Top 10 accounting stories for 2025

In March this year, an ATO data-matching activity on rental income saw some taxpayers receive letters with incorrect information. The letters, issued to property owners who had failed to include rental income in their tax return for the 2023- and 2024-income years, said the recipient may not have included all rental income for their properties.

The letter from the ATO did provide recipients the option to rectify their tax returns, as well as provide a formal audit and penalty warning. However, according to multiple tax agents, some clients who had received the communication didn’t actually own any of the properties listed in the letter – leading to widespread stress and confusion.

2. ‘The company’s money is not your money’: ATO on Div 7A myths

As confusion around Division 7A continues to persist, the Tax Office dispelled some common myths as it sought to clamp down on compliance with the provision. The ATO told taxpayers that common beliefs such as “I can use company money any way I like” or “I don’t keep records” were causing Division 7A mistakes.

To clear up this perception, the ATO said: “A company is a separate legal entity. This means the company’s money is not your money, and there will be consequences every time you take money or access other benefits from your private company.”

It was also noted that private company funds had to be accessed in the form of salary and wages, directors fees or dividends, all of which would be included in taxpayers’ assessable income.

3. ‘Long overdue’: Payday Super legislation introduced

On 9 October, the long-awaited Payday Super legislation was introduced to parliament in a move that was widely welcomed by the super and tax community. Having since passed and set to start on 1 July 2026, Treasurer Jim Chalmers said the initiative was intended to put a stop to wage theft in the form of unpaid super.

The Treasury Laws Amendment (Payday Superannuation) Bill 2025 would require employers to pay their employees’ super at the same time as their salary and wages. Some pushback was received from various bodies on the short notice period of the initiative’s implementation, yet on the whole the measure was accepted with open arms. 

4. ‘Reckless’ Victorians to gear up for 50% penalty tax

This year also saw Victoria introduce a new penalty tax rate for “recklessness” following changes to the Victorian State Taxation Acts Amendment Bill 2025. The changes introduced a 50 per cent penalty tax rate to encourage taxpayers to be “vigilant” in their state tax activities.

The tax rate was intended to sit between the existing 25 per cent general default and the 75 per cent intentional disregard rates and would give the Commissioner of State Revenue broad discretion to impose a higher penalty tax.

The Commissioner said the tax rate would be applied for notification defaults based on the recklessness of a taxpayer, or someone on the taxpayer’s behalf and would apply to tax defaults and notification defaults occurring from the day it received royal assent.

5. Bribery, brothels, breaches of confidence: ATO officer loses appeal against imprisonment

In a crazy story, a former ATO client engagement officer lost an appeal against a five-year prison sentence for accepting a $100,000 bribe in return for a favourable tax audit. The former ATO client engagement officer Wenfeng Wei was also found to have had a gambling addiction and laundered the money through casinos to provide an “ostensible source for the money”, according to court documents.

The court documents also divulged Wei was assigned to audit the taxation affairs of an individual and the individual’s company. Wei received a cash bribe from this individual for undertaking a significantly favourable audit assessing them for outstanding tax liabilities of $136,290, when the audit ought to have identified income tax and GST shortfalls of just over $6 million.

6. Tax agent speaks out after ATO denied hospitalised client’s lodgment deferral request

In an exclusive interview with Accountants Daily, a tax practitioner shared her experience of the ATO denying her tax deferral request for a client who had been hospitalised while going through divorce proceedings. The tax practitioner, Deborah Ianchello, applied for a lodgment deferral request for a client’s trust tax return due to exceptional and unforeseen circumstances.

Originally, Ianchello thought the deferral would be a ‘no-brainer’ based on the client’s trust being tied up in divorce proceedings and that they had been hospitalised. However, much to her surprise, the ATO denied the deferral request despite it being significantly detailed.

7. Tax agent, solicitor receives 10-year ASIC ban

A registered tax agent, registered SMSF auditor and solicitor who recommended his clients invest in companies he controlled was banned from providing financial services for 10 years by ASIC. 

According to the corporate regulator, it had reason to believe Edwards was not a fit and proper person to provide financial services, or to perform functions as an officer and control an entity that carried on a financial services business. It was also alleged that Edwards did not have the “judgement, skill or character” to participate in the Australian financial services industry, and was likely to contravene a financial services law.

8. ‘Punishment doesn’t fit the crime’: ATO upholds $9k penalty to dormant business

A tax agent questioned the fairness of the ATO’s penalty regime after the Tax Office denied a $9,000 penalty remission accrued by a sole trading client’s dormant company. When agent Kevin San had a client come to him with a failure to lodge a penalty for a business he had never traded, he thought it would be a ‘slam dunk’ case for a penalty remission with the ATO. San told Accountants Daily he was shocked when the ATO knocked back the remission request and that the ATO’s current tax agent phone staff, “appeared to lack expertise and had been largely unhelpful in resolving conflicts and queries”.

9. ATO’s debt book climbs to $105bn

In May, the ATO revealed it would be taking deliberate and targeted action in its tax collection activities as the total tax debt sat at over $105 billion. At the UNSW ATAX International Conference on Tax, Commissioner of Taxation Rob Heferen shared that the debt was the “largest it has ever been” and was money that could have been benefiting all Australians.

Heferen also warned taxpayers who repeatedly refused to pay debts or engaged with the ATO that it would be moving to urgently deploy its full powers. From this warning, it was emphasised that only 22,000 taxpayers were responsible for $11 billion of the total amount of collectable debt.

10.  Tribunal rules against tax agent in recent PAYG withholding case

A tax agent lost an appeal to overturn administrative penalties in a case involving wages that were paid from the bank account of an entity other than the employer. The Administrative Review Tribunal of Australia upheld a decision by the ATO to issue penalty assessments to a taxpayer after it found it had failed to take reasonable care with its PAYG withholding obligations. The decision, DJG Consulting Pty Ltd as Trustee for the David Gerrans Family Trust and Commissioner of Taxation (Taxation and business) [2025] ARTA 84, involved a registered tax agent who was the sole shareholder and director of a consulting firm.

The Commissioner of Taxation conducted audits of the applicant and other entities controlled by the tax agent, and determined that the applicant entity, which was the trustee of a family trust, had PAYG withholding obligations and was therefore required to lodge business activity statements and remit amounts withheld accordingly.