Read time: 7 minutes
Published Tuesday 12th May 2026

 

The 2026–27 Federal Budget includes several proposed and announced measures that may affect small businesses, companies, property investors, family groups, employers and individual taxpayers.

Some measures are intended to apply from 1 July 2026, while others are proposed for later income years. This means timing may matter when making business, tax, property or investment decisions.

This summary explains the key areas to review and why they may be relevant.

Key areas at a glance

The Budget includes measures relating to:

  • the permanent $20,000 instant asset write-off for eligible small businesses
  • pay as you go instalment flexibility
  • loss carry-back rules for eligible companies
  • proposed changes to negative gearing
  • proposed capital gains tax changes
  • proposed minimum tax rules for discretionary trusts
  • a $250 Working Australians Tax Offset
  • a $1,000 instant deduction for work-related expenses
  • fuel, freight, housing and electric vehicle measures

The impact of these measures will depend on the taxpayer, structure, timing, income, assets and eligibility rules.

1. Small business measures

Permanent $20,000 instant asset write-off

The Government has announced that the $20,000 instant asset write-off will be made permanent from 1 July 2026.

Eligible small businesses with turnover up to $10 million may be able to immediately deduct eligible assets costing less than $20,000.

This affects the timing of deductions. It does not make an asset free, and it does not mean every purchase will be commercially worthwhile.

This may be relevant for businesses planning to buy:

  • tools
  • equipment
  • technology
  • machinery
  • eligible business assets costing less than $20,000

Before buying assets, business owners should review whether the asset is needed, whether it will be installed and ready for use in the relevant income year, and whether the business has the cash flow to support the purchase.

Accountant review is recommended before making purchasing decisions based on this measure.

PAYG instalment flexibility

From 1 July 2027, businesses are expected to be able to opt in to monthly pay as you go instalments.

This may help some businesses better align tax payments with current trading conditions, particularly where profit changes during the year.

It may be relevant for businesses affected by:

  • seasonal trading
  • fuel or freight costs
  • project delays
  • tighter margins
  • late customer payments
  • supply chain disruptions

Businesses should review whether their current instalment settings still reflect current trading conditions.

2. Companies and start-ups

Loss carry-back for eligible companies

The Budget proposes to reintroduce loss carry-back rules from the 2026–27 income year.

Eligible companies that make a current-year loss may be able to use that loss to claim a refund against tax paid in the previous two income years.

This may support cash flow for eligible companies that have had profitable years followed by a loss-making year.

Companies should review:

  • taxable profits in the previous two income years
  • current-year trading performance
  • expected taxable income or loss
  • planned asset purchases
  • tax instalments
  • cash flow forecasts

Accountant review is recommended before relying on loss carry-back outcomes.

Loss refundability for start-ups

From 2028–29, small start-ups in their first two years of operation are expected to be able to receive a refund for tax losses, capped at the value of fringe benefits tax and withholding tax paid on employee wages.

This may be relevant for early-stage companies that are employing staff and incurring losses before becoming profitable.

Start-ups should review their structure, wage payments, withholding tax, fringe benefits tax exposure, early trading losses and funding needs.

3. Fuel, freight and supply chain costs

The Budget includes fuel security and supply chain measures, including support linked to fuel supply, fertiliser security, manufacturing and logistics.

Fuel, freight and gas costs can affect business margins quickly.

This may be relevant for:

  • transport and logistics businesses
  • construction businesses
  • manufacturing businesses
  • civil works businesses
  • food and wholesale businesses
  • businesses with high fuel, freight, gas or input costs

Businesses should review their fuel assumptions, freight costs, supplier terms, customer pricing, contract terms, gross margins and cash flow buffers.

Where fuel, freight or gas costs are material, businesses should avoid relying on last year’s cost assumptions without review.

4. Property investors and landlords

Proposed negative gearing changes

The Government proposes to limit negative gearing to new builds from 1 July 2027.

Budget material indicates that investment properties owned before Budget night will be exempt. For new purchases, negative gearing is proposed to be limited to new builds.

For investors buying established residential property after Budget night, this may change when rental losses can be used.

The key issue is not that rental losses disappear. The issue is that some losses may need to be carried forward, rather than used to reduce salary, wage or other income in the same year.

Property investors should review:

  • whether the property is new or established
  • contract date
  • settlement timing
  • expected rental income
  • expected interest costs
  • expected cash shortfall
  • ability to carry losses forward
  • impact on personal cash flow
  • planned sale timing

Accountant review is strongly recommended before buying, selling or refinancing investment property.

5. Capital gains tax changes for investors

Proposed replacement of the 50% CGT discount

The Government proposes to replace the current 50% capital gains tax discount with an inflation-based indexation model from 1 July 2027.

The current discount is generally available to eligible individuals and trusts where an asset has been held for more than 12 months.

The proposed model would instead adjust for inflation and tax the real gain.

This may affect assets such as:

  • investment properties
  • holiday homes
  • shares
  • crypto assets
  • business assets
  • collectibles
  • some long-held assets where gains arise after 1 July 2027

Investors should review assets with large unrealised gains, expected sale timing, valuation needs, ownership structure, marginal tax rates and whether any concessions may apply.

Accountant review is strongly recommended before making sale timing decisions.

Proposed 30% minimum tax on capital gains

The Budget also proposes a 30% minimum tax on capital gains from 1 July 2027.

This may affect people who were planning to sell assets in a low-income year to reduce tax payable on a capital gain.

Before selling or planning to sell an asset, investors should review:

  • expected capital gain
  • expected taxable income in the year of sale
  • whether the gain relates to the period before or after 1 July 2027
  • whether the 30% minimum tax could apply
  • whether indexation changes the calculation
  • whether an exemption or concession may apply

6. Discretionary trusts and family groups

Proposed 30% minimum tax on discretionary trusts

The Government proposes to introduce a 30% minimum tax on discretionary trusts from 1 July 2028, with some exceptions.

This may affect family groups and private businesses that use discretionary trusts.

The proposed rules may affect:

  • annual distribution planning
  • family group structures
  • business ownership
  • asset ownership
  • restructuring decisions
  • succession planning

The Budget also refers to restructuring relief for some taxpayers moving out of discretionary trusts into companies or fixed trusts.

Family groups and businesses using discretionary trusts should review their current structure, income distribution patterns, beneficiary profiles, asset ownership and succession plans.

Accountant review is strongly recommended. Restructuring decisions should not be made based on headlines alone.

7. Employees and individual taxpayers

$250 Working Australians Tax Offset

The Government is introducing a $250 Working Australians Tax Offset from the 2027–28 income year.

The Budget indicates that the offset will apply to eligible people who earn income from wages or salary, rather than investment income.

Most workers are not expected to receive the benefit immediately.

Individuals should review their expected taxable income, income type and expected tax refund or payable position.

$1,000 instant deduction for work-related expenses

From the 2026–27 income year, workers are expected to be able to claim an instant deduction of up to $1,000 for work-related expenses.

This may make tax returns simpler for many workers.

However, people with work-related expenses above $1,000 may still need to claim using the usual method and keep appropriate records.

Individuals should keep records where:

  • work-related expenses exceed $1,000
  • they want to claim actual expenses
  • they have deductions outside work-related expenses
  • they are unsure whether an expense is deductible

8. Housing and home buyer measures

The Budget includes funding for housing infrastructure and measures intended to support first home buyers.

This may be relevant for:

  • first home buyers
  • property investors
  • builders
  • trades
  • developers
  • civil works businesses
  • businesses linked to housing construction

Home buyers should review eligibility, deposit requirements, property caps, timing, borrowing capacity and interaction with state-based concessions.

Housing-related businesses should review project pipeline, infrastructure approvals, demand for new builds, labour and materials capacity, cash flow and contract terms.

9. Employers and electric vehicle arrangements

The Government is changing electric vehicle fringe benefits tax arrangements.

Employers that offer, or are considering offering, electric vehicles through salary packaging or employment arrangements may need to review the timing and cost impact.

Employers should review:

  • existing electric vehicle arrangements
  • vehicle cost
  • arrangement start date
  • fringe benefits tax exposure
  • salary packaging settings
  • employee communication

What to review now

Different taxpayers will be affected in different ways.

Business owners may need to review:

  • planned asset purchases
  • PAYG instalments
  • fuel and freight costs
  • business cash flow
  • company loss positions
  • business structure
  • trust arrangements
  • upcoming equipment purchases

Property investors may need to review:

  • existing property holdings
  • new versus established property purchases
  • contract date and settlement date
  • negative gearing assumptions
  • carried-forward losses
  • planned sale timing
  • capital gains tax exposure

Family groups and trusts may need to review:

  • discretionary trust distributions
  • beneficiary tax profiles
  • asset ownership
  • succession plans
  • restructuring options
  • eligibility for rollover relief

Individuals may need to review:

  • eligibility for the $250 offset
  • expected work-related expenses
  • whether the $1,000 instant deduction is suitable
  • whether actual deductions may be higher
  • record keeping

Final word

The 2026–27 Federal Budget includes measures that may affect cash flow, tax administration, investment decisions and household tax outcomes.

The key points are:

  • timing matters
  • structure matters
  • cash flow matters
  • eligibility rules matter
  • proposed changes may affect taxpayers differently

If any of these measures may affect your business, investments, property plans or family structure, consider speaking with your accountant before making decisions.

General information only

This article is general information only and does not take into account your personal circumstances, business structure, income, assets, liabilities or objectives. Budget measures may be subject to legislation, further guidance, eligibility rules and administrative detail before they apply. You should seek professional advice before making tax, business, investment, property or structuring decisions.