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- Small businesses will benefit from a permanent $20,000 instant asset write-off starting July 2026, providing long-term certainty for asset planning.
- New loss carry-back rules will allow companies to offset future losses against past tax paid, creating potential cash refunds for eligible businesses.
- From 2028, trust distributions will face a flat 30% tax rate, likely triggering significant entity restructuring and refinancing needs.
- Real-time monthly PAYG instalments arriving in 2027 will help seasonal businesses better align tax payments with their actual earnings.
Tuesday’s Federal Budget has largely been dominated by housing and cost-of-living measures. But beneath the headline announcements are several updates that will directly impact SME and self-employed clients over the coming years [1].
For partners, these changes are worth keeping on the radar, especially where they may influence cash flow, structuring, tax planning, and funding requirements.
Here are 4 that stand out.
1. $20k instant asset write-off made permanent
From 1 July 2026, the instant asset write-off threshold will become permanent (for businesses with turnover under $10M).
That removes the usual year-to-year uncertainty around whether the concession will be extended, giving SMEs more confidence when planning equipment and asset purchases.
Why this matters:
- More certainty around timing capital expenditure
- Stronger incentive to bring forward purchases where tax deductions are beneficial
- Ongoing demand for finance where clients want to preserve cash flow while still investing
For clients looking to maximise deductions in FY26, timing will matter. Assets generally need to be acquired and ready for use within the financial year to be eligible.
2. Loss carry-back rules return
Loss carry-back provisions will be reintroduced for companies with up to $1B turnover. This allows losses from FY27 to be carried back and offset against tax already paid in FY24 and FY25, generating a potential cash refund from the ATO.
Why this matters:
- Businesses that previously performed well may now be eligible for refunds
- Cash flow timing becomes a key issue while waiting for ATO processing
- Opportunities to smooth short-term liquidity pressure
Where clients are trading through a softer period but awaiting refunds, short-term working capital solutions may help bridge timing gaps.
3. Trust distributions taxed at 30% from 2028
From 1 July 2028, distributions from discretionary trusts will be subject to a flat 30% tax rate at trustee level.
With a significant number of SMEs operating through trust structures, this is expected to drive a wave of restructuring activity over the next few years.
Why this matters:
- Entity restructuring across trading and investment structures
- Re-financing requirements linked to ownership or security changes
- Updates to guarantees and lending structures as entities shift
These changes are likely to be gradual, but the lead time means planning discussions will start well before 2028.
4. Dynamic PAYG instalments from July 2027
From July 2027, businesses will be able to opt into monthly, software-calculated PAYG instalments based on real-time earnings.
This is designed to better align tax obligations with cash flow, particularly for businesses with variable or seasonal income.
Why this matters:
- Smoother tax payments across the year
- Reduced risk of large, unexpected BAS or instalment shocks
- Improved visibility of tax obligations in real time
For clients still experiencing uneven cash flow, revolving credit facilities or flexible working capital structures may remain an important tool to manage seasonal volatility.
What this means for partners
While none of these changes require immediate action, they do signal a continued shift toward:
- More structured tax timing and compliance systems
- Greater alignment between real-time performance and tax obligations
- Ongoing restructuring activity across SME and trust-owned businesses
For brokers and advisers, the key opportunity is to identify where timing, structure, or cash flow pressure will create financing needs over the next 12–24 months – and start those conversations early.
