The 2026 Federal Budget included a range of proposed tax and business measures that could affect small businesses, investors, and individuals over the coming years.
While many of the changes won’t take effect immediately—and most still require legislation before becoming law—they provide a useful indication of the Government’s direction on tax policy, business support, and investment incentives.
Here are some of the key announcements small business owners should be aware of.
The $20,000 Instant Asset Write-Off Becomes Permanent
One of the most practical measures from the Federal Budget for small businesses was the announcement that the $20,000 instant asset write-off will become a permanent feature of the tax system from 1 July 2026.
For eligible businesses with turnover under $10 million, this means assets costing less than $20,000 can continue to be immediately deducted rather than depreciated over several years.
This provides greater certainty for businesses planning equipment, technology, tools, and vehicle purchases. Rather than waiting each year to see whether the measure will be extended, business owners can make longer-term investment decisions with more confidence.
As always, businesses will still need to ensure assets are installed and ready for use before claiming the deduction.
PAYG Instalments May Better Reflect Current Business Activity
Another measure aimed at supporting cash flow is the proposed expansion of dynamic PAYG instalments from 1 July 2027.
Currently, PAYG instalments are largely based on historical tax return information, which can create challenges for businesses whose profits fluctuate significantly from year to year.
Under the proposal, businesses will have the option of using ATO-approved calculations embedded within accounting software to better align PAYG instalments with current business performance.
For growing businesses, this could reduce the risk of unexpected tax bills, while businesses experiencing slower periods may avoid paying more tax than necessary during the year.
Changes to Electric Vehicle Concessions
The Federal Budget also announced changes to the current Fringe Benefits Tax (FBT) concessions for electric vehicles.
While the existing exemption remains available for eligible vehicles provided before 1 April 2029, the Government plans to transition to a reduced concession model from that date.
Businesses considering electric vehicle purchases or salary packaging arrangements should be aware that the generous incentives currently available may not remain in place indefinitely.
Significant Changes Proposed for Property Investors
Two of the most widely discussed Federal Budget announcements relate to Capital Gains Tax (CGT) and negative gearing.
From 1 July 2027, the Government has proposed replacing the current 50% CGT discount with an indexation-based system. Rather than automatically reducing capital gains by 50% for assets held longer than 12 months, the cost base of an asset would be adjusted for inflation before calculating the taxable gain.
The Government has also proposed changes to negative gearing rules for newly acquired established residential investment properties. Under the proposal, future rental losses on these properties would no longer be deductible against salary and wage income and could instead only be offset against future rental income or capital gains from residential property.
Importantly, existing investment properties are proposed to be grandfathered, and new residential builds would remain exempt.
While these changes are primarily aimed at the housing market, they may affect many business owners who also hold investment properties as part of their broader wealth-building strategy.
Trust Taxation Under Review
The Federal Budget also included a proposal to introduce a minimum 30% tax on discretionary trusts from the 2029 income year.
This would represent one of the most significant changes to trust taxation in recent decades and could impact many family businesses, investment structures, and asset-holding entities.
The proposed commencement date remains several years away, and substantial consultation and legislation would still be required before any changes take effect. However, it is likely to be an area closely watched by advisers and business owners over the coming years.
What Should Business Owners Do Now?
At this stage, there is no need for immediate action on most of these proposals. Many measures are still subject to parliamentary approval, and further details are expected over time.
However, the Budget reinforces the importance of maintaining accurate financial records, keeping business structures under review, and planning ahead rather than waiting until changes become law.
The Bottom Line
This year’s Federal Budget included a mix of business incentives, tax reforms, and longer-term structural changes. While the permanent instant asset write-off will be welcomed by many small businesses, proposals affecting CGT, negative gearing, and discretionary trusts could have broader implications for investors and business owners alike.
As further details emerge and legislation is introduced, it will be important to understand how these changes may affect your individual circumstances.
If you’d like to discuss how the proposed Budget measures may impact your business or future plans, get in touch with our team—we’re here to help.
