Small business – $20,000 instant asset write-off
The Treasury Laws Amendment (Strengthening Financial Systems and Other Measures) Act 2025External Link has extended the $20,000 instant asset write-off limit to the 2025-26 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. You must first use or install these assets ready for use for a taxable purpose between 1 July 2025 and 30 June 2026.
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 2026. Normally this rule prevents small business entities from re-entering the simplified depreciation regime if they opted out.
To claim a deduction under the instant asset write-off, complete item 6 – label X – Depreciation expenses and item 10 – label A – Deduction for certain assets.
For more information, see Small Business Support – $20,000 instant asset write-off.
R&D tax incentive - R&D activities relating to gambling and tobacco
This measure isn’t law yet. Once the measure is law, some activities relating to gambling and tobacco will be excluded from eligibility for the R&D tax incentive.
The Government announced this proposed change in the Mid-year Economic and Fiscal Outlook 2024–2025, for income years starting on or after 1July 2025. It is proposed that some R&D activities relating to gambling and tobacco will be excluded from eligibility for the R&D tax incentive. However, activities that are solely for the purpose of harm reduction (for example reducing addiction) won't be excluded.
Denying deductions for ATO interest charges
The Treasury Laws Amendment (Tax Incentives and Integrity) Act 2025External Link amended the tax law to deny income tax deductions for general interest charges (GIC) and shortfall interest charges (SIC). The amendments apply in relation to assessments for income years starting on or after 1 July 2025.
This means most taxpayers can’t claim a deduction for GIC and SIC incurred on or after 1 July 2025 from their 2025–26 income tax return and onwards. GIC and SIC incurred before 1 July 2025 will continue to be deductible for the 2024–25 and earlier income years.
For taxpayers with an approved substituted accounting period (SAP), the law applies in a different way. This law change means that a taxpayer will no longer be able to claim a deduction from their next SAP starting after 1 July 2025. The SAP is itself considered an 'income year'.
For example, a taxpayer with an approved SAP from 1 January 2025 to 31 December 2025 may deduct any GIC and SIC incurred for this period in their 2025–26 tax return. They can’t deduct GIC and SIC amounts from their next SAP starting on 1 January 2026.
As GIC and SIC are no longer deductible, any GIC or SIC that is later remitted, will no longer need to be included as assessable income in the year in which the remission occurred. Remissions of GIC and SIC are assessable only if the original interest was deductible.
Any GIC or SIC incurred prior to 1 July 2025 that is later remitted, must be included in your assessable income in the year in which the remission occurred.
For more information see: Denying deductions for ATO interest charges
Practical Compliance Guideline PCG 2025/5
Practical Compliance Guideline PCG 2025/5 Personal Services Businesses and Part IVA of the Income Tax Assessment Act 1936 has been published. This Guideline is relevant to those with alienation arrangements where personal services income (PSI) is derived through a company or trust (called a personal services entity or PSE).
Income is classified as PSI when it is mainly (more than 50%) a reward for personal efforts or skills. An alienation arrangement may create a compliance risk when it is used to retain income in the PSE (‘retention of profits’ arrangements) or divert income to associates (‘income splitting’ arrangements), or both, so that overall, less tax is paid.
This Guideline outlines the types of alienation arrangements that the Commissioner considers to be ‘low risk’, those which are ‘higher risk’, and the likelihood of ATO reviewing those arrangements.
For more information, see:
Junior Mineral Exploration Incentive
On 5 May 2021, the Australian Government announced it would extend the Junior Minerals Exploration Incentive to 30 June 2025. The Junior Mineral Exploration Incentive has not been extended beyond this date.
From the 1 July 2025 exploration credits cannot be received or claimed.
Changes to the Company tax return 2026
No new labels have been added to or removed from the Company tax return 2026.
Continue to: How to lodge your company tax return and pay
Return to: How to get the Company tax return 2026