The Federal Budget 2026-27: Update for small business

The Australian Government’s 2026-27 Federal Budget, released on Tuesday 11 May 2026 includes measures which are relevant to small businesses. 

The Budget also provides updated economic forecasts, with growth expected to slow in 2026-27 before recovering in 2027-28.

Among the Budget initiatives are:

• Permanent $20,000 instant asset write-off -  from 1 July 2026, the Federal Government will permanently extend the $20,000 instant asset write‑off for small businesses with turnover up to $10 million. Assets valued at $20,000 or more can continue to be placed into the small business simplified depreciation pool. The provisions that prevent small businesses from re‑entering the simplified depreciation regime for five years after opting out will continue to be suspended until 30 June 2027.
• Loss carry back measures - from 1 July 2026, companies with aggregated annual global turnover of less than $1 billion will be able to carry back a tax loss and offset it against tax paid up to two years earlier. Loss carry back will apply to revenue losses only and will be limited by a company’s franking account balance.
• Loss refundability for small start‑up companies - from 1 July 2028, start‑up companies with aggregated annual turnover of less than $10 million that generate a tax loss in their first two years of operation will be able to utilise the loss to generate a refundable tax offset. The offset will be limited to the value of fringe benefits tax and withholding tax on wages paid in respect of Australian employees in the loss year.
• Minimum tax on discretionary trusts and rollover relief - from 1 July 2028, trustees will pay a minimum tax of 30 per cent on the taxable income of discretionary trusts. As part of this, rollover relief will be provided for three years from 1 July 2027 to support small businesses and others that wish to restructure out of discretionary trusts into another entity type, such as a company or a fixed trust. The government has also confirmed they will maintain existing CGT concessions for small businesses, allowing them to halve or completely disregard CGT on the sale of eligible assets.
• Capital gains tax (CGT) changes - the Government has announced proposed reforms to the capital gains tax system from 1 July 2027, replacing the current 50 per cent CGT discount with a discount based on inflation and introducing a minimum 30 per cent tax on capital gains for assets held by individuals, trusts and partnerships. The Federal Government has confirmed they will maintain existing CGT concessions for small businesses. The proposed changes may influence how some small businesses structure investments, succession planning and business ownership arrangements.
• Working Australians Tax Offset - a new $250 annual tax offset from 2027–28 will apply to Australian workers, including sole traders.
• Mental health and financial wellbeing support - an additional $8 million from 1 July 2026 will support the continuation of the NewAccess for Small Business Owners program and the Small Business Debt Helpline.
• Fuel disruption relief and business support:
  • $2.9 billion in temporary fuel excise relief and a reduction in the heavy vehicle road user charge to zero to assist businesses affected by fuel disruptions and rising transport costs.
  • eligible manufacturing and logistics businesses will be able to access interest-free loans through the National Reconstruction Fund’s $1 billion Economic Resilience Program to help respond to supply chain and market disruptions.
  • temporary ATO relief measures will apply for businesses unable to meet tax obligations due to fuel supply disruptions.
• Monthly PAYG flexibility - from 1 July 2027, small and medium businesses will be able to opt in to reporting and paying pay as you go (PAYG) instalments monthly and to using an ATO-approved calculation embedded in accounting software to calculate and vary their instalments.
• Access to mandatory standards - Funding has been allocated to provide ongoing grants to Standards Australia to provide free public read‑only access to standards referenced in Commonwealth and state and territory legislation.
• Electric vehicle (EV) tax changes - The Budget adjusts the existing Fringe Benefits Tax (FBT) treatment for electric vehicles. From 1 April 2029, eligible electric vehicles valued up to the fuel-efficient luxury car tax threshold will receive a permanent 25 per cent FBT discount, while EVs valued up to $75,000 provided before that date will retain the existing full exemption. The changes may affect small businesses using EVs through company fleets, salary packaging or novated leasing arrangements, particularly for higher-value vehicles.
• Skills and workforce measures- apprenticeship incentive reforms from 1 January 2027 will prioritise support for small and medium employers and Group Training Organisations, alongside faster recognition of migrant trade qualifications is intended to help address workforce shortages.
• Extending unfair trading protections - continued protections against unfair trading practices and unfair contract terms for small businesses, including franchisees, with a view to addressing the power imbalance faced by small businesses when dealing with larger businesses.
• Expanded venture capital incentives - from 1 July 2027, the Government will expand the venture capital tax incentives in changes designed to better facilitate venture capital investment and support early stage and growth businesses, particularly where traditional finance is more difficult to obtain.
• Trade and export support - the Budget builds on previous reforms by removing 497 nuisance tariffs and consultation will also occur on abolishing additional tariffs with a view to further cutting costs for Australian businesses. The Budget also expands the Australian Trusted Trader program with a view to making exporting easier for small businesses.
• Research and Development Tax Incentive reforms - from 1 July 2028, reforms to the R&D Tax Incentive are intended to simplify access and better support innovation and investment by growing businesses.

For  more information on all Budget measures, please visit: https://budget.gov.au/. Businesses with questions about how these measures may apply to their circumstances are encouraged to contact the NSW Small Business Commission or seek advice from a professional adviser.