Simplifying Tax for Small and Medium Businesses

Start Dates

• Instant asset write-off: from the 2026–27 income year
• PAYG instalment changes: from 1 July 2027

As part of the 2026–27 Federal Budget, the Government announced several measures aimed at reducing complexity and improving cash flow for small and medium businesses.

From 1 July 2026, the $20,000 instant asset write-off for eligible businesses with turnover below $10 million will become permanent.

The Government also confirmed that the temporary suspension of rules preventing businesses from re-entering the simplified depreciation regime within five years of opting out will continue until 30 June 2027.

From 1 July 2027, eligible businesses will also have the option to report and pay PAYG instalments monthly, providing greater flexibility in managing cash flow and tax obligations.

Instant Asset Write-Off

Under section 328-180 of the Income Tax Assessment Act 1997 (ITAA 1997), eligible small businesses can immediately deduct depreciating assets costing less than the applicable threshold in the year the asset is first used or installed ready for use.

The threshold has changed multiple times in recent years through temporary legislation, with the current $20,000 threshold applying since 30 June 2023.

From 1 July 2026, the Government will permanently extend the $20,000 instant asset write-off for eligible small businesses with annual turnover of up to $10 million.

Assets costing $20,000 or more will continue to be allocated to the simplified depreciation pool under existing rules.

PAYG Instalments

From 1 July 2027, eligible small and medium businesses will be able to opt into:

• monthly PAYG instalment reporting and payments; and
• ATO-approved PAYG calculations integrated into accounting software.

The Government stated that the measure is intended to better align PAYG instalments with real-time business performance and cash flow.

Businesses with a history of tax non-compliance may be required to report monthly.

The Government will also provide $10.9 million to the ATO to expand its pilot program for dynamic PAYG instalment calculations.

2026–27 Federal Budget – Expanding Venture Capital Tax Incentives

Start Date

From 1 July 2027

The Government announced reforms to expand and modernise Australia’s venture capital tax incentive framework to encourage investment in early-stage and high-growth businesses.

Under the current rules, venture capital concessions are available through:

• Venture Capital Limited Partnerships (VCLPs); and
• Early-Stage Venture Capital Limited Partnerships (ESVCLPs).

From 1 July 2027, the reforms will:

• increase the VCLP investee asset threshold from $250 million to $480 million;
• increase the ESVCLP investee asset threshold from $50 million to $80 million;
• increase the ESVCLP tax incentive asset cap from $250 million to $420 million; and
• increase the maximum ESVCLP fund size from $200 million to $270 million.

The increased thresholds will apply to both existing and new venture capital funds.

The Government also announced that the eligible venture capital investor program will close to new applications from 7:30pm (AEST) on 12 May 2026.

2026–27 Federal Budget – Support for Small Business

Start Date

From the 2025–26 income year over three years

The Government announced additional funding to support the financial wellbeing and mental health of small business owners facing ongoing economic pressures.

Funding will extend:

• the Small Business Debt Helpline financial counselling service; and
• the New Access for Small Business Owners (NASBO) mental health coaching program.

The Government stated that the measure is intended to help small business owners manage financial stress, debt pressures, and broader economic uncertainty.

2026–27 Federal Budget – Improvements to Australian Business Registers

The Government also announced further investment to continue modernising Australia’s business registry systems.

The reforms are intended to improve the accuracy, integrity, and efficiency of Australia’s business registration and identification systems, while reducing fraud risks and improving data integration across government agencies.