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.
$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.
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.
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.
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.
Frequently Asked Questions
What is the difference between fixed-price and hourly bookkeeping?
Hourly bookkeeping charges you based on the time your bookkeeper spends working, so your monthly cost can change. Fixed-price bookkeeping charges an agreed monthly fee for a defined scope of services, making your costs easier to predict.
Is fixed-price bookkeeping cheaper than hourly bookkeeping?
It can be, especially for businesses with regular monthly bookkeeping needs. With fixed pricing, you avoid higher bills during busy months and know your cost upfront.
Who is hourly bookkeeping best for?
Hourly bookkeeping can suit businesses with occasional, irregular, or one-off bookkeeping needs. It may also work for businesses with very low transaction volumes that do not need ongoing support.
Who is fixed-price bookkeeping best for?
Fixed-price bookkeeping is generally suited to small businesses with regular transactions that want consistent bookkeeping and a predictable monthly cost.
Does fixed-price bookkeeping mean the scope of work is unlimited?
No. A fixed-price plan covers an agreed scope of services. If your bookkeeping needs change significantly, you may need to change your plan or add extra services.