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Home » Featured » Federal Budget 2026–27: What Australian Small Businesses Need to Know

Federal Budget 2026–27: What Australian Small Businesses Need to Know

  • May 13, 2026

The 2026–27 Federal Budget was handed down on 12 May 2026, with over $3.5 billion in new business tax measures directed toward small businesses. The package includes a mix of permanent tax changes and operational improvements aimed at supporting cash flow, investment and growth.

 

If you run a small business in Australia, here’s what you need to know.

1. $20,000 Instant Asset Write-Off — Now Permanent

The Government will permanently extend the $20,000 instant asset write-off from 1 July 2026.

 

Small businesses with an annual turnover of under $10 million will be able to immediately deduct eligible assets costing less than $20,000. This supports cash flow, simplifies tax returns, and provides certainty for forward planning.

 

What this could mean for SMEs: Planning to buy a new piece of equipment, tools, or technology? If it costs less than $20,000, you can write it off in your tax return from 1 July 2026 onwards.

2. Loss Carry-Back Reintroduced

From 1 July 2026, the Government will permanently reintroduce two-year loss carry-back measure for companies with turnover up to $1 billion, a measure expected to benefit around 85,000 companies, most of which are small businesses.

 

If your company makes a tax loss in the current income year, you’ll be able to carry that loss back against tax paid in the previous two income years and receive a refund.

 

What this could mean for SMEs: For eligible companies recording a tax loss, this provides an option to access cash sooner. Speak to your accountant about whether this applies to your situation.

3. Loss Refundability for Start-Ups

From 1 July 2028, small start-up businesses during their first two years of operation will be able to get a refund for tax losses, capped at the value of Fringe Benefits Tax and withholding tax paid on employee wages.

 

This is designed to support early-stage businesses that are not yet profitable.

 

What this could mean for SMEs: If you’re launching a new business or in the early stages of building one, this measure may improve cash flow in the critical first two years.

4. $250 Tax Offset for Working Australians, Including Sole Traders

From 2027–28, over 13 million Australian workers will receive a new $250 annual tax offset, directly benefiting around 1.5 million sole traders.

 

What this could mean for SMEs: Sole traders will receive an additional $250 tax offset each year from the 2027–28 financial year.

5. Support for Businesses Affected by Fuel Disruptions

The Government has announced several temporary measures aimed at supporting small businesses affected by fuel disruptions and the resulting supply chain pressures.

 

This includes $2.9 billion in fuel excise relief with the heavy vehicle road user charge reduced to zero. Temporary relief will also be available for businesses unable to meet their tax obligations as a result of fuel supply disruptions.

 

What this could mean for SMEs: If your business relies on transport, logistics or fuel-intensive operations, it is worth reviewing what temporary relief may be available to you. Visit budget.gov.au for details.

6. Making It Easier to Do Business

Alongside the tax measures, the Budget introduces changes designed to make running a small business more straightforward, from simpler government reporting to reduced costs. Key measures include:

  • Free access to all mandatory Australian Standards, saving eligible businesses over $1,600 per year in document access costs. This is particularly relevant for trade-based businesses such as those in construction who are required to reference these standards regularly.
  • Monthly PAYG instalment flexibility: From 1 July 2027, small businesses can opt in to monthly reporting and dynamic instalment calculations to better reflect real-time business conditions.
  • A streamlined “tell-us-once” approach, reducing the need to submit the same information across different government agencies.
  • The removal of a further 497 tariffs from 1 July 2026, estimated to save businesses around $127 million in compliance costs per year.

7. Digital Adoption and AI Support

The Digital Solutions program is entering its third round from 1 July 2026, offering small businesses access to coaching, workshops and webinars with a greater focus on AI and emerging technologies.

 

The Government has also launched AI.gov.au, a dedicated online resource to help small and medium businesses understand and adopt AI responsibly.

 

Cyber security is also addressed in the Budget, with $89.3 million allocated to strengthen cyber security initiatives, with small businesses among those set to benefit.

Important Reminder: Payday Super Starts 1 July 2026

From 1 July 2026, the way employers pay super is changing. Rather than quarterly payments, super contributions will need to be paid alongside wages and land in the employee’s fund within seven business days of each payday.

 

It is worth ensuring your payroll system is set up to accommodate this. For more information, visit the ATO’s Payday Super page or speak to your payroll provider about how to prepare.

The Bottom Line

The 2026–27 Federal Budget delivers a mix of permanent tax changes and temporary relief measures for Australian small businesses. The permanent $20,000 instant asset write-off and the reintroduction of loss carry-back are among the key measures for small businesses, with potential cash flow benefits for businesses investing in growth.

 

For the full detail, visit the official Australian Government Budget 2026–27 website.

Disclaimer: This article is for general informational purposes only and does not constitute financial, tax or legal advice. Please consult a registered tax agent or financial advisor for advice specific to your circumstances.

Considering finance but unsure where to start? Give our team a call on 1300 760 930 or click Get Started. We’re here to talk through your needs and help you access funds in as little as 24 hours.

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