Is the ATO cracking down on professionals splitting income?
Asked by: Lukas Stracke | Last update: April 17, 2026Score: 4.5/5 (1 votes)
Yes, the Australian Taxation Office (ATO) is actively cracking down on professionals using income splitting via trusts, companies, and partnerships to divert earnings to lower-taxed family members, targeting lawyers, doctors, tradies, and accountants, especially after issuing updated guidance in late 2025 to clarify Part IVA anti-avoidance rules for Personal Services Income (PSI). The ATO's focus is on arrangements where substantial income goes to associates, raising concerns about disguised employees and arrangements designed primarily to avoid tax, with plans to move to stricter enforcement.
Is the ATO cracking down on income splitting for professionals?
The ATO is cracking down on income splitting for professionals, with thousands of people including lawyers, accountants and tradies potentially impacted. The Australian Taxation Office (ATO) has put thousands of Australian professionals splitting income with their spouses and children on notice.
Is income splitting allowed in Australia?
Broadly speaking, the law allows the splitting of income from property and business income, unless that business income is generated from the taxpayer's personal services. This means that salary- or wage-earning taxpayers are at a relative disadvantage.
What is the ATO cracking down on?
The Australian Taxation Office is cracking down on tax dodgers fleeing the country, as it looks to rein in a massive debt. The collectable debt book bill has blown out to $50 billion, with the ATO looking to crack down on people seeking to flee the country or go on overseas holidays rather than paying what they owe.
Is the ATO cracking down on family trusts?
The crackdown has resulted in the ATO undertaking extensive audits of family trusts and historical distributions, and the issue of hefty Family Trust Distributions Tax (FTD Tax) assessments for noncompliance – being a 47% tax (plus Medicare levy) along with General Interest Charges (GIC) on any historical liabilities.
5 Changes in 2025 that the ATO Doesn't Want You to Know
How to avoid new inheritance tax in Australia?
Ways to Avoid Inheritance Tax Australia
- Understanding Tax Exemptions and Partial Exemptions. ...
- Leveraging Super Death Benefits to Pay Less Inheritance Tax. ...
- The Role of Testamentary Trusts in Tax Planning. ...
- Gifting Assets Before Death. ...
- Tax Implications of Transferring Wealth to Beneficiaries.
Can my wife take half of my trust?
Trusts created and funded before the marriage are more likely to be considered separate property, especially if their assets have not been commingled with marital property. Conversely, trusts established during the marriage, particularly those funded with marital assets, may be subject to equitable distribution.
Is ATO cracking down on side hustles?
The Australian Taxation Office (ATO) is using data matching to catch out taxpayers with “secret” side hustles. More Aussies are working multiple jobs and they're being warned to remember that nothing is hidden anymore.
What is the ATO targeting in 2025?
The ATO's 2025 audit hitlist targets inflated work-from-home claims, misreported rental deductions, undeclared gig income, and untracked crypto trades. Backed by AI and real-time data matching, audits are now triggered by inconsistencies, not random checks. Preparation is key to avoiding penalties.
What is the income splitting tax strategy?
Income splitting refers to various financial arrangements where income that would typically be taxed at a higher rate for one individual is instead taxed at a lower rate for another individual.
What is the most overlooked tax break in Australia?
The 10 Most Overlooked Tax Deductions in Australia – Legal Tax Minimisation Strategies
- Home Office Deductions: The Hidden Goldmine.
- Motor Vehicle Expenses: Claiming for Work-Related Travel.
- Self-Education Tax Deductions: Invest in Your Future.
- Income Protection Insurance: Protecting Your Future.
Who is eligible for income splitting?
Pension income eligible for income splitting includes: Life annuity payments from a Registered Pension Plan (RPP) at any age. Variable pension benefits from an RPP starting at age 65. Withdrawals from a Registered Retirement Income Fund (RRIF) or Life Income Fund (LIF) starting at age 65.
Why does ATO ask for spouse income?
By including your spouse's income in your tax return, we can work out if you're entitled to specific offsets, rebates or reductions. It also lets us know if you're liable for the Medicare levy surcharge. If you don't include your spouse's income, we may need to amend your tax return which may leave you with a debt.
What happens if you have more than $1.6 million super?
If you exceed the cap, you are liable to pay tax on the excess transfer balance earnings (excess transfer balance tax). You also need to transfer any excess to a super accumulation account or withdraw it as a lump sum. This is called a commutation.
How much is $100,000 salary after tax in Australia?
If you make $100,000 a year living in Australia, you will be taxed $24,967. That means that your net pay will be $75,033 per year, or $6,253 per month. Your average tax rate is 25.0% and your marginal tax rate is 34.5%. This marginal tax rate means that your immediate additional income will be taxed at this rate.
Who qualifies for 0% capital gains?
To qualify for 0% capital gains tax, you must have long-term capital gains (assets held over a year) and your total taxable income must fall below specific IRS thresholds, such as under $48,350 for single filers or $96,700 for married filing jointly (for 2025), using deductions to lower your income, allowing you to realize investment profits tax-free in lower-income years.
Are people struggling financially in Australia in 2025?
The latest data from Equifax reveals Australians demonstrated strong financial resilience in 2025, amid an ongoing cost-of-living crisis, the national average credit score remained in the 'Excellent' range at 864 (out of a possible 1200), lifting by three points from the 2024 average of 861.
What will trigger an ATO audit?
ATO audit triggers explained: ATO reviews are commonly triggered by missing or under-reported income, unusually high or unsupported deductions, results that differ from industry benchmarks, and income that appears inconsistent with assets or lifestyle. Accurate reporting and proper records reduce the risk of review.
What is the 10 year tax rule in Australia?
Referred to as tax-paid investments, insurance bonds in Australia are taxed by the fund manager at the corporate tax rate of 30% subject to being held for a minimum of 10 years and do not need to be reported on an investor's tax return. So, the tax is paid before you as an investor receive a profit.
Which jobs pay $100 an hour in Australia?
$100 an hour jobs in sydney nsw
- Horticulture Trainee. Inner West Council. ...
- Program Manager. ...
- Senior BA - ClaimCentre. ...
- Sales Representative – Changing Lives! ...
- Site Manager - Apartments. ...
- Web Developers - ACCEPTING CVs. ...
- English Teacher – PTE / IELTS / General English (Beginner Friendly) ...
- Solar & Battery Salesperson (Commission Only)
Do I have to pay tax on OnlyFans income?
Yes, the money which OnlyFans creators can earn from paid subscriptions or selling content is taxable just like any other income can be, regardless of its source.
How can I make $1000 a month in passive income?
To earn an extra $1,000/month passively, you can invest in income-generating assets like dividend stocks, REITs, or peer-to-peer lending, or build digital assets like online courses, ebooks, or niche blogs that earn royalties or ad revenue over time. Other methods include real estate (rentals, storage), affiliate marketing, dropshipping, or renting out unused space/assets (yard, car). Most require upfront time or capital, but generate income with less ongoing effort once established, with some methods like high-yield savings providing easier entry.
What money can't be touched in a divorce?
Money that can't be touched in a divorce is typically separate property, including assets owned before marriage, inheritances, and gifts, but it must be kept separate from marital funds to avoid becoming divisible; commingling (mixing) these funds with joint accounts, or using inheritance to pay marital debt, can make them vulnerable to division. Prenuptial agreements or clear documentation are key to protecting these untouchable assets, as courts generally divide marital property acquired during the marriage.
Is my divorced wife entitled to my inheritance?
An ex-wife generally cannot claim an inheritance received after a divorce, as it's considered separate property, but she might have a claim if the inheritance was mixed with marital funds (commingling), if it's covered in a specific divorce agreement, or if she's a named beneficiary on assets like life insurance or retirement accounts. The key is whether the inherited money remained separate or became a shared marital asset.
Does wife automatically inherit husband's estate?
No, a wife does not automatically inherit her husband's entire estate; it depends heavily on state law, whether he had a will, and if there are children from other relationships, though some assets (like jointly-owned property or life insurance with a named beneficiary) often transfer automatically. In community property states, spouses share everything, while common law states divide property based on ownership and intestacy laws if there's no will, often giving the spouse a portion (e.g., 1/3 or 1/2) and the rest to children, not the spouse.