What's new for trusts?

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. You must first use or install these assets 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.

If you're claiming a deduction under the instant asset write-off, complete item 5 – label K Depreciation expenses and item 51 – label A Deduction for certain assets.

For more information, see Small business support – $20,000 instant asset write-off.

Debt deduction creation rules

The Treasury Laws Amendment (Making Multinationals Pay Their Fair Share – Integrity and Transparency) Act 2024External Link introduces the debt deduction creation rules 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 doesn't 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 item 29 – label O Were the thin capitalisation or debt deduction creation rules applicable to you?, you must complete and attach an International dealings schedule 2025 to your Trust tax return 2025.

For more information, see:

• Debt deduction creation rules and Division 7A
• Draft Practical Compliance Guideline PCG 2024/D3 Restructures and the new thin capitalisation and debt deduction creation rules
• Draft Taxation Ruling TR 2024/D3 Income tax: aspects of the third party debt test in Subdivision 820-EAB of the Income Tax Assessment Act 1997

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.

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 cannot be claimed for misuse tax paid.

Trusts reflect the capital works deduction at the 4% depreciation rate by including the deduction amount for the period in the income year that the 4% rate applies at Item 9 Rent:

• label X Capital works deduction
• label Y Build to rent capital works deduction at 4%.

For more information, see Housing tax incentives - build to rent developments.

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 Trust tax return 2025

In the Trust tax return 2025, there has been a change or removal of the following items and labels:

• new
  • Managed investment trusts – Is the trust a Withholding MIT?
  • Managed investment trusts – Is the trust a stapled MIT?
  • item 9 – label Y Build to rent capital works deductions at 4%
• changes
  • Managed investment trusts – MIT type, additional codes in table
  • item 22 Attributed foreign income – label S Did you have branch operations in Australia or overseas, or a direct or indirect interest in a foreign trust, foreign company, controlled foreign entity or transferor trust?
  • item 29 Overseas transactions – label O Were the thin capitalisation or debt deduction creation rules applicable to you?
• removal
  • item 52 Small business bonus deductions
    • label C Small business energy incentive
    • label A Small business skills and training boost.

Continue to: Instructions to complete the Trust tax return 2025

Return to: How to get the Trust tax return 2025