Federal Budget announcement 2026-2027 – updates for businesses

The key considerations for businesses as a result of the 2026-2027 Federal Budget announcement are as follows:

Taxation of trusts

The Government has announced that, from 1 July 2028, discretionary trusts will be subject to a minimum tax rate of 30 per cent. The tax will be payable by the trustee and will be non‑refundable.

While individual beneficiaries are expected to receive a non‑refundable credit for tax paid by the trustee, company beneficiaries will not receive any credit. As a result, distributions to corporate beneficiaries or “bucket companies” will effectively attract a minimum 30 per cent tax at the trust level, before any further tax outcomes at the company level resulting in a double-tax outcome.

Temporary roll-over relief for restructures

To support the transition away from discretionary trust structures, the Government has announced temporary roll‑over relief to facilitate restructures into other ownership structures such as companies or fixed trusts.

This roll‑over relief is proposed to apply for a limited three‑year period from 1 July 2027.

Instant asset write-off

The Budget permanently extends the $20,000 instant asset write‑off for eligible small businesses with aggregated turnover of up to $10 million, effective from 1 July 2026.

Capital gains tax reforms

From 1 July 2027, the existing 50 per cent capital gains tax discount will be replaced with an inflation‑adjusted method for calculating capital gains, together with a minimum tax rate of 30 per cent on real capital gains.

Importantly:

• the changes apply only to gains accruing from 1 July 2027 onward. Calculations will need to include discounting from acquisition to 30 June 2027, and indexation from 1 July 2027;
• existing exemptions and concessions continue to apply, including the main residence exemption and the small business CGT concessions; and
• the 30 per cent rate applies only to the net real gain remaining after indexation and any applicable exemptions.

Investors in newly constructed residential property will have the option of applying either the existing 50 per cent CGT discount or the new system, where eligible.

Loss carry back and start-up loss refundability

From the 2026–27 income year, eligible companies will be able to carry back tax losses and obtain refunds against tax paid in the prior two income years.

In addition, from 2028–29:

• eligible start‑up companies in their first two years of operation will be able to receive refundable offsets for tax losses; and
• refunds will be capped by the amount of PAYG withholding and fringe benefits tax paid on employee wages.