Housing tax incentives - build to rent developments
The Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Act 2024External Link and Capital Works (Build to Rent Misuse Tax) Act 2024External Link provide tax incentives to increase the supply of housing. From 1 January 2025, the incentives give owners and investors in eligible build to rent developments access to:
- an accelerated deduction of 4% for capital works relating to build to rent developments
- a concessional final withholding tax rate of 15% on eligible fund payments (amounts referrable to rental income and capital gains from the build to rent development).
To be an eligible build to rent development that the owner can choose to be subject to the incentives, the Australian development will have:
- at least 50 dwellings for rent to the public with a lease term offer of at least 5 years
- at least 10% of the dwellings as affordable dwellings
- a single owner.
Also, for the capital works deduction at the 4% depreciation rate, construction of the build to rent development must have commenced after 7:30 pm AEDT on 9 May 2023.
For an eligible development to access the tax incentives, its owner must make a choice that the development accesses the incentives. The owner must notify the Commissioner of Taxation (the Commissioner) in the approved form – Build to rent development notice of events form.
All eligibility conditions must be met for a minimum period of 15 years.
- If the conditions aren't met while accessing the concessions, we may issue a Build to rent development misuse tax notice of assessment to the owner of the development. We will use this new tax to clawback the incentives during the relevant period. A deduction can't be claimed for misuse tax paid.
AMITs claiming the capital works deduction at the 4% depreciation rate must include the deduction amount for the period in the income year that the 4% rate applies in the:
- tax return at
- section Capital allowances, label Total Division 43 capital works deductions (special building write-off)
- section Capital allowances, label Build to rent capital works deduction at 4%
- in the AMIT tax schedule at
- section Assessable income, subsection Income - other than capital gains, label Direct deductions.
For more information, see Build to rent development tax incentives.
Debt deduction creation rules
The debt deduction creation rules (DDCR) were enacted by the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share – Integrity and Transparency) Act 2024External Link. The Act introduces the DDCR in Subdivision 820-EAA of the Income Tax Assessment Act 1997 (ITAA 1997).
For income years that commence on or after 1 July 2024, the DDCR operates to disallow related party debt deductions arising in relation to certain related party arrangements including arrangements undertaken (entirely or partially) prior to 1 July 2024.
The DDCR applies to multinational businesses (that is, businesses operating in Australia and at least one other jurisdiction), including private businesses and privately owned groups.
The DDCR does not apply to:
- entities that, together with their associate entities, have $2 million or less of debt deductions for an income year
- securitisation vehicles
- certain special purpose entities
- Australian plantation forestry entities
- authorised deposit-taking institutions (ADIs).
If you answer Yes at the question Were the thin capitalisation or debt deduction creation rules applicable to you?, at Overseas transactions/thin capitalisation, you must complete and attach an International dealings schedule 2025 to the AMIT tax return 2025.
For more information, see:
- Debt deduction creation rules and Division 7A
- Draft Practical Compliance Guideline PCG 2024/D3 Restructures and the thin capitalisation and debt deduction creation rules - ATO compliance approach
- Draft Taxation Ruling TR 2024/D3External Link Income tax: aspects of the third party debt test in Subdivision 820-EAB of the Income Tax Assessment Act 1997.
Small business – $20,000 instant asset write-off
The Treasury Laws Amendment (Tax Incentives and Integrity) Act 2025External Link has extended the $20,000 instant asset write-off limit to the 2024–25 income year. The measure aims to support small business entities (with an aggregated annual turnover of less than $10 million).
Eligible small business entities can immediately deduct the business use portion of the cost of eligible depreciating assets costing less than $20,000. Such assets must have been first used or installed ready for use for a taxable purpose between 1 July 2024 and 30 June 2025.
The $20,000 limit applies on a per asset basis, so small business entities can instantly write off multiple assets. Small business entities can also immediately deduct an eligible amount included in the second element of a depreciating asset's cost.
The 5-year 'lock out' rule is suspended until 30 June 2025. This rule prevented small business entities from re-entering the simplified depreciation regime if they opted out.
You need to complete section Capital allowances, label Total depreciation deducted for income year in the AMIT tax return and section Assessable income, subsection Income - other than capital gains, label Other Deductions in the AMIT tax schedule if you're claiming a deduction under instant asset write-off.
For more information, see Small business support – $20,000 instant asset write-off.
Reducing the use of cheques for tax refunds
The Treasury Laws Amendment (2024 Tax and Other Measures No. 1) Act 2024External Link amends tax law to provide the ATO with a discretionary power to retain certain tax refunds and credits for up to 90 days. We can retain the refund from the date the refund or credit becomes payable.
This period enables us time to contact you to nominate a valid Australian financial institution details (FID) to receive your refund by electronic fund transfer (EFT).
Where the Commissioner retains a refund, we will contact you by letter, email or a message in myGov.
The Commissioner can refund an amount to an account that satisfies the following conditions:
- the account holder is the
- entity
- entity and another entity
- entity’s registered tax agent or BAS agent
- entity’s legal practitioner as trustee or executor
- the account is at a branch or office of a financial institution within Australia.
The holding period doesn't apply if an entity supplies their valid Australian financial institution details in their tax return. Where this happens, we will pay the refund to the account of an entity in a timely manner.
Changes to the AMIT tax return 2025
In the Attribution managed investment trust tax return 2025, changes to the following sections include:
- section Overseas transactions/thin capitalisation – rewording the question Did the thin capitalisation provisions affect you? to Were the thin capitalisation or debt deduction creation rules applicable to you?
- section – Capital allowances – new label Build to rent capital works deduction at 4%
- section – Withholding obligations – new label Is the trust a Withholding MIT?
Removed items in the AMIT tax return 2025
In the Attribution Managed Investment Trust tax return 2025, changes to remove the following include:
- section Small business bonus deductions
- label Small business skills and training boost
- label Small business energy incentive.
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