22 May 2026

$20,000 instant asset write-off made permanent

BUDGET MEASURE: The $20,000 instant asset write-off will be permanently extended for small businesses with aggregated turnover under $10 million. It will apply to eligible assets first used or installed ready for use from 1 July 2026.

Our analysis

Three years of annual extensions made permanence almost inevitable but the real win is ending the late-legislation cliffhanger that had become a genuine planning headache. The threshold itself is unchanged and won’t be indexed, meaning its real value continues to erode. The Opposition proposed lifting it to $50,000 in the Budget reply. Worth noting the per-asset basis still applies, so multiple sub-$20,000 purchases can each be written off, and the measure pairs usefully with the reintroduced loss carry-back rules.

Loss carry-back reinstated

BUDGET MEASURE: Companies with global turnover under $1 billion can carry losses back two years, from 1 July 2026. Separately, loss refundability for start-ups (turnover under $10 million, first two years of operation) applies from 1 July 2028.

Key Features and what’s new

This is a permanent measure, unlike the temporary loss carry-back rules that applied during the COVID years. Treasury estimates it will reduce receipts by $2.3 billion over five years and benefit around 85,000 companies.

Key features to note:

• Revenue losses only (capital losses don’t qualify)
• Available only to companies — not trusts, partnerships or sole traders
• Delivered as a refundable tax offset, not a deduction
• Capped by the company’s franking account balance at year-end
• Losses can be carried back against tax paid in the prior two income years

The start-up loss refundability measure is new and shouldn’t be confused with carry-back. Because new companies typically have no prior tax to recover, the refund is instead capped at the FBT and PAYG withholding paid on Australian employee wages in the loss year — effectively rewarding early-stage hiring. It applies for the first two years of operation only and starts from 1 July 2028, so there’s a long lead time before it bites.

$1,000 instant tax deduction

BUDGET MEASURE: From the 2026–27 income year, individuals can claim a flat $1,000 for work-related expenses without itemising (charitable donations and professional memberships still claimable on top).

Practical implications

This is a welcome simplification and replaces the long-standing $300 substantiation threshold, which had been left unchanged for many years and fallen well behind inflation. Treasury expects 6.2 million workers (around 42% of taxpayers) to benefit, with an average saving of about $205. Keep in mind it’s a deduction, not a refund, so the cash benefit depends on your marginal tax rate. This translates into roughly $160 at the bottom rate to $450 at the top (excluding Medicare levy).

More deductions are always welcome, especially where they don’t have to be substantiated. But it’s still worth keeping written evidence of work-related expenses for at least one year to confirm which option suits. The $1,000 threshold is easy to exceed. Keep in mind the ATO’s fixed-rate WFH method alone (70c per hour) reaches it at around 27 hours per week of home-based work. This is before adding car use, tools, self-education or professional subscriptions. Charitable donations and union/professional fees remain separately claimable on top, so they don’t need to be weighed against the $1,000 instant tax deduction choice.