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 previously opted out.
If you're claiming a deduction under the instant asset write-offExternal Link, 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-offExternal Link.
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 chargesExternal Link
Publication of 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:
- Practical Compliance Guideline PCG 2025/5 Personal services businesses and Part IVA of the Income Tax Assessment Act 1936
- Personal services incomeExternal Link.
Reportable Tax Position Schedule
MITs and CCIVs will be required to lodge a Reportable tax position scheduleExternal Link, for income years commencing on or after 1 July 2025, if they meet the reportable tax position criteria.
The reportable tax position schedule can be found at Reportable Tax PositionExternal Link.
Changes to the Trust tax return 2026
In the Trust tax return 2026, there has been an addition, change or removal of the following items and labels:
- new
- Item 58
- Label B1 - Non-PP Managed investment scheme amount
- Label U2 - Franked distribution related to investment amount
- Label H1 - Other assessable foreign source from a financial investment amount
- Item 58
- changes
- Item 58
- Label B2 Non-PP NCMI
- Label B3 Non-PP Excluded from NCMI
- Item 58
- removal
- Item 54
- Label G Other refundable tax offsets
- Item 58
- Label M Exploration credits distributed
- Item 54
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.
Continue to: Instructions to complete the Trust tax return 2026
Return to: How to get the Trust tax return 2026