2026-27 Federal Budget: What It Means for Australian Business Owners
Every year, the federal budget gets handed down, and a lot of it doesn’t seem relevant for business owners, but this year, there are a few changes that may impact more than you realise. The detail really matters here.
There are changes to capital gains tax, negative gearing, and business structures that will directly affect how you build wealth, sell assets, and structure your business. A lot of business owners have not noticed, and some of these require decisions sooner than most people realise.
Here is what you need to know.
The immediate wins for business owners
The $20,000 instant asset write-off is now permanent
From 1 July 2026, the instant asset write-off is locked in for good for businesses with an annual turnover under $10 million. No more uncertainty about whether it will be extended each year. If you are planning to purchase equipment, vehicles, or tools under $20,000 each, you can buy with confidence and write them off in the same financial year.
What you need to think about
Is there equipment, tooling, or a vehicle you have been putting off? If you need it before 30 June, buying now could reduce your tax bill this year. Talk to us before you commit so we can make sure the timing works in your favour.
Loss carry-back returns from 2026-27
Companies with annual turnover under $1 billion can now carry back a tax loss and offset it against tax paid in the previous two years, receiving a real cash refund. If you have a year where you invest heavily in staff, systems, or growth and profit dips as a result, this turns that into a genuine cash outcome rather than a credit sitting on the books.
What you need to think about
If you are planning a year of heavy investment, whether that is new equipment, premises, or growing your team, factor this in. It changes what a softer year actually costs you.
Personal income tax cuts from 1 July 2026
The 16% tax bracket drops to 15% from 1 July 2026, then to 14% from 1 July 2027. Not life-changing on its own, but combined with proper tax planning, it adds up.
What you need to think about
Are you drawing the right amount from your business as salary versus dividends or distributions? Small changes to how you pay yourself can make a meaningful difference when the rates shift. This is worth reviewing before 30 June.
The bigger tax changes that need planning now
Negative gearing limited to new builds from 1 July 2027
One of the most significant changes in decades. From 1 July 2027, negative gearing on residential property will be limited to new builds only. Anything you already own keeps the current rules. But established properties purchased from now on will no longer allow you to offset losses against your income. If property is part of your wealth plan, what you buy and when you buy it have just become much more important decisions.
What you need to think about
If you are planning to buy an investment property in the next year or two, the type of property now directly affects your tax position. A new build may work better for you than it would have previously. Worth a conversation before you commit to anything.
Capital gains tax changes from 1 July 2027
The 50% CGT discount that most business owners and investors have relied on is being scrapped from 1 July 2027. It is being replaced with an inflation-based discount, plus a minimum 30% tax on net capital gains. This affects the timing of selling property, shares, and business assets. For anyone considering a business sale or a significant asset disposal in the next few years, this will significantly affect the numbers.
What you need to think about
Thinking about selling your business, a property, or shares in the next two to three years? The timing of a sale before or after 1 July 2027 could make a significant difference to what you actually keep. This is where early planning pays off.
Discretionary trust tax changes from 1 July 2028
This is the one we are watching most closely. From 1 July 2028, a minimum 30% tax will apply to discretionary trusts. There are exceptions, and the government has built in three years of rollover relief from 1 July 2027 for businesses that need to restructure. When using a bucket company, it is suggested that the 30% tax paid in the trust will not count towards the company’s income tax, and the remainder will be taxed (i.e., double-taxed) upon receipt by the company. This will result in effective tax rates of 47.5% to 51% on distributions to bucket companies! A heinous result and massive overreach.
The detail is still being worked through, and we want to give you the right advice, not a rushed one. We will come back to you on this specifically as the legislation firms up. If legislation comes out that is as bad as this looks, then restructuring options will need to be reviewed and implemented.
What you need to think about
If your business distributes income through a trust to family members or related entities, this change is directly relevant to you. Our advice is not to make any structural decisions until we have worked through the details together. Rollover relief exists and is being extended to give you time to get this right. We have yet to see any details of this extended rollover relief, but we will work through it if you are affected.
A few other things worth knowing
Electric vehicles and FBT
Cars under $75,000 keep their full FBT exemption if the arrangement starts before 1 April 2029. Cars over $75,000 will be subject to a 25% FBT discount from 1 April 2027. If an electric vehicle is on the cards for you or a key employee, the purchase price and timing both matter.
What you need to think about
If you are considering an EV as a business vehicle or as part of a salary package for a senior employee, get the structure right, and you could save significantly on FBT. Talk to us before you buy.
Your action list
You don’t need to act on everything at once. But these are the points you need to start thinking about now.
- Are you thinking of buying equipment or vehicles before 30 June?
Talk to us first on timing and structure. - Is property part of your wealth plan?
The type and timing of your next purchase need a fresh look before you commit. - Are you thinking about selling your business or a significant asset?
The window before July 2027 matters. Start that conversation early. - Is your business running through a trust?
Sit tight on any structural decisions. We will come back to you on this one specifically. - Is an electric vehicle on the cards for you or a key employee?
Get the structure right before you sign anything.
If you have any questions about the budget or the points above, get in touch.
