The FY27 Federal Budget introduced a range of tax and business measures that could affect small businesses over the next few years. Key announcements focused on trusts, capital gains tax, business investment incentives and simplifying parts of the tax system.
Discretionary Trust Changes
From 1 July 2028, discretionary trusts are expected to face a new minimum tax rate of 30%. This could impact many family-run businesses that currently use discretionary trusts for income distribution and tax planning purposes. To assist businesses wanting to move away from trust structures, the Government has proposed temporary rollover relief for restructures into companies or fixed trusts.
Capital Gains Tax (CGT) Changes
The Government also announced proposed changes to the current CGT discount rules. From 1 July 2027, the existing 50% CGT discount may be replaced with an indexation-style method, together with a minimum 30% tax rate on capital gains. Importantly, transitional rules are expected to protect gains that accrued before the new rules begin.
Permanent $20,000 Instant Asset Write-Off
Small businesses with turnover below $10 million will continue to benefit from the $20,000 instant asset write-off, which is set to become permanent from 1 July 2026. This allows eligible assets to be immediately deducted instead of depreciated over time, helping improve cash flow and making it easier for businesses to invest in equipment and technology.
$1,000 Standard Work-Related Deduction
From 1 July 2026, taxpayers may be able to claim up to $1,000 in work-related expenses without needing to keep detailed receipts or records. Individuals with expenses above this amount can still choose to claim actual expenses under the normal rules. The aim is to simplify tax return preparation, particularly for employees and sole traders with smaller deductions.
Fuel Excise Relief
The Budget also included temporary fuel cost relief, with fuel excise on petrol and diesel reduced by approximately 32 cents per litre for three months from 1 April 2026. Heavy vehicle road user charges were also temporarily removed during this period. Businesses in transport, construction and trade industries may see short-term savings as a result of the lower fuel costs.
