The 2026-27 Federal Budget included a genuine package of measures aimed at small and medium businesses. From a permanent instant asset write-off to loss carry-back, start-up support and R&D incentive reforms, there is real substance here for business owners to work with.

This article covers the changes most relevant to business owners and operators. If you are primarily looking for what the Budget means for your personal finances or investments, see our companion article: 2026-27 Federal Budget: What It Means for Individuals and Investors. For full technical details on all measures, download the DFK Everalls Federal Budget Tax and Superannuation Overview.

Minimum 30% tax for discretionary trusts

If you operate your business through a discretionary trust, the Budget introduced a minimum 30% tax on trust distributions from 1 July 2028 (excluding primary production income). This is covered in full in our companion article for individuals and investors.  We strongly recommend that you talk to us soon to discuss the implications for your family and the various strategies available, including proposed rollover relief for restructuring.  The rollover relief window opens on 1 July 2027 and closes three years later.

Instant asset write-off made permanent

The $20,000 instant asset write-off is no longer up for renewal every Budget. From 1 July 2026, it is permanent. If your business turns over less than $10 million, you can write off any eligible asset under $20,000 in full the year you buy it, rather than depreciating it over time.

The permanence is the real news here. This threshold has been extended year by year since 2015, which has made it hard to plan around. Knowing it’s locked in means you can factor it into equipment and infrastructure decisions with confidence rather than waiting to see what each budget brings.

Assets at $20,000 or more still go into the simplified depreciation pool — 15% in the first year, 30% each year after that. 

EV novated leases: the full exemption is winding back

The full FBT exemption for EVs under novated leases is not going away entirely, but it is being wound back in stages:

• Until March 2027: the full exemption continues for all eligible EVs.
• April 2027 to March 2029: the full exemption applies only to EVs priced up to $75,000. Above that, up to the luxury car tax threshold, a 25% discount applies.
• From April 2029: a permanent 25% discount applies to all EVs below the luxury car tax threshold.

Existing arrangements are unaffected. If your business offers EV novated leases as part of salary packaging, April 2027 is the date to plan around.

Loss carry-back reintroduced permanently

From 1 July 2026, companies with aggregated global turnover under $1 billion can offset current-year tax losses against tax paid in the previous two years and receive the difference as a refund. The offset is limited to revenue losses and capped by the company’s franking account balance.

This is a meaningful measure for businesses coming off a difficult year after profitable ones. If your company made a tax loss in 2026-27 but paid tax in 2024-25 or 2025-26, you may be entitled to a refund of some of that tax. Up to 85,000 companies, mostly small businesses, are expected to benefit. The ATO will administer the measure.

Note that the previous temporary version of loss carry-back applied to companies with turnover under $5 billion. The new permanent measure applies to those with turnover under $1 billion.

Loss refundability for start-ups

Most start-ups lose money before they make it. From 1 July 2028, that loss has more value than it used to. Small start-up companies in their first two years can now get a tax refund on losses, capped at the value of FBT and PAYG withholding tax paid on Australian employee wages in the same year. Turnover needs to be under $10 million to qualify.

This is a practical cash-flow measure designed to support early-stage businesses investing in staff before they reach profitability. Up to 25,000 young companies per year are expected to benefit. If you are in the process of starting a business or plan to do so in the next few years, this is worth incorporating into your early financial planning.

Monthly PAYG reporting and dynamic instalment calculations

From 1 July 2027, small and medium businesses can opt in to monthly PAYG reporting and payment. The practical upside is that ATO-approved accounting software calculates and adjusts your instalments in real time, so your tax position stays current throughout the year rather than arriving as a surprise at lodgement.

Nothing changes unless you choose it. For businesses with volatile or seasonal income, matching payments more closely to actual earnings can take real pressure off cash flow.

Two practical benefits come with this:

• If a business uses the ATO-approved calculators and gets their instalment variation wrong, they won’t be charged any penalty interest, removing a risk that has previously deterred businesses from varying their instalments.
• Monthly reporting gives businesses better visibility over their tax position, which is particularly useful for cash flow management in businesses with variable income.

Monthly reporting and payment will only be mandatory for businesses with a demonstrated history of non-compliance. For all others, it remains opt-in. Whether it suits your business depends on your cash flow cycle and accounting setup. Your DFK Everalls adviser can help you decide whether to adopt it when it becomes available.

R&D tax incentive reforms

Significant reforms to the R&D Tax Incentive take effect from 1 July 2028. The headline change is that the core offset rate doubles, from 25% to 50%. If your business invests in genuine experimental research, that is a material improvement worth planning for now.

Other key changes include:

• The intensity threshold for qualifying for higher offset rates drops from 2% to 1.5%, making the higher rates available to more businesses.
• The turnover threshold to access the highest refundable tax offset rises from $20 million to $50 million for businesses under 10 years old.
• The maximum R&D expenditure cap increases from $150 million to $200 million.
• The minimum spend threshold rises from $20,000 to $50,000. R&D projects below $50,000 must be undertaken with a recognised research organisation to be eligible.
• Supporting R&D expenditure will be removed from eligibility, focusing the incentive on core experimental activity.

These reforms form part of the Government’s response to the Ambitious Australia: Strategic Examination of Research and Development report. If your business invests in R&D or is considering doing so, these changes are worth building into your planning now, even though the effective date is July 2028.

Venture capital tax incentives expanded

From 1 July 2027, the asset size caps for the venture capital limited partnership programs are being significantly lifted. For most clients, this sits outside their day-to-day, but if you invest through VC structures or are involved in early-stage businesses near these thresholds, ask your adviser whether the changes affect your position.

What should you do now?

Several of these measures are already in effect or take effect from 1 July 2026. The instant asset write-off and loss carry-back both start this financial year, so they are relevant to the planning you are doing right now.

The monthly PAYG option, R&D reforms and start-up loss refundability all take effect in 2027 or 2028, giving you time to prepare. The businesses that benefit most from these measures will be the ones that plan for them in advance rather than react when they arrive.

Download the DFK Everalls Federal Budget Tax and Superannuation Overview for the full technical details on all Budget measures. To speak with a DFK Everalls adviser about what these changes mean for your business, contact your Client Account Manager directly.

This article is a general summary of selected 2026-27 Federal Budget measures and does not constitute financial, taxation or legal advice. The measures described are proposals subject to the passage of legislation. Please speak with a qualified adviser regarding your individual circumstances.