2026 Federal Budget: Business taxation
The 2026 Federal Budget includes a number of measures aimed at supporting business investment, improving cash‑flow resilience and reducing administrative complexity. Key announcements include the reintroduction of the loss carry‑back regime, the permanent extension of the $20,000 instant asset write‑off for small businesses, and the expansion of dynamic monthly PAYG instalments. Below you will find a summary of these measures and their key features.
Reintroduction of the loss carry‑back regime
The Government has announced that it will reintroduce the loss carry‑back regime for most companies and start‑ups, with effect from 1 July 2026.
Under the reintroduced regime:
Companies with aggregated annual global turnover of less than $1 billion will be eligible
Tax losses can be carried back and offset against company tax paid in up to the two previous income years
This allows companies to reclaim tax paid in prior profitable years, improving cash flow when losses occur.
Instant asset write‑off permanently extended for small businesses
The Budget confirms the permanent extension of the $20,000 instant asset write‑off for small businesses with an aggregated turnover of up to $10 million.
The $20,000 threshold was previously scheduled to expire on 30 June 2026, at which point it would have reverted to the general $1,000 threshold. The permanent extension provides greater certainty for small businesses when planning asset purchases.
Key features include:
Immediate deduction for eligible assets costing less than $20,000
Assets costing $20,000 or more may continue to be allocated to the small business simplified depreciation pool
Pool deductions generally apply at:
15% in the first year an asset is added, and
30% in subsequent years
In practical terms, this gives small businesses ongoing certainty that investing in new equipment can deliver an immediate tax deduction and cash‑flow benefit.
Expansion of dynamic monthly PAYG instalments
As part of a broader initiative to reduce regulatory burden, the Government will work with the ATO to expand its pilot program for dynamic PAYG instalment calculations and monthly business tax payments. This allows businesses to better match tax payments to how they are actually performing, reducing the risk of overpaying tax when cash flow is tight.
From 1 July 2027:
Small and medium‑sized businesses will be able to opt in to:
Monthly PAYG instalment reporting and payments, and
An ATO‑approved calculation method embedded in accounting software
Instalments will be calculated using more real‑time business data, rather than historical income
Further information
The application and impact of these measures will depend on individual business circumstances, including structure, turnover, profitability and existing tax positions.
For assistance in understanding how these Budget measures apply to your situation, please contact Mission Advisory. We can provide guidance tailored to your specific circumstances and explain how the changes interact with your existing arrangements.
As your trusted advisors, we will work with you to optimise your position.
This information is general in nature and based on Budget announcements and factsheets. Final outcomes will depend on legislation yet to be passed.