The Government’s five core priorities for this budget are: responding to the global oil shock, taking pressure off Australians, making the economy more productive, delivering tax reform for workers and businesses, and making sensible savings.
According to the Treasurer, he has sought to produce a budget that addresses intergenerational inequality, provides cost-of-living relief whilst also reducing inflation, and kickstarts Australia’s lagging productivity.
Underpinning this budget is $63.8 billion in savings and reprioritisations, making this as much a budget of restraint as it is of reform.
For Australia’s 2.6+ million small businesses, this budget lands with a mix of genuinely welcome news and some significant changes that will likely also have cost implications, not just for compliance but for the need for further advisory services.
There are $3.5 billion worth of new measures that benefit SMEs. The Government also claims it is making tax time simpler for SMEs, saving them 376,000 hours a year.
There’s real dollar value in measures like the permanent Instant Asset Write-Off, a new $1,000 instant tax deduction, and a $250 tax offset for working Australians and sole traders.
But proposed changes to capital gains tax, negative gearing, and discretionary trust taxation will reshape the landscape for many business owners who hold investment assets or operate through trust structures. It will be vital for SMEs to discuss the changes with their trusted advisors.
Here’s the lowdown on what you need to know as a small- or medium-sized business owner.
The good stuff: tax deductions and offsets
Let’s start with the wins.
The $1,000 Instant Tax Deduction allows individuals — including sole traders — to claim up to $1,000 in work-related expenses without needing to keep receipts. It’s a meaningful simplification that reduces admin burden for anyone who currently scrambles to justify every small deduction at tax time. Note, though, that charitable donations, association memberships, and union fees are excluded from this deduction.
There’s also a new $250 Working Australians Tax Offset (WATO), which is available to sole traders, not just employees. If you run your own business and draw an income, you’ll benefit from this offset on top of the legislated income tax cuts already rolling out. The WATO is set to offer a permanent annual tax offset of up to $250 for income earned from 1 July 2027.
The Government also claims these measures will make tax time simpler for SMEs, saving the sector a combined 376,000 hours a year. Whether that figure proves accurate in practise remains to be seen, of course.
Instant Asset Write-Off goes permanent
After years of uncertainty and repeated short-term extensions, the $20,000 Instant Asset Write-Off (IAWO) has been made permanent for businesses with an annual turnover of up to $10 million.
This is a significant win for small businesses. The IAWO allows eligible businesses to immediately deduct the cost of new or second-hand assets (up to $20,000 per asset) rather than depreciating them over time. The certainty of a permanent scheme means you can plan capital expenditure without waiting each year to see whether the scheme will be renewed.
If you’ve been holding off on equipment purchases or business upgrades, this is the green light to revisit those plans with your accountant.
“Making the Instant Asset Write Off permanent removes some of the uncertainty that has made it harder for businesses to invest with confidence in the past,” MYOB CEO Paul Robson said.
Loss carry back and start-up support
From tax years commencing on or after 1 July 2026, companies with an aggregated annual global turnover of up to $1 billion will be able to carry back a tax loss and offset it against tax paid in the previous two years (revenue losses only). This is a cash-flow positive measure for any business that has a lean year after profitable ones, as you can effectively claw back some of the tax you’ve already paid.
For early-stage businesses, there’s also a new loss refundability measure for small start-ups. For tax years starting on or after 1 July 2028, businesses with a turnover of less than $10 million that generate a tax loss in their first two years will be able to use that loss to generate a refundable tax offset. This will be genuinely helpful for founders who are investing heavily upfront before revenue kicks in.
CGT changes: what’s happening and when
This is where it gets more complex. From 1 July 2027, the current 50% Capital Gains Tax (CGT) discount will be replaced by a cost base indexation model, with a 30% minimum tax on net capital gains. These changes apply to all CGT assets (including property and shares) held by individuals, trusts, and partnerships, including pre-1985 assets.
The good news: the existing CGT concessions specifically for SMEs will be maintained. And gains arising before 1 July 2027 will still be subject to the current 50% discount rules.
Investors in new houses will have the choice of either the 50% discount or the new indexation model with the minimum tax.
If you hold significant assets through a trust or personally, it’s worth talking to your accountant now — before 1 July 2027 — about what these changes mean for your situation.
Negative gearing: new builds only from 2027
From 1 July 2027, negative gearing will be limited to eligible new builds. Losses from established properties will only be deductible against rental income or capital gains from residential property and not against other income. However, excess losses can be carried forward to future years.
For SME owners who hold investment properties as part of their wealth strategy, this is a meaningful change. If you currently use rental losses to offset your business or personal income, that arrangement will no longer work for established properties after July 2027. Again, speak to your adviser sooner rather than later.
Discretionary trusts: the new 30% minimum tax
Many SMEs operate through discretionary trust structures, and this Budget introduces a significant change: a minimum 30% tax on taxable income distributed through discretionary trusts. Beneficiaries (other than companies) will receive non-refundable credits for the tax paid by the trustee.
Importantly, the Government is offering a three-year rollover relief window from 1 July 2027 for SMEs that want to restructure into a different entity type, such as a company or a fixed trust. ASIC will be resourced to help expedite these changes.
The minimum tax will not apply to fixed trusts, widely held trusts, complying superannuation funds, special disability trusts, deceased estates, or charitable trusts. Some income types — including primary production income and certain income relating to vulnerable minors — will also be excluded.
If your business currently operates through a discretionary trust, this is a priority conversation to have with your accountant. The restructuring window is generous, but three years goes quickly.
Fuel prices: immediate relief for business costs
Fuel was identified as the number one cost pressure facing SMEs in the latest MYOB Business Monitor, cited by 51% of respondents, with average fuel costs rising by around 18% over the past 12 months.
“Fuel remains the single biggest cost pressure facing SMEs,” Paul Robson said.
The global oil shock is particularly a live issue for any business with transport, logistics, or fuel-heavy operations.
Today, the Government has responded with a three-month lowering of the fuel excise from 1 April 2026, delivering a 32 cents-per-litre reduction in petrol and diesel prices.
Beyond the short-term excise cut, the $14.8 billion Strengthening Australia’s Fuel Resilience package includes a $7.5 billion Fuel and Fertiliser Security Facility and a $3.2 billion Australian Fuel Security Reserve.
There are also $1 billion in interest-free loans available to manufacturing and logistics businesses impacted by the fuel crisis. If your business has been hit hard by fuel costs, it’s worth exploring whether you’re eligible.
Other factors affecting SMEs
Free access to mandatory standards, saving some businesses up to $1,600 per year
A National Construction Code Modernisation Project to reduce state-by-state variations
Round 3 of the Digital Solutions Program from 1 July 2026, with a new focus on AI and emerging technologies
Expansion of PAYG pilot, with SMEs able to opt into monthly payments using ATO-approved calculations embedded in accounting software from 1 July 2027.
Extension to funding of $8.2 million over three years to continue the Small Business Debt Helpline and the NewAccess for Small Business Owners mental health coaching program through to 30 June 2027.
Restructuring of electric vehicle FBT discount, with reductions coming into place in 2029. If you’ve been considering adding EVs to a novated leasing arrangement or company fleet, the window for the full 100% discount on vehicles under $75,000 is open until April 2029. Plan your fleet decisions accordingly.
The bottom line
This is a reforming budget with benefits for small businesses in some areas, but it also introduces complexity, particularly around investment structures. The permanent IAWO, the instant tax deduction, the sole-trader tax offset, and the loss carry-back provisions are all wins. The changes to CGT, negative gearing, and discretionary trust taxation, however, will require careful attention and good advice.
The good news is that the transition timelines are relatively generous, with most of the structural changes not taking effect until 1 July 2027, giving you time to plan. So, be sure to use it!
“Tonight’s budget provides some measures that will enable long-term business planning,” MYOB’s Paul Robson confirms. “The focus now must be on ensuring these unlock confidence and investment across a sector that remains central to the Australian economy.”
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Information provided in this article is of a general nature and does not consider your personal situation. It does not constitute legal, financial, or other professional advice and should not be relied upon as a statement of law, policy or advice. You should consider whether this information is appropriate to your needs and, if necessary, seek independent advice. This information is only accurate at the time of publication. Although every effort has been made to verify the accuracy of the information contained on this webpage, MYOB disclaims, to the extent permitted by law, all liability for the information contained on this webpage or any loss or damage suffered by any person directly or indirectly through relying on this information.
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