Reforming the Treatment of Tax Losses for Businesses and Start-ups
The Government has announced plans to reintroduce the loss carry-back offset and introduce a refundable tax offset for certain small business start-ups. Currently, companies that incur losses in an income year must wait until they return to profitability before using those tax losses to reduce taxable income. Under the proposed changes, for tax years commencing on or after 1 July 2026, companies with an aggregated annual global turnover of less than $1 billion will be able to carry back revenue tax losses and offset them against tax paid up to two years earlier. This measure aims to provide immediate cash flow relief to struggling businesses.
Expansion of Dynamic PAYG Instalment Calculations and Monthly Payments
The Government has unveiled three measures to simplify the tax system, allowing businesses to focus more on operations and less on compliance. These include expanding dynamic PAYG instalment calculations, offering monthly payments as an option for small and medium enterprises (SMEs), and introducing mandatory monthly reporting for non-compliant taxpayers. The changes are designed to reduce administrative burdens and improve tax certainty.
R&D Tax Incentive Reform
Major reforms to the Research and Development Tax Incentive (RDTI) have been announced, aiming to simplify the scheme and better target support for business R&D activities. Effective from 1 July 2028, the reforms will adjust offset rates, program delivery, and eligibility criteria. The Government says these changes will ensure the incentive is more effective in encouraging innovation.
Expansion of Venture Capital Tax Incentives
From 1 July 2027, the Government will expand venture capital tax incentives to better support early-stage and growth businesses. The asset size caps for investee businesses under the Venture Capital Limited Partnership (VCLP) and Early-Stage Venture Capital Limited Partnership (ESVCLP) programs will be increased, allowing more start-ups to access funding.
Expanded ATO Powers to Address Tax Fraud
The Government will commit $86.3 million over four years from 1 July 2026, with ongoing funding of $9.7 million per annum from 2030–31, to implement Phase 2 of the Counter Fraud Strategy. This will modernise fraud prevention and detection in the tax and superannuation systems, including strengthened real-time ATO detection capabilities, enhanced individual protections, and expanded live monitoring of fraudulent account access involving tax agents, businesses, and high-risk superannuation activities.
Federal Budget 2026
Expert commentary on this year's Federal Budget is available, including sector-specific perspectives and analysis of the business decisions it informs.
