Australian Federal Budget 2026-27: Small business

Loss refundability reforms for businesses and start-ups

The Government will provide tax relief to businesses and start‑ups 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 by a company's franking account balance.
- 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 and withholding tax on wages paid in respect of Australian employees in the loss year.

From 1 July 2026, the Government will permanently extend the $20,000 instant asset write‑off for small businesses with turnover up to $10 million. Assets valued at $20,000 or more can continue to be placed into the small business simplified depreciation pool. The provisions that prevent small businesses from re‑entering the simplified depreciation regime for 5 years after opting out will continue to be suspended until 30 June 2027.
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.

The Government will abolish 497 nuisance tariffs from 1 July 2026 which means that the Government will have removed almost 1,000 tariffs over two years. This measure will eliminate tariffs on a wide range of imported goods including wine glasses, tyres, air conditioners, margarine and bitumen. This will streamline around $23 billion worth of trade.

The Government will expand the venture capital tax incentives to better facilitate venture capital investment and support early stage and growth businesses. The increases will apply to new and existing funds and to new investments they make, including where funds make further investments in businesses already held. From 1 July 2027:
- The venture capital limited partnership (VCLP) cap on the asset size of the investee business at the time of investment will be increased from $250 million to $480 million;
- The early-stage venture capital limited partnership (ESVCLP) cap on the asset size of the investee business at the time of investment will be increased from $50 million to $80 million;
- The ESVCLP tax incentive cap on the asset size of the investee business, at which investment returns can be fully tax exempt, will be increased from $250 million to $420 million; and
- The maximum fund size of ESVCLPs will be increased from $200 million to $270 million.

The Government will provide expanded rollover relief for three years from 1 July 2027 to support small businesses that wish to restructure out of discretionary trusts into another entity type, such as a company or a fixed trust, as a result of the introduction of the 30% minimum tax on discretionary trusts. This will provide relief from income tax consequences, including capital gains tax, for those who choose to restructure.

The Government will amend the National Consumer Credit Protection Regulations 2010 to extend the small business exemption from responsible lending obligations for a further ten years, until October 2036, to support easier and timely access to finance for small businesses.

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.