2026 Budget: What Businesses Need to Know

The 2026-27 Budget dropped on 12 May. There's plenty of talk about housing and the cost of living. But what does it actually mean if you're running a business?

Housing is the Government's Priority

The government wants 1.2 million new homes built. That's the target. And they're throwing money at it to make it happen.

For construction businesses, this could mean more work coming through the pipeline. But it also means changes to how you run your business, how you structure your investments, and how much tax you'll pay.

Some of this is good news. Some of it needs your attention right now.

For Business Owners

The $20,000 Instant Asset Write-Off is Permanent

This is a win. If your business turns over less than $10 million, you can instantly deduct assets costing up to $20,000. No more wondering if the scheme will be extended. It's locked in.

What this means for you: If you've been holding off on buying equipment, technology, or tools because you weren't sure the write-off would last, that uncertainty is gone. Plan your purchases with confidence.

Pro tip: If you need multiple items, buy them separately. A $19,000 trailer and a $15,000 tool package are two separate write-offs. A $34,000 combo deal isn't.

New $1,000 Instant Tax Deduction

Here's a new one. From the 2027-28 income year, there's an instant tax deduction of up to $1,000 available.

We're still waiting on the finer details of how this will work and who qualifies, but it's worth keeping on your radar. Finally, some certainty.

Fuel Excise Cut - Short-Term Relief for Your Fleet

Running trucks, utes, and machinery? You'll see some relief at the bowser.

The government is cutting the fuel excise for three months, saving $2.9 billion.

If you're running a fleet or burning through diesel on earthmoving and plant equipment, this helps your cash flow in the short term.

But here's the reality: It's temporary. Don't build it into your long-term job costing. When the three months are up, fuel costs go back to where they were.

497 Nuisance Tariffs Abolished

From 1 July 2026, the government is scrapping 497 tariffs that add compliance costs to imported goods.

If you're bringing in materials, fittings, or equipment from overseas, think specialty hardware, imported tiles, or machinery parts. This could mean less red tape and lower costs.

What to do: Talk to your suppliers. Find out if any of your regular materials or equipment were subject to these tariffs. You might see savings flow through.

Energy Bill Relief

The Budget includes $1.8 billion in electricity bill relief.

If you're running a workshop, factory, or warehouse with significant power costs, you should see some benefit here.

But like the fuel excise cut, this is about easing pressure now, not a long-term fix. Keep an eye on your overheads and don't assume energy costs will stay low.

R&D Tax Incentive Threshold Lifted

This one's for the bigger operators or those doing innovative work.

From 1 July 2028, the R&D tax incentive threshold increases from $150 million to $200 million turnover.

If you're developing new construction methods, prefab systems, or sustainable building technologies, this gives you more room to claim incentives as your business grows.

For Individuals

The $250 Tax Cut

From the 2027-28 income year, there's a $250 tax cut per worker.

It's not going to change your life, but it's $250 more in your pocket. If you're a sole trader or working as an employee, you'll see this flow through when you lodge your return.

Instant Tax Deduction of Up to $1,000

There's a new instant tax deduction of up to $1,000 coming in.

We're waiting on the full details, but this could be useful if you're buying smaller tools, safety gear, or work-related items. Keep your receipts, and we'll make sure you claim everything you're entitled to.

Cost of Living Help

The Budget's got measures to ease household costs, including electricity rebates, fuel relief, and more.

If you're running your own show as a sole trader, these savings hit both your business and your personal Budget. Every bit helps when you're managing cash flow job to job.

For Property Investors

Here's where things get interesting, and where you need to pay attention.

Negative Gearing Isn’t Gone - But It Is Being Reined In

Despite the headlines, negative gearing hasn’t been abolished outright. Instead, the Federal Budget has drawn a clear line between new housing supply and existing investment properties.

From 1 July 2027, negative gearing for residential property will generally be limited to newly built homes. Investors who purchase an established property after 7:30pm on Budget night (12 May 2026) will no longer be able to offset rental losses against wages or other income.

The key point for existing investors is grandfathering. Investment properties already held at Budget night are not affected; current negative gearing rules continue to apply for as long as those properties are owned.

The policy intent is clear: shift investor demand toward new housing construction, while winding back tax incentives for buying existing homes.

The 50% CGT Discount Is Being Replaced - Not Increased or Scrapped Without Replacement

The long‑standing 50% Capital Gains Tax (CGT) discount is also set to change, but again, not in a simple “on/off” way.

From 1 July 2027, the discount will be replaced with a return to cost‑base indexation, meaning capital gains will first be adjusted for inflation. After indexation, a new 30% minimum tax rate will apply to the remaining “real” gain.

Importantly, this change:

• Applies to all CGT assets, not just property (including shares and business assets)

• Only affects capital gains that accrue from 1 July 2027 onwards

• Leaves earlier gains protected under transitional rules

In other words, there’s no retrospective hit, but the tax outcome on future gains will look very different to what investors have been used to over the past 25 years.

What This Really Means in Practice

Taken together, these changes don’t eliminate property investment, but they reshape the tax logic behind it.

High‑growth, negatively geared strategies relying on tax refunds become less attractive for established properties. At the same time, new builds, business structures, and longer‑term planning decisions become more important than ever.

For investors, business owners and developers, this Budget isn’t about panic; it’s about reviewing structures, timing and strategy before the new rules kick in.

30% Minimum Tax on Discretionary Trusts

From 1 July 2028, discretionary trusts face a minimum tax rate of 30%.

If you're a builder or tradie who's set up a family trust to distribute income to your spouse, kids, or other family members on lower tax rates, this changes everything.

The flexibility that made trusts attractive is being wound back.

What to do now: Don't panic, but don't ignore it either. We need to review your structure to see whether a trust still makes sense or if there's a better way to set things up before these changes kick in.

The government's expecting to collect $4.5 billion over five years from this measure. That money's coming from business owners like you.

The Fiscal Reality

The government's running a $31.5 billion deficit this year and doesn't expect a balanced budget until 2034-35.

They're raising $77.2 billion over the decade from the housing tax changes alone.

What does that tell you? Taxes aren't going down. The government needs revenue, and they're coming for it.

Now is the time to ensure your business and investment structures are working as hard as they can for you, both legally and strategically.

Action Plan: What Business Owners Should Do Now

Need tailored advice?

This is general information based on the Budget announcements of 12 May 2026. Many measures require legislation. Before making moves, if you’d like to talk more about how this impacts your business, let's chat.

*This article is general in nature and does not constitute personal financial or tax advice. The 2026-27 Budget measures discussed are subject to passing legislation. Always seek professional advice tailored to your specific circumstances.