What The 2026–27 Federal Budget Means For Business Owners

The 2026–27 Federal Budget is not just another list of tax changes.

For business owners, it signals a much bigger shift: more scrutiny, more reform, more pressure on structures, and a stronger need to plan ahead rather than react at the last minute.

There are several major changes business owners should understand, particularly around trusts, capital gains tax, negative gearing, PAYG instalments, asset write-offs, R&D, company losses, FBT and ATO compliance.

But before making any rushed decisions, the best thing business owners can do right now is pause.

Let the dust settle for a week or two.

Then start the planning properly.

One of the most significant announcements is the proposed minimum tax on discretionary trusts.

From 1 July 2028, trustees will pay a minimum tax of 30% on the taxable income of discretionary trusts.

This is a major change for business owners using family trusts, discretionary trusts and bucket company arrangements.

Trusts have long been used because of their flexibility. They allow income to be distributed across beneficiaries and can support tax planning, asset protection and long-term wealth creation.

That does not mean trusts are now “dead”.

But it does mean structures need to be reviewed carefully.

For businesses using trusts and bucket companies, this is not something to panic about today. It is something to plan for properly once the detail settles.

The key question is no longer simply:

“Is my structure tax effective?”

It is now:

“Is my structure still appropriate for the business I am building?”

The Budget also announced major capital gains tax reform from 1 July 2027.

The 50% CGT discount will be replaced by cost base indexation for assets held for more than 12 months, with a 30% minimum tax on net capital gains.

This applies to individuals, trusts and partnerships.

For business owners, investors and family groups, this may affect future planning around:

• property sales

• business sales

• investment entities

• succession planning

• asset protection strategies

• long-term wealth creation

Importantly, this does not mean every asset needs to be sold or moved now.

It means capital gains planning needs to become more deliberate.

From 1 July 2027, negative gearing for residential property will be limited to new builds.

Losses from established residential properties will generally only be deductible against rental income or capital gains from residential properties.

Established residential properties acquired before 7:30pm AEST on 12 May 2026 are expected to be grandfathered.

For property investors, developers and business owners with investment portfolios, this is an important change.

It may impact:

• future property investment decisions

• cashflow modelling

• ownership structures

• wealth planning

• tax planning around rental losses

Again, this is not a reason to panic.

It is a reason to review the strategy properly.

The Budget confirmed that the $20,000 instant asset write-off for small businesses with turnover up to $10 million will be permanently extended from 1 July 2026.

This is useful for businesses investing in equipment, tools, technology, vehicles or operational assets.

But the tax deduction should not drive the decision.

The right question is:

“Does this asset genuinely improve the business?”

Good tax planning should support good commercial decisions — not encourage unnecessary spending.

From 1 July 2027, small and medium businesses will be able to opt in to reporting and paying PAYG instalments monthly using ATO-approved calculations in accounting software.

This may help businesses align tax payments more closely with actual performance.

For some businesses, this could improve cashflow visibility.

For others, monthly tax payments may create more administrative pressure.

The key will be understanding whether monthly PAYG instalments support your business rhythm or create unnecessary complexity.

The Budget also announced that company loss carry-back rules will be reintroduced for revenue losses for companies with aggregated annual global turnover of less than $1 billion.

This applies for tax years commencing on or after 1 July 2026.

For eligible companies, this may allow certain losses to be carried back and offset against tax paid in earlier years, subject to limits.

This could be relevant for businesses investing heavily, expanding, or experiencing a temporary downturn after prior profitable years.

The Research and Development Tax Incentive is also being reformed from 1 July 2028.

The Budget proposes changes including:

• increasing the offset for core R&D expenditure

• reducing the intensity threshold

• removing eligibility for expenditure that only supports R&D

• increasing the refundable offset turnover threshold to $50 million

• increasing the maximum expenditure cap

• increasing the minimum expenditure threshold

For innovative businesses, technology businesses, manufacturers and businesses investing in product development, this will need careful review.

The message is clear: genuine R&D may still be supported, but claims will likely need to be more focused, better documented and more clearly linked to core R&D activity.

The Budget also announced changes to the FBT treatment of electric vehicles.

From 1 April 2029, a permanent 25% discount on FBT will apply for eligible electric cars valued up to the fuel-efficient luxury car tax threshold.

There are also transitional rules for eligible EVs provided before that date.

For business owners using salary packaging, company vehicles or employee benefit arrangements, this is worth reviewing as part of broader remuneration and FBT planning.

The Budget includes additional funding to strengthen the tax system against fraud and increase targeted ATO compliance activity.

This is important.

The ATO is becoming more data-driven, more automated and more active in identifying issues.

Business owners should expect continued focus on:

• tax debts

• trust arrangements

• R&D claims

• superannuation compliance

• director obligations

• accurate reporting

• unusual arrangements

This reinforces a simple point:

Reactive accounting is becoming increasingly risky.

Right now, business owners should not rush.

Do not restructure immediately because of a headline.

Do not assume trusts no longer work.

Do not make asset purchases purely for tax reasons.

Do not make major investment decisions without modelling the outcome.

Instead, take a breath.

Let the legislation, commentary and technical guidance settle.

Then begin a proper planning process.

Over the next few weeks and months, business owners should review:

• trust structures

• bucket company arrangements

• company versus trust structures

• asset ownership

• investment strategies

• tax planning forecasts

• PAYG instalment strategy

• capital gains exposure

• R&D eligibility

• FBT arrangements

• cashflow forecasts

The biggest opportunity is not reacting quickly.

It is planning properly.

The 2026–27 Federal Budget creates some meaningful changes, especially for business owners using trusts, bucket companies, property investment structures and growth-focused business entities.

But good decisions are not made in panic.

They are made with context, modelling and advice.

For now, the right approach is to stop, understand the direction of the changes, let things settle, and then start planning with clear numbers and a proper strategy.

That is where the real value will be created.