July 2025 Round Up
With tax time now in full swing, it’s crucial to stay on top of the risks and responsibilities that come with the new financial year. In this month’s update, we cover two important areas to protect your finances – how to avoid the 47% tax trap on family trust distributions, and what to watch for as ATO impersonation scams continue to rise. Staying informed could save you both money and stress this tax season.
1. Stay Scam Safe this Tax Time – Scams on the Rise Read the full article
2. Beware of the 47% Tax Trap: Family Trust Distribution Pitfalls Explained Read the full article
Stay Scam Safe This Tax Time: ATO Impersonation Scams on the Rise
Scam activity is increasing again this tax season, with a sharp rise in ATO impersonation scams.
What’s Happening?
Recent data shows:
ATO email scams have increased by over 300% compared to this time last year.
Reported scam losses reached $13.7 million in early 2025, up from $4.6 million in early 2024.
Phishing scams remain the main type, targeting individuals with fake emails and messages.
Jenny Wong, CPA tax lead, said:
“Scammers know Australians have tax on their minds at this time of year and use this to catch people off-guard, especially in the early morning.”
How These Scams Work
Scammers often:
- Send emails or texts claiming to be from the ATO or other government agencies
- Create urgency by mentioning refunds, penalties, or account issues
- Include links to fake websites to steal personal information
Common Phrases to Watch For
Messages may mention:
‘Urgent new notification in your account inbox’
‘Update regarding your benefits’
‘New refund notification’
‘Avoid being penalised’
These will often ask you to click a link to log in to myGov or provide details.
How to Stay Scam Safe
- Never share your myGov login, tax file number, or bank details unless you are sure who you are dealing with.
- Check if the message could be fake. The ATO will never send unsolicited messages with links requesting personal information or logins.
- If something doesn’t feel right, don’t act on it. Contact us or the ATO directly to confirm.
How the ATO Will Contact You
The ATO may send an SMS or email asking you to contact them, but they will never:
Send unsolicited messages with links requesting personal information or login
Ask for personal information or payments via social media (Facebook, Instagram, X, LinkedIn)
Final Reminder
“Scams are designed to create urgency before you’ve had a chance to think clearly. Always take a moment to review messages with a clear head,” said Wong.
If you suspect a scam:
Visit ato.gov.au/scamsafe
Call the ATO on 1800 008 540
We’re here if you need further support this tax time.
Beware the 47% Tax Trap: Family Trust Distribution Pitfalls Explained
Family trust elections (FTE) can unlock valuable tax concessions – but one misstep could see you hit with a 47% tax bill.
Why Family Trust Elections Matter
Family trust elections (FTE) allow trusts to access certain tax concessions. However, they come with a major risk: triggering the family trust distributions tax (FTDT), which is levied at 47% (top marginal tax rate plus Medicare levy).
Complex Rules can Mean Costly Mistakes
“FTE and FTDT provisions are complex, poorly understood, and can lead to significant tax pitfalls for family businesses and private groups,”
– Nitin Saby, tax advisor and former ATO director
Key complexities include:
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Choosing a ‘test individual’, whose family group defines who can receive distributions.
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Using ATO-approved forms precisely, including elections, revocations, or variations.
Who Counts as ‘Family’?
Under an FTE:
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Distributions can only go to the test individual’s family group.
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The family group includes their spouse, parents, grandparents, siblings, and any companies, trusts, or partnerships where family group members hold fixed interests.
Distributing outside this group triggers FTDT at 47%.
Common Triggers for Family Trust Distribution Tax
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Distributions to non-family group members (via payments, credits, loans, or transfers).
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Poor record-keeping or unclear beneficiary registers.
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Complex family structures or succession issues, especially if the test individual dies and trusts aren’t updated.
ATO Scrutiny is Increasing
“There is a clear trend of the ATO targeting high-net-worth and multi-generational private groups for FTDT compliance,”
– Nitin Saby
This is especially true for longstanding structures involving generational wealth transfers.
How to Stay Compliant
- Carefully considering all implications before making an FTE.
- Maintaining meticulous record-keeping.
- Reviewing trust deeds regularly.
Seeking professional advice frequently. - Monitoring legislative and case law changes.
Important: This is not advice. Clients should not act solely on the basis of the material contained in this article. Items herein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. This article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval. Liability limited by a scheme approved under Professional Standards Legislation.
