The 2026–27 Budget: $3.5 billion in business tax relief, and none of it is law yet

The Treasurer handed down the 2026–27 Federal Budget on 12 May 2026. It carries $3.5 billion of new business tax relief. Not one of the small business tax measures in it is law.

Four of them will matter to most trading businesses on the Gold Coast: a permanent $20,000 instant asset write-off, a two-year loss carry back reintroduced for companies, refundable losses for start-ups, and monthly PAYG instalments. Each is an announcement with a start date attached. Here is what each would do, and what you can actually rely on between now and 30 June.

Announced is not legislated

A Budget measure is a statement of intent. It changes your tax when Parliament passes it, and not before. The ATO's guidance on the Budget's loss measures, published on Budget night, states the position in five words: this measure is not yet law. The same is true of the write-off.

That distinction has a price. If you rearrange a purchase, a structure or a dividend around a measure that is later amended in the Senate or dropped altogether, you wear the difference. Almost everything below starts on 1 July 2026 or later, which leaves months of parliamentary time before any of it binds.

One exception is worth naming, because it is not a small business measure and it does bind now. The Budget's negative gearing change applies to established residential properties acquired from 7:30pm AEST on 12 May 2026. That start date is Budget night, even though the law has not passed. So "nothing in this Budget has effect yet" is the wrong summary. "None of the small business tax relief has effect yet" is the right one.

The $20,000 instant asset write-off would become permanent

Start with what is already law. A small business with aggregated turnover under $10 million can immediately deduct the business portion of an asset costing less than $20,000, where the asset is first used or installed ready for use between 1 July 2025 and 30 June 2026. The limit applies per asset, so several assets can each be written off in the same year. That extension passed the Senate on 27 November 2025.

It stops on 30 June 2026. The $20,000 figure has only ever arrived through time-limited transitional provisions. The standing amount in the Income Tax Assessment Act 1997 is $1,000.

The Budget removes that annual cliff. Budget Paper No. 2 says the Government will permanently extend the $20,000 instant asset write-off from 1 July 2026 for small businesses with turnover up to $10 million. Assets costing $20,000 or more still go into the small business simplified depreciation pool, depreciated at 15 per cent in the first income year and 30 per cent each year after that. The lock-out rules, which stop a business that opts out of simplified depreciation from re-entering for five years, stay suspended until 30 June 2027.

Treasury puts the value at around $890 million in cash flow support over five years, $32 million a year in compliance costs and 366,000 hours of record keeping.

Two things to hold on to. Aggregated turnover counts the turnover of your affiliates and connected entities, not just the trading company. And a deduction is not a rebate: a $19,000 second-hand ute, deducted in full by a company on the 25 per cent rate, saves $4,750 of tax. The other $14,250 is money that left the business.

Loss carry back is being reintroduced, not extended

This one is widely misdescribed. There is no loss carry back available today — the previous version finished with the 2022–23 income year. The Budget brings it back and makes it permanent.

Budget Paper No. 2 sets the terms. For tax years commencing on or after 1 July 2026, companies with aggregated annual global turnover of less than $1 billion will be able to carry a tax loss back and offset it against tax paid up to two years earlier. It applies to revenue losses only, and is limited by the company's franking account balance. Treasury expects it to reach around 85,000 companies, mostly small businesses, at a cost of $2.3 billion in receipts over five years.

Three limits do most of the work. Revenue losses only, so a capital loss stays where it is. Companies only, so a sole trader, partnership or discretionary trust cannot use it. And the franking account cap, which means a company cannot get back more than the tax it has paid and not already passed out as franked dividends.

What that looks like on a Robina business

An example, with figures chosen to show the mechanics rather than drawn from a real client.

A landscaping company in Robina has aggregated turnover of $1.2 million and is taxed at the 25 per cent base rate. It reported taxable income of $80,000 in 2024–25 and $60,000 in 2025–26, so it paid $20,000 and then $15,000 of tax. Its franking account holds $35,000 and it has paid no franked dividends.

In 2026–27 it earns $30,000 before capital purchases, then buys two ride-on mowers at $16,000 each, a trailer at $18,500 and a compressor at $9,500. That is $59,500. Every item is individually under $20,000, so under the announced permanent write-off each is deducted in full.

The company now reports a $29,500 tax loss for 2026–27. Carried back against tax paid in the two earlier years at 25 per cent, that produces a $7,375 refund.

Change one fact and the answer changes. Had the company paid franked dividends and left only $5,000 in its franking account, the refund would be capped at $5,000. And a loss used this way is spent: it cannot also be carried forward against next year's profit.

Refundable losses for start-ups, from 2028–29

The third measure is further out. For tax years commencing on or after 1 July 2028, a company with aggregated annual turnover under $10 million that makes a tax loss in its first two years of operation would be able to turn that loss into a refundable tax offset. Budget Paper No. 2 caps the offset at the value of fringe benefits tax and withholding tax on wages paid to Australian employees in the loss year.

Put plainly, a young company that employs people gets back the tax it remitted on those wages, up to the value of its loss. Budget Paper No. 2 puts $410 million of payments behind the measure over five years. It is two Budgets away and it is not law. There is no structure worth building around it today.

The rest of the package

• Monthly PAYG instalments. From 1 July 2027, small and medium businesses would be able to opt in to reporting and paying instalments monthly, using an ATO-approved calculation built into accounting software. Businesses with a demonstrated history of non-compliance would be required to report and pay monthly.
• A $250 Working Australians Tax Offset from the 2027–28 income tax year, applying to income derived from work, which includes the business income of sole traders. Treasury expects around 1.5 million sole traders to benefit.
• A 30 per cent minimum tax on discretionary trusts from 1 July 2028, with expanded rollover relief for three years from 1 July 2027 for small businesses that want to restructure out of a trust into a company or a fixed trust. If you trade through a family trust, that is the measure to watch.
• $8 million from 1 July 2026 for the NewAccess for Small Business Owners program and the Small Business Debt Helpline.

The one measure already in your bank account

One thing in this Budget is in force. Excise on most fuels was cut for three months from 1 April 2026 — a 60.9 per cent reduction, worth 32 cents a litre on petrol and diesel — and the heavy vehicle road user charge went from 32.4 cents a litre to zero. It ends on 30 June 2026. If you run vehicles, that is the line item that moved this quarter, and it moves back.

Where this leaves the year to 30 June

Nothing announced on 12 May changes a figure in the 2025–26 return you are about to prepare. That return runs on the rules already legislated, and the $20,000 write-off in them requires an asset first used or installed ready for use by 30 June 2026. Installed ready for use is the test, not ordered and not invoiced.

For the year after, the honest position is that the settings are unknown until the legislation passes. That argues for building the 2026–27 numbers both ways rather than assuming the announcement, which is part of what we do in forecasting and budgeting. We track each measure's passage for clients as part of our taxation and compliance work. And if the discretionary trust measure lands as described, restructuring out of a family trust is a business advisory conversation for 2027, not a scramble in 2028.