2025-26 Federal Budget: Tax administration

Managed investment trust rules to be amended

Amendments to clarify the arrangements for managed investment trusts (MITs) will be made to ensure legitimate investors can continue to access concessional withholding tax rates for fund payments from 13 March 2025.

In particular, trusts ultimately owned by a single widely-held investor will be able to access the MIT concessions. The proposed changes will ensure that genuine, foreign-based widely-held investors, such as pension funds, can still access concessional withholding tax rates on eligible distributions to members through MITs.

This measure will complement the ATO’s strengthened guidelines. The amendments will not affect the ATO's power to take action under the general anti-avoidance rules in Pt IVA of ITAA 1936 where "captive MITs" involve other characteristics of the kind set out in Taxpayer Alert TA 2025/1. 

Source: Budget Paper No 2, p 4; Assistant Treasurer and Minister for Financial Services, Clarifying tax arrangements for managed investment trusts [media release], 13 March 2025.

Start date deferred for clean building MIT withholding tax concession for data centres and warehouses

The start date of the 2023–24 Budget measure to extend the clean building managed investment trust (MIT) withholding tax concession will be deferred from 1 July 2025 to the first 1 January, 1 April, 1 July or 1 October after assent of amending legislation.

A final withholding tax rate of 10% currently applies to payments from eligible clean building MITs made to foreign residents in countries with which Australia has effective exchange of information agreements. This applies to eligible trusts holding office buildings, retail centres and non-residential accommodation built after June 2012 that meet energy efficiency standards. 

The 2023–24 Budget proposed to extend the concession to eligible data centres and warehouses from 1 July 2025, where construction commenced after 7:30 pm (AEST) on 9 May 2023. The start date for the proposal is deferred from 1 July 2025 to the first 1 January, 1 April, 1 July or 1 October after the amending legislation receives assent. 

Source: Budget Paper No 2, p 4.

ATO funding to strengthen compliance activities

The ATO will be given $999 million in funding over 4 years to extend and expand its tax compliance activities.

Additional funding includes:

• $717.8 million over 4 years from 1 July 2025 for a 2-year expansion and a one-year extension of the Tax Avoidance Taskforce, to support compliance scrutiny on multinationals and other large taxpayers;
• $155.5 million over 4 years from 1 July 2025 to extend and expand the Shadow Economy Compliance Program, to reduce shadow economy behaviour such as worker exploitation, under‑reporting of taxable income, illicit tobacco and other shadow economy activity;
• $75.7 million over 4 years from 1 July 2025 to extend and expand the Personal Income Tax Compliance Program, to enable the ATO to deliver a combination of proactive, preventative and corrective activities; and
• $50 million over 3 years from 1 July 2026 to extend the Tax Integrity Program, to continue the ATO’s engagement program to ensure timely payment of tax and superannuation liabilities by medium and large businesses and wealthy groups.