Overview
The most significant budget in years
Treasurer Jim Chalmers handed down the 2026–27 Federal Budget on 12 May 2026, describing it as the most ambitious in 26 years. For Australian small business owners, four changes stand out: a full overhaul of capital gains tax, new restrictions on negative gearing, the imminent arrival of Payday Super, and the permanent extension of the $20,000 instant asset write-off.
Some of these changes take effect in weeks. Others from 1 July 2027. All of them warrant a conversation with your accountant.
Important: This article is a plain-English summary only. It is not tax or financial advice. Several measures still require legislation to pass Parliament before becoming law. Speak with a registered tax agent or accountant before making any decisions based on this article.
At a glance
What changed and when
| Change | When | Who it affects |
|---|---|---|
| Payday Super | 1 July 2026 | All employers with staff |
| $20,000 instant asset write-off — permanent | 1 July 2026 | Small businesses (turnover under $10M) |
| Negative gearing — limited to new builds | 1 July 2027 | Residential property investors (new purchases after Budget night) |
| CGT — 50% discount replaced with indexation + 30% minimum | 1 July 2027 | Individuals, trusts, partnerships |
| Loss carry-back — reintroduced | 2026–27 income year | Companies with losses |
Change 1 — Effective 1 July 2026
Payday Super — the most urgent change for any employer
Payday Super is already legislated — it was passed in 2025 and is not a new Budget announcement. But it takes effect in seven weeks and many small businesses are still unprepared.
From 1 July 2026, employers must pay superannuation guarantee contributions at the same time as wages, every payday. Contributions must reach the employee's super fund within seven business days. This replaces the current quarterly payment system entirely.
The calculation basis also changes. The SG rate stays at 12%, but it is now calculated on qualifying earnings (QE) — a broader definition than ordinary time earnings (OTE) that includes salary sacrifice amounts and certain other payments previously excluded.
The seven-day rule is strict. Contributions that don't reach the super fund in time trigger the Superannuation Guarantee Charge — which includes the unpaid super, interest, and an administrative uplift. The ATO monitors compliance through Single Touch Payroll in real time.
Critical: the Small Business Superannuation Clearing House (SBSCH) closes permanently on 30 June 2026. If your business uses the SBSCH to pay super, you must transition to a SuperStream-compliant clearing house before that date. Contact your payroll software provider or super fund now if you haven't done this already.
The ATO has confirmed a transitional compliance approach for the first year (1 July 2026 to 30 June 2027), where employers making genuine attempts to comply and correcting errors quickly will be treated as low risk. This transitional approach expires 30 June 2027.
If your business currently pays super quarterly and uses the SBSCH, both of those things need to change in the next seven weeks. Speak with your payroll software provider, bookkeeper, or accountant now. This is the most time-sensitive item for any business with employees.
Change 2 — Effective 1 July 2026
$20,000 instant asset write-off — now permanent
Small businesses with annual turnover under $10 million can immediately deduct eligible assets costing less than $20,000. This has been extended year by year since 2015. From 1 July 2026 it is a permanent feature of the tax system — no more annual renewals, no more end-of-year deadline pressure.
The $20,000 threshold is not indexed to inflation, so its real value will erode over time. But the permanence removes the planning uncertainty that previously made it difficult to time capital expenditure decisions around an extension that may or may not come.
Assets costing $20,000 or more continue to be depreciated through the simplified depreciation pool at 15% in year one and 30% in subsequent years.
Loss carry-back is also reintroduced from 2026–27. Companies with turnover under $1 billion that make a loss this year can carry it back and offset it against tax paid in the prior two income years — generating a cash refund. This is particularly useful for businesses that had profitable years recently but face a difficult 2026–27 trading environment.
Change 3 — Effective 1 July 2027
Negative gearing — limited to new residential builds
From 1 July 2027, negative gearing deductions for residential property will only be available on new builds. For established residential properties acquired after 7:30pm AEST on 12 May 2026 (Budget night), losses will only be deductible against rental income or residential property capital gains — not against other income such as salary or business profits. Excess losses are carried forward.
Existing properties are fully grandfathered. Any residential property owned on Budget night — including properties under contract but not yet settled — can continue to be negatively geared under the existing rules until disposal. This is a complete exemption, not a phase-down.
New builds, purpose-built rental properties, and properties that support government housing or affordable housing programs retain full negative gearing access regardless of acquisition date.
For small business owners who hold residential investment properties personally, the timing of any future acquisition decision has changed materially. Properties contracted before Budget night are unaffected. Properties contracted from 13 May 2026 onwards fall under the new rules.
Change 4 — Effective 1 July 2027
Capital gains tax — the 50% discount is replaced
This is the most structurally significant change in the Budget. From 1 July 2027, the 50% CGT discount for individuals, trusts, and partnerships is replaced with two mechanisms: cost base indexation, and a 30% minimum tax rate on capital gains.
How indexation works: Rather than reducing the taxable gain by a flat 50%, the original cost base of the asset is indexed for inflation. Only the real gain — above the inflation-adjusted cost — is subject to tax. For assets held through periods of significant inflation, indexation may produce a lower tax outcome than the current 50% discount. For assets held in low-inflation periods, the current discount generally produced a better outcome.
The 30% minimum tax: A minimum 30% tax rate applies to capital gains accruing after 1 July 2027, regardless of the indexation result. This sets a floor on CGT liability and is particularly relevant for high-income earners whose marginal rate would otherwise be applied.
Only gains accruing after 1 July 2027 are affected. Gains on assets already held will be apportioned — the portion accrued before 1 July 2027 retains the existing treatment. The CGT reforms apply to gains arising after that date only.
What is not affected: The main residence exemption is unchanged. Small business CGT concessions are unchanged — this is important for business owners planning a sale or succession. Superannuation funds including SMSFs retain access to the one-third CGT discount. The 60% CGT discount for affordable housing is retained.
Pre-CGT assets: A significant change that caught many advisers by surprise — assets acquired before 19 September 1985, which were previously fully CGT-exempt, will no longer be fully exempt from 1 July 2027. Capital gains accruing after that date will be taxable, using a deemed cost base equal to the asset's market value at 1 July 2027. Gains accrued before 1 July 2027 remain exempt. Anyone holding long-standing business assets, family company shares, or inherited property from before 1985 should seek specific advice urgently.
The shift to indexation-based CGT means accurate cost base records become more important than ever. Indexation is calculated from the original purchase price plus improvement costs. If those figures are missing, incorrect, or poorly documented, your CGT position will be wrong. If you hold assets that may be subject to CGT on eventual sale, now is the time to ensure those records are complete and accessible.
What to do now
Practical next steps
Before 30 June 2026: If you have employees, confirm your payroll software is ready for Payday Super and transition away from the SBSCH to a SuperStream-compliant clearing house. This is the most immediate deadline.
If you hold investment properties: Speak with your accountant about the negative gearing and CGT changes. Properties held on Budget night are grandfathered — the treatment of future acquisitions has changed materially.
If you hold pre-CGT assets: The change to pre-1985 asset treatment is significant and requires specific advice. The market value at 1 July 2027 will become the deemed cost base — understanding what that means for your position requires planning now, not in 2027.
If you are planning asset purchases: The permanent write-off removes end-of-year urgency. You can now plan capital expenditure on business need rather than tax deadline.
If your books are not current: Loss carry-back, CGT indexation, and Payday Super compliance all depend on accurate, up-to-date financial records. If your bookkeeping is behind, that is the first thing to address.
