Key points
- Company tax rates are unchanged for 2025–26: 25% for base rate entities, 30% for other companies.
- The $20,000 instant asset write-off continues for 2025–26: small businesses (turnover under $10M) can immediately deduct eligible assets costing under $20,000 each, if installed and ready for use by 30 June 2026.
- ATO interest charges (GIC/SIC) are no longer tax-deductible from 1 July 2025 — businesses included.
- Trust distribution resolutions must be made and signed by 30 June 2026; the ATO continues to focus on Section 100A, unpaid present entitlements (UPEs) and foreign trusts (Section 99B).
- The Division 7A benchmark interest rate for 2025–26 is 8.37%.
The 2025–26 financial year (the “2026 financial year”) is ending soon. For companies, trusts and small businesses, several changes apply this year — and some require action before 30 June.
Company tax rates: unchanged for 2025–26
- Base rate entity: 25%
- Other companies: 30%
A company is a base rate entity (tested each year) if its aggregated turnover in the previous year was under $50 million and 80% or less of its assessable income is passive income (dividends, interest, rent, royalties, capital gains). Rates themselves haven’t changed.
$20,000 instant asset write-off
For 2025–26, small businesses with aggregated turnover under $10 million can immediately deduct the full cost of eligible depreciating assets costing less than $20,000 each, rather than depreciating them over time.
- The $20,000 limit is per asset, so it can apply to multiple assets.
- Timing matters: the asset must be installed and ready for use by 30 June 2026 — simply ordering or paying isn’t enough.
- Assets costing $20,000 or more go into the small business depreciation pool (15% in the first year, 30% each year after).
If you’re planning to buy equipment, keep that 30 June 2026 date in mind.
ATO interest charges are no longer deductible (GIC/SIC)
From 1 July 2025, the ATO’s General Interest Charge (GIC) and Shortfall Interest Charge (SIC) are no longer tax-deductible — businesses and individuals alike.
- It’s the date the interest is incurred that counts, not when it’s paid; anything incurred on or after 1 July 2025 is non-deductible, even on earlier-year tax debts.
- Interest incurred before then remains deductible for 2024–25 and earlier years.
For businesses with ATO debt or payment arrangements, this raises the real cost of falling behind. Lodge and pay on time where possible, and arrange a payment plan early if needed.
Trusts: make distribution resolutions before 30 June
For family trusts, unit trusts and the like, the most important thing before year-end is to make and sign the year’s distribution resolution by 30 June 2026 (or earlier if the trust deed requires).
The ATO continues to focus on:
- Section 100A (reimbursement agreements): where a beneficiary is made presently entitled but someone else gets the benefit, an anti-avoidance rule can tax the trustee at the top marginal rate — with particular attention to unpaid present entitlements (UPEs) used for other purposes.
- Foreign trusts (Section 99B): amounts an Australian resident or beneficiary receives from a foreign trust that weren’t previously taxed may be assessable.
- Resolutions must be contemporaneous: after the 2025 Goldenville decision, the ATO and the tribunal have made clear that back-dated or reverse-engineered resolutions will be rejected. Keep evidence they were completed by 30 June.
Division 7A: benchmark rate 8.37%
When a private company lends to a shareholder or associate, the loan must meet Division 7A rules or it can be treated as an unfranked deemed dividend in the shareholder’s income.
- The 2025–26 benchmark interest rate is 8.37% (down from 8.77%) — the minimum rate a complying loan must charge.
- Don’t forget the year’s minimum repayment under the loan agreement before 30 June.
FAQs
Q: Did my company’s tax rate change this year?
A: No. Base rate entities remain at 25% and other companies at 30% for 2025–26.
Q: For the $20,000 write-off, is ordering before 30 June enough?
A: No. The asset must be installed and ready for use by 30 June 2026, not merely purchased or paid for.
Q: When must a trust distribution resolution be made?
A: Generally by 30 June 2026 (earlier if the deed requires), signed at the time with evidence kept — it can’t be back-dated.
Q: Can a business still deduct ATO interest?
A: No. GIC/SIC incurred on or after 1 July 2025 is non-deductible; interest incurred before then remains deductible for 2024–25 and earlier years.
Disclaimer: This article is general information only and not personal tax advice. Final outcomes depend on legislation as enacted, ATO guidance and your individual circumstances.
