Business Tax Relief Package Delivers Immediate Support
The Federal Budget introduces a comprehensive business tax relief package to support companies and drive investment and innovation.
$20,000 Instant Asset Write-Off Made Permanent
Small businesses gain greater certainty as the government permanently extends the $20,000 instant asset write-off for businesses with a turnover of up to $10 million. This measure was due to drop to $1,000 on 30 June 2026, but the extension now supports ongoing equipment purchases and business expansion plans.
Businesses can continue to place assets valued at $20,000 or more into the small business simplified depreciation pool. They can claim deductions of 15% in the first year and 30% in subsequent years. The government will also keep the rules suspended that prevent businesses from re-entering the simplified depreciation regime for five years after opting out, extending this relief until 30 June 2027.
Changes to Discretionary Trust Taxation
From 1 July 2028, the government will apply a minimum 30% tax rate to discretionary trusts on taxable income. Trustees will pay this tax, and beneficiaries will receive non-refundable tax credits. However, this change may increase the effective tax rate for lower-income beneficiaries who would usually pay less than 30%.
To assist with restructuring, the government will offer expanded rollover relief for three years starting from 1 July 2027. This support helps businesses transition discretionary trusts into companies or fixed trusts.
Tax Loss Carry-Back Returns
From 1 July 2026, companies with aggregated annual global turnover below $1 billion can again carry back tax losses. They can offset these losses against tax paid up to two years earlier. This measure applies only to revenue losses and remains limited by the company’s franking account balance.
FBT Changes for Electric Vehicles
The government confirms changes to the fringe benefits tax (FBT) exemption for electric vehicles (EVs). It will phase in these changes over three years, introducing a permanent 25% discount for eligible EVs from 1 April 2029.
There are no changes in the current FBT year. Additionally, EVs priced below $75,000 will remain unaffected until 1 April 2029.
R&D Tax Incentive Reforms
From 1 July 2028, the government will implement major reforms to the Research and Development (R&D) Tax Incentive.
- It will increase core R&D offset rates by 4.5 percentage points
- It will lower the intensity threshold from 2% to 1.5%
- It will raise the turnover threshold for the highest offset rate from $20 million to $50 million
- It will increase the maximum expenditure threshold from $150 million to $200 million
However, the reforms will remove eligibility for supporting R&D expenditure and raise the minimum expenditure threshold from $20,000 to $50,000.
Monthly PAYG Instalments for SMEs
From 1 July 2027, small and medium businesses can choose to report and pay PAYG instalments monthly. The system will use ATO-approved calculations within accounting software to better reflect real-time business activity and improve cash flow management.
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Important: Clients should not act solely on the basis of the material contained here. Items herein are general comments only and do not constitute or convey advice per se. Also, changes in legislation may occur quickly. We, therefore, recommend that our formal advice be sought before acting in any of the areas.
