Federal Budget: What You Need to Know
In This Guide
$20,000 Instant Asset Write-Off is Now Permanent
The Two-Year Loss Carry-Back Scheme is Now Permanently Extended for Companies
Refundable Tax Offsets for Eligible Start-Up Companies
Capital Gains Tax Is Changing, And It Matters if You Plan to Sell
Discretionary Trusts Are Getting a Minimum 30% Tax Rate
Negative Gearing Is Being Restricted to New Builds
Workers Get a New $250 Tax Offset and $1,000 Instant Deduction
Your Action Plan
FAQs
The 2026 Federal Budget introduced several major tax and business reforms that could directly impact how businesses invest, structure operations, manage cash flow, and plan for long-term growth.
Some measures are immediate wins for small businesses. Others may significantly change tax planning and investment strategies over the next few years.
Here’s a simple breakdown of the key business-related announcements and what they may mean for you.
1. $20,000 Instant Asset Write-Off Is Now Permanent
If your business buys a piece of equipment, a laptop, a vehicle, a machine, or tools worth up to $20,000, you can deduct the full cost in the same year you buy it. No more spreading it across years.
This has been extended before, but now it's locked in permanently.
Who benefits most:
Tradies, builders, and workshop businesses buying tools or machinery
Office-based businesses upgrading computers or fit-outs
Any SME looking to invest before the end of financial year
If you've been sitting on the fence about upgrading equipment, this is a good reason to move before 30 June.
2. The Two-Year Loss Carry-Back Scheme Is Now Permanently Extended for Companies
The permanent two-year loss carry-back scheme is being reintroduced for Australian companies with up to $1 billion in turnover, with the measure applying to income years after 1 July 2026.
If your company made a loss from 1 July 2026, it may be able to carry that loss backwards and offset it against profits your company paid tax on up to two years earlier, potentially triggering a tax refund.
This gives business owners more certainty when planning around future downturns, uneven revenue, or rebuilding periods.
Who benefits most:
Businesses that had a rough year due to economic slowdown, rising costs, or project delays
Seasonal or project-based businesses with uneven revenue
Businesses rebuilding after a difficult period
3. Refundable Tax Offsets for Eligible Start-Up Companies
From tax years commencing on or after 1 July 2028, eligible “small start-up companies” with aggregated annual turnover under $10 million will be able to use tax losses generated in their first two years of operation to access a refundable tax offset.
The offset will be capped based on the amount of fringe benefits tax (FBT) and withholding tax paid on wages for Australian employees during the loss year. In practice, this means the measure is primarily targeted at start-ups with employees, rather than small businesses more broadly.
Who benefits most:
Early-stage start-ups investing heavily in growth
New businesses hiring Australian employees in their first two years
Founders managing cash flow during the early stages of operation
The measure is designed to provide additional cash flow support to growing Australian start-ups during their critical early years.
4. Capital Gains Tax Is Changing, And It Matters if You Plan to Sell
Right now, if you sell a business or investment asset after holding it for more than 12 months, you only pay tax on 50% of the gain.
From 1 July 2027, that 50% CGT discount is being replaced by an inflation-adjusted model, alongside the introduction of a new minimum 30% tax rate on capital gains after indexation has been applied. In practice, this means capital gains will no longer be taxed below an effective 30% rate under the new regime.
Those with gains well above inflation may pay more, while people with modest gains that are closer to inflation may actually pay less tax under the new model.
The main concession announced is for new residential property investors, who will be able to choose between the existing 50% CGT discount or the new indexed cost base and minimum tax model. Income support payment recipients, including Age Pension recipients, will also be exempt from the 30% minimum tax.
Who's affected:
Business owners planning to sell their business
Entrepreneurs relying on capital growth as part of their exit strategy
Investors holding property, shares, or other assets
Important nuances:
Existing investments and gains made before 1 July 2027 are expected to be grandfathered
Small businesses can still access existing CGT concessions
The CGT discount inside superannuation is not affected
If you were planning to sell a business or asset in the next few years, the timing of that decision just became more important. Talk to your adviser before July 2027.
4. Discretionary Trusts Are Getting a Minimum 30% Tax Rate
From 1 July 2028, income distributed through a discretionary (family) trust will be subject to a minimum 30% tax rate. Previously, families could distribute income to lower-income members to reduce the overall tax bill.
Who's affected:
Family businesses operating through a trust structure
Professional services firms (accountants, lawyers, consultants) using trusts
SME groups that distribute income to family members
Important nuances:
Fixed trusts, charitable trusts, and superannuation funds are not affected
Rollover relief is available for 3 years from 1 July 2027 to help businesses restructure
Deceased estates and primary production income have specific exemptions
If your business uses a discretionary trust, the next 12–24 months are a critical window to review your structure.
5. Negative Gearing Restricted to New Residential Builds
From 1 July 2027, you can only negatively gear new residential property, not existing homes.
If you buy an established property after Budget night and it runs at a loss, you can still deduct those losses against your residential property income, and carry unused losses forward to future years but you can no longer offset them against your wages or other income. Properties you already own as of 12 May 2026 are fully exempt.
Who's affected:
Property investors buying established homes after 12 May 2026
Property developers and construction businesses
Businesses with a property investment arm
The government wants investment flowing into new housing. If property is part of your wealth strategy, the type of property you buy now matters more than it did before.
6. Workers Get a New $250 Tax Offset and $1,000 Instant Deduction
Two smaller but practical wins have also been announced:
A new $1,000 instant tax deduction for work-related expenses from the 2026–27 financial year, allowing eligible taxpayers to claim without needing to keep receipts for low-value work-related expenses.
The $1,000 instant deduction does not replace other separately claimable deductions. Taxpayers can still claim eligible deductions for charitable donations, union fees, and professional association fees in addition to the instant deduction.
The measure is designed to reduce the compliance burden for individuals with modest work-related expenses by removing the need to itemise smaller claims, while preserving the existing rules for taxpayers with larger deductible expenses.
A new Working Australians Tax Offset (WATO) worth up to $250 per year, commencing from July 2027.
Eligibility for the offset is still one key detail to be confirmed. While the Budget refers to income derived from work, it is not yet clear whether any amount of work income will qualify, or whether a minimum level of qualifying income will be required to access the offset
Quick Reference: Winners and Those Who Need to Plan
Likely Winners
✓ Small businesses buying equipment under $20,000
✓ Companies that experienced losses in 2025–26
✓ New housing developers and construction businesses
✓ Startups seeking R&D refundable offsets
✓ Workers claiming work-related deductions
✓ Venture capital investors and early-stage funds
✓ SMSF holders with no super changes
Need to Plan Carefully
! Businesses using discretionary trust structures
! Business owners planning to sell before 2027
! Property investors buying established homes now
! Entrepreneurs with capital gains exit strategies
! Families distributing income through trusts
! Pre-CGT asset holders with unexpected exposure
! Startups awaiting CGT consultation outcome
Your Action Plan
You don't need to act on everything at once. Here's a practical, time-ordered checklist:
Frequently Asked Questions
When will this take effect?
While these announcements provide valuable insight into the Government’s proposed direction, it is important to note that Federal Budget measures remain subject to legislative approval and potential policy changes. Should there be a change in government following the election, some of these proposed reforms may be revised, delayed, or not proceed in their current form.
Does the $20,000 write-off apply to second-hand assets?
Eligibility conditions apply depending on your business structure, turnover, and how the asset is used. Speak to your adviser before purchasing to confirm the asset qualifies under the current rules.
Does the CGT change affect superannuation?
No. The CGT discount inside super funds is not affected by these reforms. This is a key distinction for SMSF holders.
When do the trust changes actually start?
The 30% minimum tax on discretionary trust income begins 1 July 2028. Rollover relief is available for a three-year window from 1 July 2027 through to 30 June 2030, giving businesses time to restructure ahead of the changes taking effect. The earlier you start, the more options you'll have.
Will negative gearing changes affect my existing properties?
No. Properties you owned on 12 May 2026 (Budget night) are fully exempt. The new rules only apply to established homes purchased after that date.
Ready to Understand What This Means for Your Business?
Every business is different. The impact of these changes depends on your structure, your assets, your growth plans, and your exit strategy. A conversation now can save significant money later.
Book a Budget ReviewGeneral information only. This article is a summary of announced measures from the 2026–27 Federal Budget and does not constitute financial, legal, or taxation advice. Some measures are subject to legislative enactment and may change. You should consult a qualified adviser regarding your specific circumstances before taking any action. Published 13 May 2026.