Key takeaways
- $20,000 instant asset write-off made permanent from 1 July 2026 for businesses with turnover under $10M.
- Company loss carry back returns — eligible companies with global turnover under $1B can carry revenue losses back up to two years.
- Small start-up loss refundability from 1 July 2028 — first-two-year losses can produce a refundable tax offset.
- Discretionary trusts pay a minimum 30% tax rate from 1 July 2028 (2029 income year) — a major shift for family trust planning.
- The R&D Tax Incentive is reshaped — higher core R&D offsets, but supporting R&D expenditure becomes ineligible.
The 2026–27 Federal Budget reaches well beyond personal tax. Small businesses, companies, start-ups, R&D players and discretionary trusts all face significant changes.
The package mixes cash-flow support and investment incentives with material tightening on trust-based tax planning.
If you hold an ABN, run a small business, or operate through a company or trust, several of these measures are worth understanding now.
1. $20,000 instant asset write-off — now permanent
From 1 July 2026, the small business $20,000 instant asset write-off becomes permanent.
It applies to businesses with aggregated annual turnover under $10 million.
Eligible businesses can fully deduct eligible assets costing under $20,000 in the year of purchase, rather than depreciating over multiple years.
This is meaningful cash-flow support for businesses that regularly buy tools, equipment, computers, office assets or similar business assets.
Assets costing $20,000 or more continue to go into the small business depreciation pool.
The five-year lockout on re-entering the simplified depreciation regime is also paused until 30 June 2027.
2. Company loss carry back returns
From income years starting on or after 1 July 2026, eligible companies can use loss carry back again.
The measure applies to companies with aggregated annual global turnover under $1 billion.
Those companies can carry a current-year revenue loss back to offset company tax paid in up to two prior years.
Important limits:
- only revenue losses qualify
- capped by the company’s franking account balance
- not available for all loss types
For businesses with short-term losses that have already paid company tax in earlier years, loss carry back can deliver real cash-flow relief.
3. Small start-up loss refundability
From income years starting on or after 1 July 2028, the Government will introduce loss refundability for small start-up companies.
The measure applies to start-ups with aggregated annual turnover under $10 million that incur a tax loss in their first two years of operation.
Eligible companies can convert their tax loss into a refundable tax offset.
The offset is capped by the FBT and wages withholding tax connected with Australian employees during the loss year.
This gives early-stage start-ups some cash-flow support before they reach profitability.
4. Dynamic PAYG instalment calculations
From 1 July 2027, small and medium businesses can choose to:
- report and pay PAYG instalments monthly, and
- use an ATO-approved calculation embedded in their accounting software to compute and adjust PAYG instalments
The goal is to align PAYG instalments more closely with real-time trading.
For businesses with volatile income, dynamic PAYG can reduce the mismatch between instalments paid and actual profit for the year.
Taxpayers with persistent non-compliance can still be required to report and pay PAYG instalments monthly.
5. R&D Tax Incentive reform
From 1 July 2028, the Research and Development Tax Incentive is reshaped. Key changes:
- Increase the offset on core R&D expenditure by roughly 25% to 50%
- Reduce the intensity threshold from 2% to 1.5%
- Remove eligibility for supporting R&D expenditure
- Raise the turnover threshold to access the highest offset rate from $20 million to $50 million
- For companies with turnover under $50 million, retain higher offset eligibility for older firms — but limit the refundable offset to companies under 10 years old
- Raise the upper R&D expenditure threshold from $150 million to $200 million
- Raise the minimum expenditure threshold from $20,000 to $50,000
The reform has the biggest impact on tech, biomed, software, manufacturing, engineering and any business that depends on R&D investment.
6. Discretionary trusts — minimum 30% tax rate
One of the most consequential parts of the Budget for trust structures.
From 1 July 2028 (the 2029 income year), trustees of discretionary trusts will pay a minimum 30% tax on the trust’s taxable income.
For non-corporate beneficiaries, non-refundable credits generally flow through to offset the tax already paid by the trustee.
For corporate beneficiaries, the rules differ: the corporate beneficiary is assessed on trust income to which it is entitled, but cannot claim credits for the trustee’s tax.
The intent is to reduce the use of discretionary trusts to lower overall tax through income splitting.
7. Trusts not subject to the minimum 30% rate
The minimum 30% tax does not apply to all trusts. The following are excluded:
- fixed trusts
- fixed testamentary trusts
- complying superannuation funds
- special disability trusts
- deceased estates
Certain income is also excluded:
- primary production income
- certain income relating to vulnerable minors
- amounts subject to non-resident withholding tax
- income from assets of discretionary testamentary trusts that existed at the time of announcement
8. Three-year rollover relief — time to restructure
From 1 July 2027, the Government provides three years of expanded rollover relief.
The relief supports small businesses and other taxpayers that want to restructure out of a discretionary trust into another entity, such as a company or fixed trust.
If you currently use a discretionary trust to run a business, hold investment assets, or manage family wealth, it’s worth assessing whether the structure still suits the future tax landscape.
9. Electric car FBT concessions adjusted
From 1 April 2029, a permanent 25% FBT discount applies to eligible electric cars.
Transitional arrangements:
- Eligible electric cars already under arrangement retain the FBT discount rate that applied at the time
- Eligible electric cars priced at $75,000 or less and provided before 1 April 2029 still qualify for the 100% FBT discount
- Eligible electric cars priced above $75,000 but at or below the fuel-efficient luxury car tax threshold, if provided between 1 April 2027 and 1 April 2029, attract a 25% FBT discount
Anyone considering an electric vehicle through a company or salary packaging arrangement should plan around these dates.
FAQs
Q: Is the $20,000 instant asset write-off per asset or in total?
A: It applies per eligible asset. Each eligible asset costing under $20,000 can be immediately deducted. For example, buying three $8,000 pieces of equipment in the same year means all three can be fully deducted. Assets costing $20,000 or more must go into the small business depreciation pool.
Q: My company made a profit last year and a loss this year — can I use loss carry back to get a refund?
A: Possibly, subject to three checks: aggregated annual global turnover under $1 billion; the loss is a revenue loss (not a capital loss); and the company’s franking account balance supports it. Eligible companies can carry the current-year revenue loss back to offset company tax paid in up to two prior years. Talk to your accountant before year-end.
Q: I run a family business through a discretionary trust — what changes from 1 July 2028?
A: From the 2029 income year, the trustee must pay a minimum 30% tax on the trust’s taxable income. Non-corporate beneficiaries receive non-refundable credits to offset their personal tax. If you currently stream income to family members on low marginal rates, the overall tax efficiency of that approach is reduced. Three years of expanded rollover relief from 1 July 2027 give time to consider restructuring into a company or fixed trust.
Q: Are fixed unit trusts subject to the minimum 30% tax?
A: No. Fixed trusts — including fixed unit trusts — are outside the minimum 30% rate. The measure targets discretionary trusts. Fixed testamentary trusts, complying superannuation funds, special disability trusts and deceased estates are also excluded.
Related services
- Australian company (PTY LTD) registration
- Family trust setup
- Fixed Unit Trust setup
- Small business tax and BAS
- Sole trader ABN registration
In summary
The 2026–27 Federal Budget mixes support for business investment and cash flow with a clear tightening of trust-based tax planning.
- For small business: the permanent $20,000 instant asset write-off and the return of loss carry back are welcome.
- For start-ups and R&D firms: future incentives become more targeted.
- For families using discretionary trusts: the minimum 30% rate and rollover relief are the changes to plan around.
If you run a business through a company, trust or ABN, talk to your accountant early — about your structure, asset purchase plans, loss positions and the long-term tax picture.
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.
