Small Business Budget Questions

Important note: This guide is general information only. Some Budget measures are proposed and may change before they become law. Clients should obtain tailored tax advice before making business, investment or structure decisions.

Below are plain-English answers to common small business questions following the Federal Budget 2026-27 announcements.

Is the instant asset write-off still available?

Yes. The Budget announced that the $20,000 instant asset write-off for eligible small businesses will be made permanent from 1 July 2026. This means eligible businesses can continue to immediately deduct the business portion of eligible assets that cost less than $20,000 each, rather than depreciating those assets over a number of years.

What can businesses instantly deduct now?

Eligible small businesses can generally immediately deduct depreciating assets costing less than $20,000 each, where the asset is first used or installed ready for use for a taxable business purpose. Common examples include tools, computers, laptops, office equipment, machinery, shelving, business equipment and some vehicle-related assets. Assets costing $20,000 or more are generally added to the small business depreciation pool rather than immediately written off.

Should I operate through a company instead of a trust?

It depends on the client’s commercial position, risk profile, profit levels, asset protection needs, family circumstances, succession plans and future exit strategy. A company may offer a fixed tax rate and simpler retained-profit treatment. A trust may still offer flexibility for distributing income and asset protection, but proposed trust tax reforms mean existing trust structures should be reviewed rather than assumed to remain the most tax-effective option.

Will company tax rates change?

No major change to the standard company tax rates was announced in the Budget. The current company tax framework remains that base rate entities generally pay tax at 25%, while other companies pay 30%. Whether a company qualifies as a base rate entity depends on the relevant turnover and passive income tests.

What budget changes affect small business owners?

Key measures include the permanent $20,000 instant asset write-off, the reintroduction of loss carry back for eligible companies from 2026-27, proposed changes to trust and capital gains tax rules, and simplified deduction measures for workers. Business owners should also consider how the Budget interacts with EOFY tax planning, cash flow, asset purchases, business structure and investment decisions.

Is the $20,000 instant asset write-off permanent?

Under the Budget announcement, yes. The Government announced that the $20,000 threshold will be made permanent for eligible small businesses from 1 July 2026. The rules still need to be applied correctly, including the less-than-$20,000 per asset threshold, business-use requirement and simplified depreciation eligibility.

How do the new tax reforms affect tradies?

Tradies may benefit from the permanent instant asset write-off because many work-related assets, such as tools, trailers, equipment and technology, may fall under the $20,000 threshold. However, tradies operating through family trusts or investing in property may need advice due to proposed trust, CGT and negative gearing reforms. The key message is not to buy equipment just for a tax deduction - purchases should make commercial sense and fit cash flow.

Practical client takeaways

• Review planned equipment purchases before 30 June and confirm they are genuinely needed.
• Check whether the asset is under the threshold and ready for use by the relevant date.
• Do not assume a trust or company is automatically best - review the structure against the client’s goals.
• Consider company loss carry back where a company expects losses after previously paying tax.
• Document advice and keep records supporting business use of claimed assets.

References

• Australian Government, Budget 2026-27, Tax reform page - permanent $20,000 instant asset write-off and company loss carry back measures.
• gov.au, What does the Budget mean for your business? - small business Budget summary.
• Australian Taxation Office, Instant asset write-off for eligible businesses - eligibility and operation of the instant asset write-off.
• Australian Taxation Office, Company tax rate changes and company tax rates - base rate entity and general company tax rate information.

Disclaimer: This document provides general information only and does not constitute tax, legal or financial advice. The correct treatment depends on the client’s specific circumstances and the final enacted legislation.