letter isn’t a bill — but it can turn into one quickly if you’re not prepared.

The common theme is simple: your reporting, your structures, and your actual behaviour all need to align.

The businesses that stay ahead don’t leave this to chance — they get proactive advice, keep their systems tight, and deal with issues before the ATO gets involved.

If you’re unsure whether your business would stand up to scrutiny, now is the time to find out.

A quick review today with our expert team at Forbes Holland can prevent a much bigger problem tomorrow.

Because in the current environment, compliance isn’t just admin — it’s risk management.