Instant asset write-off
Start date: 1 July 2026
The Government has announced that the cost threshold for the purpose of applying the instant asset write-off for small business entities will be permanently increased to $20,000 from 1 July 2026.
The instant asset write-off allows eligible small business entities with an aggregated turnover of less than $10 million to claim an immediate deduction for the full cost of depreciating assets that cost less than a specified dollar threshold. While the default threshold is $1,000, higher temporary thresholds have been implemented year to year since 2015, often leading to confusion and uncertainty.
A permanent increase in the cost threshold to $20,000 should be welcome news to small business taxpayers who will have a greater level of confidence when it comes to investing in new plant or equipment or upgrading business assets.
To qualify for the immediate deduction, the cost of the asset must be less than $20,000 after subtracting any GST credits that can be claimed.
The cost threshold applies on an asset-by-asset basis, so an immediate deduction could apply to multiple assets purchased for less than $20,000 in a particular income year, even if the aggregate cost of those assets is $20,000 or more.
Assets that cost $20,000 or more can continue to be added to a small business pool.
Just a quick reminder: the threshold for the current income year ending on 30 June 2026 has already been increased to $20,000.
FBT on electric cars
Start date: 1 April 2027
On 5 May 2026, the Government announced that the FBT exemption for electric cars would be gradually scaled back over the next few years.
The FBT exemption for electric cars was introduced in the 2022-23 income year as part of a broader initiative to reduce the cost of electric vehicles and increase uptake.
While the exemption has been phased out for plug-in hybrid electric vehicles from 1 April 2025 (with pre-existing arrangements still qualifying for the exemption in some cases), a full FBT exemption still applies to battery electric vehicles and hydrogen fuel cell electric vehicles that are provided as fringe benefits to employees if certain conditions can be satisfied.
However, the Government is planning to progressively reduce the scope of the FBT exemption on the following basis:
- The FBT exemption will continue to operate in its current form until 31 March 2027.
- From 1 April 2027 to 31 March 2029, the full FBT exemption will only be available if the car costs $75,000 or less. Electric cars above this threshold but below the luxury car tax (LCT) threshold for fuel-efficient cars will receive a 25% FBT discount.
- From 1 April 2029, all electric cars priced below the LCT threshold will receive a 25% FBT discount.
The Government indicates that these changes won’t impact the existing arrangements.
When an electric car is provided to an employee and qualifies for concessional FBT treatment under these measures, employers will still need to calculate the reportable fringe benefits amount, ignoring the FBT exemption or discount. This can impact other areas of the tax and social security systems.
Loss carry back for companies.
Start date: 1 July 2026
For income years commencing on or after 1 July 2026, the Government will allow companies with an aggregated annual global turnover of less than $1 billion to carry back a tax loss and offset it against tax paid in the two preceding years.
The ability to carry back a loss applies only to tax losses (not capital losses) and is limited by the company’s franking account balance.
Loss refunds for small start-up companies
Start date: 1 July 2028
Start‑up companies with an aggregated annual turnover of less than $10 million that generate a tax loss in their first two years of operation will be able to utilise the loss to generate a refundable tax offset.
The offset will be limited to the value of fringe benefits tax and withholding tax on wages paid in respect of Australian employees in the loss year.
PAYG instalments
Start date: 1 July 2027
The Government will provide funding to the ATO to expand its pilot of dynamic PAYG instalment calculations.
From 1 July 2027, small and medium businesses will be able to opt in to reporting and paying PAYG instalments monthly, and use an ATO-approved calculation embedded in accounting software to calculate and vary instalments.
R&D tax incentive
Start date: 1 July 2028
The Government will reform the Research and Development (R&D) Tax Incentive, which provides a tax offset for eligible companies undertaking R&D activities.
While the Government is planning to increase the tax offset rate for core R&D expenditure, supporting R&D expenditure will no longer qualify, and the minimum amount of expenditure that must be incurred in an income year to qualify for the offset will be increased from $20,000 to $50,000 (with some limited exceptions).
Minimum tax for multinationals
Start date: 1 January 2026
The Government will amend Australia’s global and domestic minimum tax legislation as part of broader reforms to the international corporate tax system.