Information updated 6 October 2026.
The 2026–27 Federal Budget was handed down on 12 May 2026. Several of the major tax measures announced in the Budget have since been legislated, while others remain subject to further legislation.
Whether you run a small business, operate a franchise or are building a franchise network as a franchisor, the important question now is how the changes affect your business, structure and planning for the years ahead.
Major measures include the permanent $20,000 instant asset write-off for eligible small businesses, changes to negative gearing and capital gains tax, company loss carry-back provisions and changes affecting discretionary trusts.
Quick Summary: What This Budget Means for Your Business
- The $20,000 instant asset write-off is now permanent for eligible small businesses from 1 July 2026.
- Company loss carry-back applies for income years commencing on or after 1 July 2026, subject to eligibility requirements.
- Negative gearing changes have been legislated and apply from 1 July 2027, with transitional and grandfathering rules.
- The $1,000 standard deduction for work-related expenses has been legislated.
- Capital gains tax reforms have been legislated, with key changes commencing from 1 July 2027.
- Changes to the tax treatment of discretionary trusts are progressing. Exposure draft legislation was released in September 2026, consultation has concluded, and final legislation is awaited.
- PAYG instalment changes are intended to provide greater access to dynamic monthly tax payments from 1 July 2027.
- The Government is changing the FBT treatment of eligible electric vehicles.
- Businesses should consider which measures affect their structure rather than assuming every Budget announcement applies to them.
The $20,000 Instant Asset Write-Off Is Now Permanent
Start date: 1 July 2026
The uncertainty around the small business instant asset write-off has finally been reduced.
The $20,000 threshold has now been legislated on a permanent basis for eligible small business entities from 1 July 2026.
To qualify as a small business entity, a business generally needs to carry on a business and have aggregated annual turnover of less than $10 million. The business must also be using the simplified depreciation rules.
Eligible businesses can immediately deduct the taxable-use portion of qualifying depreciating assets that cost less than $20,000 and are first used, or installed ready for use, during the relevant income year.
The threshold applies on a per-asset basis. This means an eligible business may be able to immediately deduct multiple qualifying assets costing less than $20,000 each.
Assets costing $20,000 or more generally enter the small business depreciation pool rather than being immediately written off.
The important distinction is that the $20,000 threshold is no longer another temporary extension waiting to be renewed. That provides businesses with greater certainty when considering equipment, technology and other eligible asset purchases as part of their broader business planning.
For franchisees, this may be relevant when considering equipment, technology or store upgrades. Franchisors should also consider how asset purchases and infrastructure investments fit into their broader network plans.
An asset purchase should still make commercial sense in its own right. A tax deduction does not make an unnecessary purchase worthwhile.
Tax Changes Affecting Employees and Sole Traders
Changes to individual taxation announced as part of the Government’s tax reform package may affect employees and some sole traders.
For employers, these changes are primarily relevant when considering payroll communication, remuneration arrangements and the broader impact of tax changes on employees.
Businesses should ensure payroll systems and processes reflect legislated tax rates and thresholds as they take effect.
The $1,000 Work-Related Expense Deduction
The Government’s $1,000 standard deduction for work-related expenses has now been legislated.
The measure is intended to simplify tax returns for employees by providing an alternative to claiming actual work-related expenses.
Employees with deductible expenses above the standard amount may still choose to claim their actual eligible expenses, subject to the normal substantiation requirements.
Employers should also review any salary packaging arrangements affected by associated FBT changes rather than assuming existing arrangements will continue unchanged.
For franchisors with head office employees, area managers or other staff participating in salary packaging arrangements, this may warrant a review with your accountant or tax adviser.
Negative Gearing Changes Have Been Legislated
Key commencement: 1 July 2027
The Government’s changes to negative gearing for residential property have now been legislated.
The reforms restrict the use of losses from certain residential property investments, while retaining negative gearing treatment for qualifying new housing and providing grandfathering arrangements.
This means the discussion has moved beyond whether the proposal will become law. Business owners who also hold residential investment property should now understand how the legislated rules may affect existing and future property investments.
The rules are detailed and their application depends on matters including when a property was acquired and whether it qualifies as new housing.
For business owners, franchisors and franchisees who hold residential property outside their operating business, this is an area where individual tax advice may be important.
Capital Gains Tax Changes
Key commencement: 1 July 2027
Capital gains tax reforms announced in the Budget have now been legislated.
The reforms change the treatment of future capital gains, including replacing the existing general 50% CGT discount for affected future gains with an approach incorporating indexation and a minimum tax on real gains.
Importantly for business owners, the small business CGT concessions have not simply been abolished. The Government has retained the four small business CGT concessions and increased the turnover threshold for the 50% active asset reduction from $2 million to $10 million from 1 July 2027.
The reforms are prospective. Value built up before 1 July 2027 remains subject to the existing rules, even where an asset is sold later.
For business owners considering a future sale, succession plan or restructure, understanding the interaction between the general CGT changes and the small business CGT concessions will be important.
Franchisors and franchisees contemplating the future sale of a business or significant asset should consider obtaining tax advice well before a transaction occurs.
Electric Vehicle FBT Changes
The Government is changing the FBT concessions applying to eligible electric vehicles.
From 1 April 2027, eligible electric cars costing more than $75,000 but below the luxury car tax threshold will receive a 25% discount on payable FBT. Eligible electric cars costing up to $75,000 will continue to receive the full FBT exemption where the fringe benefit arrangement commences before 1 April 2029. From 1 April 2029, eligible electric cars below the luxury car tax threshold will receive a 25% FBT discount.
Businesses providing electric vehicles through company car or salary packaging arrangements should review the rules applying to their particular vehicles and arrangements before making decisions based on the existing exemption.
For franchisors operating vehicle fleets or providing vehicles to senior staff and area managers, this should form part of forward remuneration and fleet planning.
Company Loss Carry-Back Is Now Law
Applies for income years commencing on or after 1 July 2026
The company loss carry-back measure has now been legislated.
Eligible corporate tax entities can carry back qualifying tax losses against tax paid in eligible earlier income years, subject to the legislative requirements.
The measure can provide cash-flow support where a company moves from profitability into a tax-loss position.
Eligibility is more detailed than simply applying a turnover threshold. Among other requirements, the entity must be a corporate tax entity and must not be a significant global entity for the relevant year.
The tax offset is also subject to limitations, including the company’s franking account position.
For growing businesses and franchise groups investing heavily in expansion, this may be worth considering as part of tax and cash-flow planning.
It does not operate in the same way for sole traders, partnerships or trusts.
Loss Refundability for Start-Up Companies
Proposed start date: 1 July 2028
The Budget also announced loss refundability measures intended to support eligible start-up companies during their first years of operation.
This is particularly relevant to businesses investing in people and growth before revenue has fully developed.
Unlike the permanent instant asset write-off and company loss carry-back measures, businesses should confirm the final legislative position and eligibility requirements before relying on this measure in future planning.
More Dynamic PAYG Instalments
Planned from 1 July 2027
The Government is working with the ATO to expand access to dynamic monthly business tax payments.
The intention is to allow more businesses to opt in to tax instalments that more closely reflect current business activity through approved tax software.
For businesses with fluctuating revenue, this could help tax instalments better align with actual trading conditions rather than relying heavily on historical performance.
For franchisors and franchisees with seasonal or changing revenue patterns, this may be worth considering once the final arrangements are available.
Discretionary Trust Changes: Still Developing
Proposed commencement: 1 July 2028
The proposed minimum tax on discretionary trusts remains particularly relevant to some business owners, but this measure needs to be distinguished from measures that have already become law.
As at October 2026, the Government has released exposure draft legislation for the minimum tax on discretionary trusts. The final rules are therefore still developing.
The proposal is intended to introduce a minimum 30% tax treatment for affected discretionary trust income, with exclusions and alternative arrangements being developed.
The Government has indicated that various trusts and types of income will be excluded, including charitable trusts, special disability trusts, superannuation funds and primary production income.
Draft arrangements also include options intended to reduce restructuring costs and an alternative under which certain discretionary trusts may elect to make fixed distributions to pre-nominated beneficiaries.
Because these rules are not yet final, businesses should be cautious about restructuring solely in response to the announcement.
However, business owners currently operating through discretionary trusts should monitor the legislation and discuss the potential implications with their tax adviser.
ATO Compliance and Fraud Protection
The Budget included additional funding and measures intended to strengthen the ATO’s ability to detect and prevent tax fraud.
For business owners, this reinforces the importance of maintaining appropriate records, using registered tax professionals and ensuring claims and tax positions can be substantiated.
Businesses making claims under areas receiving increased ATO attention should ensure their documentation and eligibility are sound.
What Should Business Owners Do Now?
Several of the headline measures from the May Budget are no longer simply proposals.
That means the conversation for the 2026–27 financial year should increasingly move from “what might happen?” to “which changes actually affect our business?”
For established and growing businesses, useful questions include:
- Does the permanent instant asset write-off affect any planned equipment or technology investment?
- Could the company loss carry-back provisions affect tax and cash-flow planning?
- Do changes to CGT need to be considered as part of longer-term succession or exit planning?
- Are any business owners affected personally by the residential property changes?
- Does the business operate through a discretionary trust that may be affected by future reforms?
- Are existing reporting, forecasting and tax planning processes capturing these changes early enough?
For franchisors, there is another layer to consider. Changes affecting the franchisor entity may not affect every franchisee in the same way. Different structures, asset purchases, property holdings and growth plans can lead to different tax outcomes across the network.
Understanding those differences early can make planning considerably easier.
Frequently Asked Questions
Is the $20,000 instant asset write-off actually permanent now?
Yes. The $20,000 threshold has now been legislated on a permanent basis from 1 July 2026 for eligible small business entities.
The threshold applies to each eligible asset and is subject to the small business simplified depreciation rules.
Can I write off multiple assets costing less than $20,000?
Yes. The threshold applies on an asset-by-asset basis, provided the assets and business satisfy the eligibility requirements.
Are the negative gearing changes still only a proposal?
No. The negative gearing reforms have been legislated. The new rules have a key commencement date of 1 July 2027 and include grandfathering and transitional arrangements.
Have the CGT changes become law?
The Government’s CGT reforms have been legislated. The new rules generally apply prospectively from 1 July 2027.
Business owners should obtain advice about how the changes interact with the small business CGT concessions before making decisions about selling or restructuring assets.
Does company loss carry-back apply from 2026–27?
Yes, the loss carry-back provisions have been legislated for eligible corporate tax entities for income years commencing on or after 1 July 2026.
Eligibility conditions and limitations apply.
Is the discretionary trust minimum tax already law?
No. As at October 2026, exposure draft legislation has been released, but the final rules are still developing.
Businesses using discretionary trusts should monitor the legislation rather than making restructuring decisions based solely on the original Budget announcement.
Planning Beyond the Budget Headlines
The 2026–27 Budget introduced significant changes, but not every measure affects every business in the same way.
For an established business, the more useful exercise is to identify which changes interact with your structure, investment plans, tax position and longer-term strategy.
For a franchise network, that may mean looking beyond individual tax measures and considering how financial planning, reporting and forecasting work across multiple entities and locations.
The earlier these issues are built into the year’s planning, the more useful the numbers become.
Speak with the Cotchy team about how tax planning, accounting and VCFO support can help your business understand what is changing and what deserves attention.
