The 2026-27 Federal Budget dropped last night and the headline for small businesses is straightforward. The $20,000 instant asset write-off is now permanent. No more annual renewals, no more uncertainty about whether it will be extended. That alone saves small businesses around $32 million per year in compliance costs.
But the bigger moves are in the tax reform package. Companies with aggregated annual turnover under $1 billion can now carry back a tax loss and offset it against tax paid up to two years earlier. That is a cash flow lifeline for businesses that had a strong year followed by a difficult one. Treasury estimates this will benefit up to 85,000 companies, mostly small businesses.
For startups specifically, there is a new refundable tax offset. If your business has turnover under $10 million and generates a loss in its first two years, you accrue a refundable offset limited to the value of FBT and withholding tax on wages paid to Australian employees. Translation: the government will partially reimburse you for employing Australians during your loss-making startup phase.
Australian companies expected to benefit from the revived loss carry-back scheme
Venture capital tax incentives are also being expanded from July 2027 to align with modern company valuations. The details are still thin, but the intent is to unlock greater access to capital for startups and high-growth businesses.
Other notable items: a new $250 tax offset for working Australians, a 30% minimum tax rate for discretionary trusts, and the 50% capital gains tax discount has been scrapped while SME concessions remain in place. That last point is significant for business owners planning exits or asset sales.
Why it matters
The permanent instant asset write-off is the change with the widest impact. Every small business in Australia that buys equipment, vehicles, technology or tools under $20,000 benefits. The certainty alone is worth something. No more end-of-financial-year scrambles to make purchases before the write-off expires.
The loss carry-back scheme is particularly relevant for businesses in cyclical industries or those making large investments. If you spent heavily on marketing infrastructure, technology or hiring in the last financial year and expect a tighter year ahead, the ability to carry that loss back against prior profits changes your cash position.
The R&D changes matter for any business building proprietary technology or products. The higher cap and extended eligibility for the refundable offset mean more companies can fund innovation without waiting years for the tax benefit.
