The 2026-27 Federal Budget was handed down by Treasurer Jim Chalmers on the evening of 12 May 2026. For Queensland small and medium business owners, it’s one of the more consequential budgets in years. There’s good news on the business front (an instant asset write-off that’s finally being made permanent, the return of loss carry-back, and a small energy rebate), some genuinely significant changes for property investors (CGT and negative gearing), and a handful of cost-of-living measures that will land in most household tax returns.
This blog walks through what changed, who it affects, and what you should be thinking about between now and 30 June.
A quick caveat before we dive in: budget announcements are not law until they pass Parliament. Most of the measures below have been announced with specific start dates, and several have already passed (for example, the $3 million super tax). Others are still draft policy. If a particular measure is critical to a decision you’re about to make, talk to us first.
The big picture
The Government has framed the Budget as a balancing act between cost-of-living relief, supporting small business, and modest tax reform. The headline business package is worth around $3.5 billion in tax relief over the forward estimates, the personal tax sweeteners arrive mostly from 1 July 2027, and the property investment changes are aimed at improving housing supply and home ownership over the next decade.
There is no change to the headline company tax rate. There is no change to GST. The Medicare levy stays where it is for most earners (with a small increase to the low-income threshold).
What’s in it for your business
1. The $20,000 instant asset write-off is permanent
The single most welcome change for SMBs: from 1 July 2026, the $20,000 instant asset write-off becomes a permanent feature of the tax system for small businesses with turnover under $10 million.
This is the same threshold that has been temporarily extended year-to-year for the last few budgets. Making it permanent means business owners can plan capital purchases with confidence rather than waiting on legislation each May. Eligible assets costing less than $20,000 that are first used or installed by 30 June can still be immediately deducted, and from 1 July 2026 the rule rolls on without an expiry date.
If you’ve been hesitant to commit to a vehicle, tooling, or IT refresh, this removes a layer of guesswork from the decision. Treasury estimates it will improve cash flow for around 2.7 million small businesses by approximately $890 million over five years.
2. Loss carry-back is back
Loss carry-back lets eligible companies use a tax loss in the current year to claim a refund of company tax paid in the prior two income years. It was a COVID-era measure that lapsed, and the Government has now reinstated it from the 2026-27 income year.
Up to 85,000 companies (most of them small) stand to benefit. For Queensland businesses going through a tough year (drought-affected, soft tourism patches, construction sector pressure), this is a real cash flow tool: instead of carrying losses forward and waiting for a profitable year, you can claim a refund of tax already paid.
3. Loss refundability for new start-ups
From 2028-29, new small start-ups in their first two years of operation will be able to claim a refund of their tax losses rather than carry them forward. Around 25,000 young companies per year are expected to access this. It’s a smaller measure for now, but worth knowing about if you’re planning a new venture or advising one.
4. Flexible monthly PAYG instalments
From 1 July 2027, businesses will be able to opt in to monthly PAYG instalments (rather than the current quarterly default), and it will be easier to adjust instalments when conditions change. For seasonal Queensland businesses (think tourism operators, agribusiness, and trades hit hard by the wet season), this is a useful piece of flexibility.
5. A $150 energy rebate
Households and eligible small businesses will receive a $150 energy bill rebate. It’s not a game-changer, but it will land automatically on power bills, and it adds up across multiple business sites.
What it means for your investments
The Budget’s biggest single change sits with property investors. Two measures, both significant.
CGT discount being replaced with indexation + a 30% minimum tax
From 1 July 2027, the current 50% capital gains tax discount for individuals, trusts, and partnerships will be removed. In its place: cost base indexation (broadly returning to the pre-1999 system, where the cost base of the asset is adjusted upward for inflation), combined with a 30% minimum tax on net capital gains.
A few important points:
- The change only applies to gains accrued after 1 July 2027. Gains accrued before that date will retain the current treatment.
- Investors in new home builds will be able to choose between the existing 50% discount and the new indexation system.
- The change applies broadly across CGT assets held by individuals, trusts, and partnerships.
The practical effect is that, for many investors, holding an asset for the long term will still produce a reasonable outcome (because indexation lifts the cost base over time), but short and medium-term gains on shares, businesses, and second properties will likely be taxed more heavily than under the current rules.
Negative gearing changes for established residential property
From 7:30pm AEST on 12 May 2026 (in other words, immediately), the rules around negative gearing change for newly acquired established residential properties.
Net rental losses on those properties can no longer be deducted against income that isn’t rental income (so they can’t offset your wages or business profits). Excess losses can still be carried forward and used against future rental income or capital gains on sale.
Critically:
- Properties owned before 12 May 2026 are grandfathered. Existing investors are not affected.
- Eligible new builds are excluded from the new rules and continue under the current regime.
- The Government estimates the package could enable up to 75,000 additional Australians to enter the housing market over the next decade.
If you’re mid-purchase on an established residential investment property, this is a significant change to factor into your numbers. If you’re already holding one (or several), the existing rules still apply to those properties.
What it means for you personally
Working Australians Tax Offset (WATO)
From 1 July 2027, a new Working Australians Tax Offset delivers up to $250 in extra tax relief. It’s applied automatically to tax returns, and it lifts the effective tax-free threshold for 13 million workers by close to $1,800 (or up to about $5,000 for workers also eligible for the Low Income Tax Offset).
$1,000 instant tax deduction (no receipts)
From the 2026-27 income year, workers can claim a flat $1,000 deduction against work-related expenses without keeping receipts. Around 6.2 million Australians are expected to use it, for an average tax saving of $205. If your genuine claimable expenses are higher than $1,000, you keep claiming as normal with substantiation; the flat $1,000 is a simpler alternative for those whose expenses sit at or below that level.
Medicare levy threshold up 2.9%
The Medicare levy low-income threshold increases by 2.9% from the 2025-26 financial year, giving modest relief to around a million low-income individuals, families, seniors, and pensioners.
Superannuation: small changes, one big one
Super was relatively quiet in this Budget, but two things matter for business owners.
Division 296 starts 1 July 2026
The much-debated $3 million super balance tax (Division 296) commences from 1 July 2026. It applies an additional 15% tax to earnings on the portion of a member’s total super balance above $3 million, with a further 10% applying above $10 million.
If you have a large super balance (typically business owners with SMSFs, long-running concessional contribution histories, or significant property holdings inside super), this is the year to revisit your strategy. The mechanics of the tax, particularly its treatment of unrealised gains, mean that some structures need a fresh look.
Contribution caps lift on 1 July 2026
- Concessional cap: $30,000 to $32,500
- Non-concessional cap: $120,000 to $130,000
If you’ve been near the cap, plan around the new limits from 1 July. If you’re using the carry-forward unused concessional cap rules, this changes how much you can pull forward.
What to do before 30 June
A short to-do list based on the changes above:
- Capital purchases: If you’re buying assets under $20,000, you can use the write-off this year as planned. From 1 July it becomes permanent, so timing is less critical than in past years.
- Loss carry-back: If your company is heading for a loss this year, plan a conversation with us about how loss carry-back interacts with your prior-year tax paid.
- Investment property: If you’re considering an established residential purchase, talk to us before you sign. New builds remain on the old rules.
- Super: Confirm your June quarter super contributions clear before 30 June; review whether you should top up concessional contributions before the cap lifts; large super balance holders need a Division 296 strategy.
- Personal: Take note of the $1,000 deduction option for 2026-27, but keep records anyway: most business owners and skilled professionals will have higher genuine claims.
A final word
Every business is different. A budget that looks neutral on paper can have a sharp impact on a specific business depending on its structure, its assets, and its plans. The CGT and negative gearing changes in particular will produce very different outcomes for different investors, and the timing of capital purchases or property transactions over the next twelve months can make a meaningful difference.
If you’d like advice tailored to your situation, the team at VBA is here to help. We work with small and medium business owners right across Queensland, and we’d be glad to walk you through what the 2026-27 Budget means for your business, your investments, and your household.
Get in touch with VBA today to book a tailored Budget review with a Queensland accountant who knows your industry inside out.
Sources
- gov.au: Budget 2026-27 (official): https://budget.gov.au/
- Tax reform, Budget 2026-27: https://budget.gov.au/content/04-tax-reform.htm
- Treasurer’s 2026-27 Budget speech: https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/speeches/2026-27-budget-speech-parliament-house-canberra
- SBS News: Federal Budget 2026 five-minute guide: https://www.sbs.com.au/news/article/federal-budget-2026-five-minute-guide/2g0jf7tvz
- Baker McKenzie: CGT Discount and Negative Gearing: https://www.bakermckenzie.com/en/insight/publications/2026/05/australia-budget-bites-cgt-discount-and-negative-gearing
- SuperGuide: Federal Budget 2026 overview: https://www.superguide.com.au/super-booster/federal-budget-2026-overview
- Pitcher Partners: Federal Budget 2026-27 superannuation analysis: https://www.pitcher.com.au/insights/federal-budget-2026-27-superannuation-unchanged-but-ripple-effects-remain/
- H&R Block: 2026 Federal Budget Tax Updates: https://www.hrblock.com.au/tax-academy/2026-federal-budget-tax-updates
- Corrs Chambers Westgarth: Australian Federal Budget 2026-27 corporate tax measures: https://www.corrs.com.au/insights/australian-federal-budget-2026-27-corporate-tax-measures
This article provides general information only and does not constitute financial, tax, or legal advice. Please consult a registered tax agent or financial adviser for guidance tailored to your circumstances.
