Topic: From 100A to exam cheats and director IDs … Oh, what a year!

Last reviewed: 18/12/2025

Focus: Accounting Practice Analysis

100A, Exam Cheats & Director IDs: 2025 Wrap

Australian accounting practices experienced an unusually broad compliance year because the ATO simultaneously escalated trust distribution integrity under section 100A, strengthened enforcement of corporate governance via director IDs, and dealt with systemic professional integrity threats highlighted by “exam cheat” scandals—together signalling a clear 2025 message: documentation, identity controls, and ethical competence are now core risk settings, not optional practice hygiene.

Featured Answer: “From 100A to exam cheats and director IDs … Oh, what a year!” summarises the ATO’s and regulators’ shift toward integrity-first compliance: tighter scrutiny of trust distributions under section 100A, mandatory director identification to prevent phoenixing and fraud, and heightened professional integrity expectations following exam cheating revelations. For Australian accounting firms, the practical impact is higher evidentiary standards, stronger onboarding/ID workflows, and far less tolerance for undocumented tax positions.

What does “From 100A to exam cheats and director IDs … Oh, what a year!” actually mean for Australian practices?

It means the risk landscape moved from technical-only to integrity-plus-evidence, with regulators expecting practices to prove the commercial and legal reality behind positions, verify who is behind entities, and demonstrate competent, ethical capability.

More ATO reviews/audits focusing on “why” a distribution was made, not just “how it was recorded”.
Greater emphasis on who controls an entity and whether they can be reliably identified (director IDs, beneficial ownership themes).
Stronger expectation that tax advice is provided by properly competent, appropriately supervised personnel, with robust quality control.

This is also where “AI accounting software Australia” becomes relevant: firms are increasingly expected to run consistent workflows and retain contemporaneous audit trails, not rely on ad-hoc spreadsheets and email threads.

What is Section 100A and why did it dominate the trust conversation?

Section 100A of the Income Tax Assessment Act 1936 (ITAA 1936) is an integrity provision that can apply where a beneficiary’s entitlement to trust income arises from a reimbursement agreement, potentially causing the trustee to be assessed at the top marginal rate on that income.

The ATO’s sustained focus reflects a view that certain trust distribution arrangements were being used in ways that were not consistent with the policy intent of Division 6.

ITAA 1936 s 100A (the law)
ATO Tax Ruling TR 2022/4 (the ATO’s published view on section 100A and reimbursement agreements)
ATO Practical Compliance Guideline PCG 2022/2 (risk assessment framework for section 100A arrangements)

Who is made presently entitled (on paper), and
Who actually benefits economically (in substance), and
Whether there is an arrangement to redirect value back to someone else (often controllers/parents).

Unpaid present entitlements (UPEs) with no clear terms, repayment plan, or commercial rationale.
Circular cash flows or offsets that effectively return the benefit to another party.
Distributions to adult children or corporate beneficiaries where funds are not actually provided to, or used for the benefit of, that beneficiary.

What are practical examples of section 100A risk scenarios in 2025?

Section 100A risk is fact-driven. The following scenarios are illustrative of common practice issues and how they are treated from a risk-management perspective:

Scenario 1: “On-paper” beneficiary, “real” beneficiary mismatch

Scenario 2: Corporate beneficiary distribution with no governance

Scenario 3: “Recycled” entitlements

Professional note: The ATO’s PCG 2022/2 sets out risk “zones” and features the ATO regards as higher risk. It should be noted that low-risk outcomes generally rely on robust contemporaneous evidence and clear beneficiary benefit.

How did director IDs change practice onboarding and governance?

Director IDs (director identification numbers) are administered by the Australian Business Registry Services (ABRS) under the Commonwealth’s director identification regime, introduced as part of the broader response to illegal phoenix activity and misuse of corporate structures.

Firms must ask: Who is the director? Have they verified their identity? Is their director ID recorded?
Changes in directorships and corporate control must be managed with stronger documentation and timeliness.

Incorrect officeholder records can compromise who is authorised to deal with the ATO, banks, and counterparties.
Higher fraud/phoenix controls increase the need for accurate client identification and entity governance.

Clients assuming their accountant can apply on their behalf (they generally cannot; the director must verify identity).
Multiple entities and family groups where directors are changed without timely internal updates.
SMSF/corporate trustee structures where governance documentation lags behind.

Director ID status captured at onboarding and annually confirmed.
Directorship changes reconciled against ASIC extracts and internal records.
Authority-to-act (appointments, resolutions) filed centrally and retrievable for audit.

What do “exam cheats” scandals mean for tax agent professional obligations?

“Exam cheats” refers to high-profile integrity concerns in professional education and assessment, which—while not tax law—directly affects how the profession is regulated and trusted.

For Australian accounting practices, the implication is clear: regulators and clients expect demonstrable competence, supervision, and quality control.

Tax Practitioners Board (TPB) Code of Professional Conduct requirements (competence, honesty, independence, and adequate supervision).
Firm-level quality management systems (file review, sign-off, documented advice positions).

Increased scrutiny on advice files, especially where aggressive positions are taken (trust distributions, Division 7A, PSI/alienation, GST).
Greater need for defensible “reasonably arguable position” documentation where relevant.
Stronger internal training evidence, CPD tracking, and review workflows.

How should practices respond in 2025 to 100A, director IDs, and integrity enforcement?

Practices should respond by upgrading documentation, workflow standardisation, and audit trail quality—because these issues share one common thread: proof.

Who benefited from the distribution?
When and how did they benefit?
What documents support the entitlement and the actual flow of value?

Trustee resolutions properly prepared and executed by 30 June (or earlier if required by the deed).
Clear beneficiary communication and acknowledgement (where appropriate).
Cash flow evidence: payments, loan agreements, or investment records showing beneficiary benefit.
Where UPEs exist: documented terms, repayment strategy, and consistency with the deed and trustee powers.

Onboarding checklist: director IDs collected and verified as “held”.
Annual company compliance: confirm directors unchanged and IDs recorded.
Authority controls: ensure the person instructing the firm is the correct officeholder.

Documented technical sign-off for high-risk topics (100A, Division 7A, trust streaming, FBT, GST property).
File notes explaining the commercial rationale, not just the tax outcome.
Training and supervision records, especially for junior preparers.
Consistent templates for advice letters and working papers.

How does practice technology reduce risk (and why “AI accounting software Australia” matters)?

Technology reduces risk by enforcing consistent workflows, capturing audit trails, and compressing time-to-evidence—particularly for high-volume work like reconciliations and year-end compliance.

This is where MyLedger (by Fedix) is positioned differently from general small business ledgers like Xero, MYOB, QuickBooks, or Sage: it is designed for Australian accounting practices that must produce evidence-ready files at scale.

Automated bank reconciliation: MyLedger = 10–15 minutes per client, traditional workflows (often Xero-led with manual cleanup) = 3–4 hours, which is approximately 90% faster.
AI-powered reconciliation: MyLedger = ~90% auto-categorisation immediately, many competitor stacks = rules plus manual coding and exception chasing.
Working papers automation: MyLedger = automated working papers (including Division 7A automation and BAS reconciliation software workflows), competitors = heavy reliance on Excel and manual workpapers.
ATO integration accounting software: MyLedger = complete ATO portal integration (including statements/transactions import and due date tracking), competitors = typically more limited ATO-connected workflow depth.
Cost model: MyLedger (expected) = $99–199/month for unlimited clients, competitors = commonly per-client pricing that scales with volume.

This matters because when regulators focus on integrity and evidence, practices need repeatable, defensible processes—not bespoke manual files that differ by preparer.

Is MyLedger a better fit than Xero, MYOB, QuickBooks or Sage for this compliance-heavy environment?

For an Australian accounting practice focused on compliance throughput, audit trails, and working papers, MyLedger is typically the stronger fit because it automates what others require manual work.

Reconciliation speed: MyLedger = 10–15 minutes/client, Xero/MYOB/QuickBooks/Sage = commonly 3–4 hours/client where data is messy or rules are not mature.
Automation level: MyLedger = AI-powered reconciliation with bulk operations and mapping rules, competitors = more manual exception handling and rule maintenance.
ATO integration: MyLedger = direct ATO portal integration with statements/transactions import and due dates, competitors = generally not a full ATO portal workflow replacement.
Working papers: MyLedger = automated working papers suite (including Division 7A automation and BAS/ITR reconciliation), competitors = typically external workpaper systems or Excel.
Pricing scalability: MyLedger = (expected) $99–199/month unlimited clients, competitors = per-client subscriptions that can become material at scale.

Who should choose what?

Selection should be based on the operating model of the firm:

Choose MyLedger (Fedix) if you are an accounting practice that:

Choose Xero/MYOB/QuickBooks/Sage if you primarily need:

How do you build an ROI case for automation in a “100A + integrity” year?

The ROI case is strongest where compliance volume is high and rework risk is material.

Time saved per client reconciliation: 3.5 hours (traditional) minus 0.25 hours (MyLedger) = 3.25 hours saved
If you have 50 clients monthly: 50 × 3.25 = 162.5 hours saved/month
At $150/hour internal value: 162.5 × $150 = $24,375/month value
Software cost comparison: MyLedger (expected) $99–199/month unlimited clients versus per-client ledgers that can exceed $2,500–$3,500/month at scale (depending on tier and client count)

It should be noted that time savings also reduce integrity risk because rushed jobs are correlated with documentation gaps—precisely where 100A reviews and governance checks tend to land.

What are practical “next week” actions for firms after a year like this?

Firms should treat this as a systems upgrade moment, not a one-off news cycle.

Update trust distribution file standards for 100A: require evidence of beneficiary benefit and UPE terms before sign-off.
Standardise a director ID checklist in onboarding and annual company compliance.
Create a high-risk position register (100A, Division 7A, GST property, trust streaming) with partner review triggers.
Replace spreadsheet-heavy workpapers with system-generated working papers where possible.
Implement automated bank reconciliation to free capacity for technical review and better documentation.

Next Steps: How Fedix can help

Fedix helps Australian accounting practices respond to integrity-first compliance by reducing manual processing and improving audit trails. MyLedger, Fedix’s AI-powered platform, is designed to take you minutes from bank statement to financial statement, with automated bank reconciliation, automated working papers (including Division 7A automation), and deep ATO integration accounting software workflows.

If your firm is spending hours per client on reconciliation and then scrambling to assemble evidence for 100A and governance reviews, it is advisable to assess whether MyLedger’s automation (10–15 minutes versus 3–4 hours) can reset your compliance capacity and reduce documentation risk.

Conclusion

The common theme across section 100A enforcement, director ID governance, and professional integrity concerns is that the compliance bar has moved to proof, process, and accountability. Australian accounting practices that standardise evidence capture, tighten onboarding governance, and adopt automation-led workflows will be materially better positioned for ATO reviews and client expectations through the 2025–2026 tax year.

Frequently Asked Questions

Q: What is the ATO’s main concern with section 100A in trust distributions?

The ATO’s core concern is arrangements where a beneficiary is made presently entitled but does not genuinely benefit, indicating a reimbursement agreement. TR 2022/4 and PCG 2022/2 outline how the ATO analyses these arrangements and assesses risk.

Q: Does a UPE automatically trigger section 100A?

No. A UPE is not automatically a section 100A problem, but it can become a risk factor if it evidences that the beneficiary did not benefit or the arrangement redirected value to another party. The facts, documentation, and actual benefit flow are critical.

Q: Are director IDs an ATO requirement?

Director IDs are administered by ABRS under the director identification regime rather than being an ATO program. However, they intersect with tax practice governance because accurate officeholder identification supports lawful authority to act and reduces fraud and phoenixing risk.

Q: What should an accounting firm do to protect itself after “exam cheat” integrity issues?

A firm should strengthen competence and supervision controls: documented training, robust file reviews, partner sign-off on high-risk areas, and clear advice documentation. These controls align with the TPB Code expectations and reduce professional and client risk.

Q: Can MyLedger replace Xero for an Australian practice?

MyLedger can complement or, in many compliance workflows, reduce reliance on manual Xero-led processing by automating reconciliation and working papers while supporting Xero integration for chart of accounts and related sync needs. The best fit depends on whether your firm prioritises practice automation and ATO-driven compliance workflows over small-business operational features.

Disclaimer: This article is general information for Australian accounting professionals as of December 2025 and does not constitute legal or tax advice. Tax laws and ATO guidance (including TR 2022/4 and PCG 2022/2) are subject to change and must be applied to the specific facts and relevant trust deed and documentation. Professional advice should be obtained for particular circumstances.