BUDGET REVIEW: Measures impacting businesses

5.1 Permanent $20,000 instant asset write-off

From 1 July 2026, the Government will permanently extend the $20,000 instant asset write-off for small businesses with turnover of less than $10 million.

Assets valued at $20,000 or more can continue to be placed into the small business depreciation pool. The provisions that prevent small businesses from re-entering the simplified depreciation regime for five years after opting out will continue to be suspended until 30 June 2027.

5.2 Reintroducing ‘loss carry back’ for companies

The Government will provide tax relief to businesses by reforming the treatment of tax losses.

For tax years commencing on or after 1 July 2026, companies with aggregated annual global turnover of less than $1 billion will be able to carry back a tax loss and offset it against tax paid up to two years earlier.

Loss carry back will apply to revenue losses only and will be limited to a company’s franking account balance.

5.3 Loss refundability for small start-up companies

The Government will introduce loss refundability for small start-up companies.

For tax years commencing on or after 1 July 2028, start-up companies with aggregated annual turnover of less than $10 million that generate a tax loss in their first two years of operation will be able to utilise the loss to generate a refundable tax offset.

The offset will be limited to the value of fringe benefits tax (FBT) and withholding tax on wages paid in respect of Australian employees in the loss year.

5.4 Dynamic PAYG instalment calculations

The Government will provide $10.9 million to the ATO to expand its pilot of dynamic PAYG instalment calculations and will expand access to monthly payments.

From 1 July 2027, small and medium businesses will be able to opt in to reporting and paying PAYG instalments monthly and to using an ATO-approved calculation embedded in accounting software to calculate and vary their instalments. This will support businesses by enabling tax instalments to better reflect real time business activity. Taxpayers with a demonstrated history of non-compliance will be required to report and pay PAYG instalments monthly.

5.5 Temporary reduction of fuel excise and heavy vehicle road user charge

The Government has temporarily reduced the excise and excise-equivalent customs duty rates (excise rates) applying to most fuel products and the road user charge for heavy vehicles, for three months from 1 April 2026.

The excise rates have been reduced by a total of 60.9%, equating to a 32 cent per litre reduction for petrol and diesel. The road user charge for heavy vehicles has also been reduced from 32.4 cents per litre to zero.

5.6 Research and Development (‘R&D’) Tax Incentives

The Government is reforming the R&D tax incentive to simplify and better target Government support for business R&D. From 1 July 2028, the Government will:

• increase the offset for core R&D expenditure by around 25% to 50%, through a 4.5 percentage point increase in core R&D offset rates;

• reduce the intensity threshold from 2% to 1.5%;

• remove eligibility of supporting R&D expenditure for the R&D tax incentive;

• enable growing firms to retain access to the refundable tax offset for longer by increasing the turnover threshold for the highest offset rate from $20 million to $50 million;

• for firms below the $50 million turnover threshold, maintain older firms’ eligibility for the higher offset rate while limiting refundability to firms under 10 years of age;

• lift the maximum R&D tax incentive expenditure threshold from $150 million to $200 million; and

• improve assurance on smaller claims by lifting the minimum expenditure threshold from $20,000 to $50,000, with research activities valued below this amount required to be undertaken with a registered Research Service Provider or Cooperative Research Centre.

5.7 Support for Small Business Debt Helpline

The Government will provide $8.2 million over three years from 2025-26 to extend the Small Business Debt Helpline financial counselling program and the NewAccess for Small Business Owners mental health coaching program to 30 June 2027.