Remember when managing your small business taxes felt straightforward? Pick your structure, claim your deductions, and lodge your return. Those days are long gone. Between changes to instant asset write-offs, evolving work-from-home rules, shifting company tax thresholds, and new compliance requirements, staying on top of small business tax obligations has become a full-time job in itself.
If you’re a small business owner wondering “What’s changed for 2025-26?” or “Am I missing out on concessions I should be claiming?” — you’re asking the right questions. The tax landscape for Australian small businesses continues to evolve, with some generous concessions expiring, others being extended, and new compliance requirements coming into effect.
Here’s what might surprise you: while some headline concessions are being wound back, there are actually more small business tax opportunities available in 2025-26 than many business owners realise. The key is understanding which thresholds apply to your business, when to time major purchases, and how to structure your affairs to maximise available concessions.
Quick Summary: Small Business Tax Changes 2025-26
Australian small businesses face significant changes in 2025-26, with the instant asset write-off dropping from $20,000 to $1,000 unless extended, but numerous other concessions remaining available. Understanding your business’s aggregated turnover determines access to different tiers of benefits across multiple thresholds.
Key changes and thresholds for 2025-26:
- Instant asset write-off: Now at $1,000 threshold (reduced from $20,000 in 2024-25. (Extension has not yet passed Parliament)
- Company tax rates: 25% for base rate entities vs 30% for others
- Working from home: Fixed rate increased to 70 cents per hour
- Small business thresholds: $10M, $50M, and $500M for different concessions
- GST cash accounting: Available for businesses under $10M turnover
- Simplified depreciation: 15% first year, 30% ongoing for eligible assets
The critical insight: Small business tax planning now requires understanding multiple turnover thresholds rather than a single “small business” definition. Getting your aggregated turnover calculation right determines access to concessions worth thousands of dollars annually.
The New Small Business Tax Landscape: Multiple Thresholds, Multiple Opportunities
Let’s face it — the idea of a single “small business” threshold is dead. In 2025-26, your business’s tax treatment depends on where you sit across multiple turnover bands, each unlocking different concessions and obligations.
The modern small business reality: Australian businesses now navigate at least four major turnover thresholds, each determining access to different tax concessions and compliance requirements.
“We’ve moved from a simple small vs large business model to a sophisticated tier system,” explains Patricia Wong, an ITP senior business tax advisor with 18 years of experience. “Many business owners don’t realise they’re missing out on concessions because they’re only looking at the $10 million threshold when their business might qualify for benefits up to $50 million.”
The critical thresholds for 2025-26:
- Under $10 million: Maximum small business concessions including simplified depreciation
- $10-50 million: Company tax rate benefits and some concessions
- $50-500 million: Limited concessions but specific compliance requirements
- Over $500 million: Large business rules and monthly PAYG requirements
What this means for your business: Success in small business tax planning now requires understanding which concessions apply at your turnover level and timing business decisions to optimise your position across multiple thresholds.
The Great Asset Write-Off Reality Check: From $20,000 to $1,000
Here’s the change that’s got every small business owner and tax professional talking (and not in a good way). The instant asset write-off, which has been a cornerstone of small business tax planning for years, has faced its biggest reduction ever in 2025-26.
What’s Changed with Asset Write-Offs
The stark reality for 2025-26: The instant asset write-off threshold has dropped from $20,000 to just $1,000 for eligible small businesses.
The transition:
- 2024-25: $20,000 threshold (expired June 30, 2025)
- 2025-26: $1,000 threshold (current position)
- Eligibility: Businesses with aggregated turnover under $10 million
“The Labor Government promised to extend this excellent deduction opportunity for small businesses again for this next financial year,” says ITP business tax pro, Jennifer Liu. “But then we heard not a peep from them since winning the election. Unfortunately, businesses that missed the June 30, 2025 deadline now face a dramatically different tax treatment for equipment purchases.”
Strategic Response: Working Within the New Reality
The new landscape: With the $20,000 threshold now expired, businesses must adapt their equipment purchasing strategies.
Current planning strategies:
- Multiple small purchases: Break larger equipment needs into items under $1,000 where practical
- Timing within financial year: Spread purchases across the financial year for cash flow management
- Depreciation planning: Understand that items over $1,000 must use simplified depreciation
- Business portion focus: Ensure accurate business use percentages for mixed-use items
Example: Sarah’s consulting business now needs equipment in 2025-26:
- Laptop ($3,000): Only $1,000 immediately deductible, remainder goes to depreciation pool
- Desk chair ($800): Fully deductible immediately
- Software ($1,200): Only $1,000 immediately deductible, remainder depreciated
Alternative Depreciation Options
When assets exceed the $1,000 threshold: Businesses can still access accelerated depreciation through the simplified depreciation pool.
Simplified depreciation benefits:
- 15% deduction in the first year
- 30% deduction each subsequent year
- Available for businesses under $10 million aggregated turnover
- Pooling of assets simplifies record-keeping
Company Tax Rates: The 25% vs 30% Decision
While company tax rates themselves aren’t changing for 2025-26, understanding base rate entity eligibility remains crucial for small business tax planning, especially as businesses grow.
Base Rate Entity Eligibility
To qualify for the 25% company tax rate in 2025-26:
- Aggregated turnover under $50 million
- 80% or less passive income (base rate entity passive income test)
The aggregated turnover trap: Many business owners forget to include connected entities and affiliates in their turnover calculation.
“We regularly see businesses that think they qualify for the 25% rate because their individual company turnover is under $50 million,” notes Michael Chen, an ITP company tax specialist. “But when you add related entities, trusts, and family companies, they exceed the threshold and face the 30% rate.”
Planning Around the Thresholds
For businesses approaching $50 million: Consider whether structure changes could maintain base rate entity status while supporting business growth.
Passive income considerations: Investment returns, rental income, and interest can push businesses over the 80% passive income threshold, triggering the higher 30% rate even with low turnover.
Working From Home: The 70 Cent Reality
Small business owners and their employees benefit from updated working from home rules that recognise the permanent shift to flexible work arrangements.
Updated Rates for 2025-26
Fixed rate method increases to 70 cents per hour for the 2024-25 and subsequent years, up from the previous 67 cents.
What the 70 cents covers:
- Electricity and gas for heating, cooling, lighting
- Phone and internet expenses
- Computer consumables and stationery
- Depreciation of home office equipment
Record-keeping requirements: Businesses and employees must maintain detailed records of work-from-home hours — estimates are no longer acceptable.
Business Implications
For small business owners: Working from home expenses can be claimed as business deductions when working from a home office.
For businesses with employees: Consider whether to provide work-from-home allowances and understand the FBT implications.
The increase to 70 cents reflects the ATO’s recognition that working from home costs have genuinely increased, along with the cost of living (think electricity, gas, and water bills).. For businesses with significant home-based operations, this can result in meaningful tax savings, so be sure you’re not missing out on these. .
Small Business Concessions: Your Tier-by-Tier Guide
Understanding which concessions apply to your business requires knowing exactly where you sit in the small business hierarchy.
Under $10 Million: Maximum Concessions
Businesses with aggregated turnover under $10 million access the full range of small business concessions:
Tax concessions available:
- Instant asset write-off ($1,000 threshold for 2025-26)
- Simplified depreciation rules (15% first year, 30% ongoing)
- Small business income tax offset (up to $1,000)
- Immediate deduction for prepaid expenses (12-month rule)
- Small business CGT concessions (subject to separate $2 million test)
- GST cash accounting and annual BAS options
- PAYG instalments based on GDP-adjusted notional tax
Administrative benefits:
- Simplified trading stock rules
- Two-year amendment period (instead of four years)
- Access to small business advisory services
$10-50 Million: Selective Benefits
Businesses in this range maintain access to key concessions while losing others:
Still available:
- 25% company tax rate (if base rate entity eligible)
- Small business restructure rollover
- Some depreciation benefits
- Certain administrative simplifications
No longer available:
- Instant asset write-off
- Simplified depreciation pool
- Small business income tax offset
- Most cash flow concessions
$50-500 Million: Limited Concessions
Larger small businesses face increased compliance but retain some benefits:
Compliance requirements:
- Monthly PAYG instalments (for companies over $20 million)
- Enhanced reporting obligations
- Limited access to small business concessions
Remaining benefits:
- Access to certain industry-specific concessions
- R&D tax incentives (different thresholds apply)
- Some depreciation options
GST and Cash Flow: Simplified Systems for Small Business
Small businesses with under $10 million in aggregated turnover can access simplified GST treatment that significantly reduces administrative burden.
GST Cash Accounting
Cash accounting benefits:
- GST payable only when payment received
- GST credits claimed only when expenses paid
- Improved cash flow management
- Reduced compliance complexity
Annual BAS option: Businesses under $20 million can lodge BAS annually instead of quarterly, further reducing administrative burden.
GST Registration Thresholds
Voluntary registration considerations: Businesses under the $75,000 threshold should consider voluntary GST registration if:
- Purchasing significant equipment or assets
- Expecting rapid growth
- Wanting to appear more established to customers
“Many small businesses miss the cash flow benefits of GST cash accounting,” notes Rachel Wong, an ITP GST specialist. “The ability to defer GST payments until you’ve actually received customer payments can make a real difference to cash flow.”
Superannuation Guarantee: Small Business Obligations
Small businesses face ongoing increases in superannuation guarantee rates and enhanced compliance monitoring.
Current and Future Rates
Superannuation guarantee rates:
- 2024-25: 11.5% of ordinary time earnings
- 2025-26: 12% of ordinary time earnings (final increase)
- From 2025-26: Rate remains at 12% ongoing
Small Business Compliance Focus
ATO enforcement priorities for small business:
- Superannuation guarantee compliance
- Single Touch Payroll reporting
- Correct classification of workers (employee vs contractor)
- On-time superannuation payments
Penalties for non-compliance: The ATO has increased focus on superannuation guarantee non-compliance, with penalties including:
- Superannuation guarantee charge (non-deductible)
- Administrative penalties
- Interest charges
- Director penalty notices
FBT Considerations for Small Business
Fringe Benefits Tax applies to benefits provided to employees, but small businesses can access certain exemptions and concessions.
Common FBT Issues
Small business FBT scenarios:
- Company cars provided to employees
- Car parking benefits in CBDs
- Entertainment and meal expenses
- Work-from-home equipment and allowances
- Staff amenities and benefits
FBT Exemptions and Concessions
Available exemptions:
- Minor benefits (under $300 value)
- Work-related equipment and tools
- Car parking (outside CBD areas)
- Certain entertainment in business premises
Planning opportunities: Structure employee benefits to maximise exemptions and minimise FBT liability while providing valuable staff benefits.
Record Keeping and Compliance: Modern Requirements
Small business record-keeping requirements have evolved significantly, with digital systems becoming essential for compliance.
Digital Record Keeping
ATO requirements for 2025-26:
- Digital records acceptable (no paper requirement)
- Cloud storage and backup systems recommended
- Integration with accounting software beneficial
- Mobile apps for expense tracking
Single Touch Payroll
Expanded STP requirements:
- All employers (including small business) must use STP
- Real-time reporting of payroll information
- Enhanced compliance monitoring
- Integration with superannuation guarantee reporting
“Modern small business compliance is about systems, not paperwork,” explains Anthony Martinez, an ITP compliance director. “Businesses with good digital systems find compliance much easier and often discover tax planning opportunities they would otherwise miss.”
FAQs: Your Small Business Tax Questions Answered
How do I know which small business concessions apply to my business?
Calculate your aggregated turnover (including connected entities and affiliates) to determine which threshold band applies. Under $10M gets maximum concessions, $10-50M gets selective benefits, and over $50M faces large business rules.
Should I have brought forward equipment purchases before the instant asset write-off dropped?
If you missed the June 30, 2025 deadline for the $20,000 threshold, focus on maximising the current $1,000 threshold and using simplified depreciation for larger items. Consider whether breaking larger purchases into smaller components might help.
How does the 25% company tax rate work with other small business concessions?
The 25% company tax rate applies to base rate entities (under $50M turnover with ≤80% passive income), while other small business concessions mainly apply to businesses under $10M turnover. You can qualify for both if eligible.
What happens if my business grows beyond the small business thresholds?
You lose access to concessions prospectively but don’t need to reverse past benefits. Plan for the transition by understanding which concessions you’ll lose and implementing systems for enhanced compliance requirements.
Can I claim both work-from-home expenses and business office expenses?
Yes, if you genuinely use both. You can claim home office expenses for time worked from home and business premises expenses for time worked in the office, provided you don’t double-claim the same expenses.
Do I need to use the simplified depreciation pool if my turnover is under $10M?
It’s optional but often beneficial. You can choose to use simplified depreciation or regular depreciation rules, but once you start using simplified depreciation, you must continue unless you opt out (and then face a five-year lock-out period).
Small Business Tax Planning Checklist for 2025-26
Here’s a checklist to keep handy and make the tax planning for your small business more simple and less stressful:
Before you submit your tax return for 2024-25:
- Review planned equipment purchases for instant asset write-off opportunities
- Calculate aggregated turnover including all connected entities and affiliates
- Assess whether business structure changes could optimise tax position
- Ensure superannuation guarantee compliance and STP reporting
- Review work-from-home arrangements and record-keeping systems
For the 2025-26 financial year:
- Implement new $1,000 instant asset write-off threshold planning
- Update working from home records for 70 cent per hour rate
- Monitor aggregated turnover throughout year for threshold management
- Review GST cash accounting and BAS frequency options
- Plan timing of income and expenses around small business thresholds
Ongoing compliance focus:
- Maintain digital record-keeping systems
- Monitor superannuation guarantee rate increases
- Track work-from-home hours and expenses
- Document business use percentages for mixed-use assets
- Keep evidence of instant asset write-off eligibility and timing
Strategic planning considerations:
- Structure purchases to maximise available concessions
- Time income recognition to optimise threshold positions
- Consider entity restructuring for growing businesses
- Plan for FBT implications of employee benefits
- Integrate tax planning with broader business strategy
Professional Support for Small Business Tax Complexity
Small business tax has evolved beyond DIY territory for most business owners. With multiple thresholds, changing concessions, and enhanced compliance requirements, professional guidance ensures you maximise benefits while meeting all obligations.
Small business tax planning now requires expertise across company law, trust structures, employment obligations, and digital compliance systems. Professional guidance ensures you access all available concessions while avoiding costly mistakes.
At ITP, our experienced small business tax specialists have helped thousands of Australian small businesses navigate the evolving tax landscape over our 50+ years in practice. We understand how to optimise your position across multiple thresholds and concessions.
Our small business tax services include:
- Aggregated turnover calculations and threshold planning
- Business structure reviews and optimisation
- Instant asset write-off and depreciation strategies
- Work-from-home and FBT compliance
- Digital record-keeping system implementation
- Ongoing compliance and strategic tax planning
Consider professional help when:
- Your aggregated turnover is approaching any major threshold
- You’re planning significant equipment or asset purchases
- Your business structure includes multiple entities or family arrangements
- You need help implementing compliant digital systems
- You want to ensure you’re accessing all available small business concessions
“Small business tax planning is about understanding the full ecosystem of concessions and obligations,” says Rebecca Foster, an ITP small business advisory specialist. “We help clients navigate the complexity while ensuring they never miss an opportunity to legitimately reduce their tax burden.”
Ready to optimise your small business tax position for 2025-26? Contact your nearest ITP office to speak with a qualified small business tax specialist who can assess your specific situation and develop a comprehensive strategy.
If you need help with specific aspects like individual tax returns for business owners or company tax compliance, our integrated approach ensures all elements of your tax position work together optimally.
The Bottom Line: Complexity Creates Opportunity
Small business tax in 2025-26 is undeniably more complex than it was five years ago. Multiple thresholds, evolving concessions, and enhanced compliance requirements mean the days of set-and-forget tax planning are over.
But here’s the opportunity: businesses that understand and actively manage their tax position can access significantly more benefits than those using outdated strategies. The key is treating tax planning as an integral part of business strategy, not an annual afterthought.
Your 2025-26 action plan:
- Calculate your true aggregated turnover including all connected entities
- Map your concessions based on your threshold band
- Time major purchases to maximise write-off benefits
- Implement systems for ongoing compliance and monitoring
- Plan strategically for business growth and threshold management
Whether your business is a startup accessing maximum small business concessions or a growing operation navigating multiple thresholds, success in 2025-26 requires understanding the full landscape of opportunities and obligations.
The businesses that thrive will be those that view tax compliance not as a cost centre, but as a strategic advantage in building a more profitable, sustainable operation.
Other Helpful Articles
Company Tax Rates Australia 2025: Complete Guide
Tax Deadlines Australia 2025: Key Dates for Your Tax Return
$20,000 Instant Asset Write-Off Ends 30 June 2025 — Or Does It?
EOFY 2024–25 Tax Tips for Small Business: How to Maximise Your Deductions and Minimise Your Tax Payable
Disclaimer: This article provides general information about small business tax changes and should not be considered personal tax advice. Tax laws are complex and individual business circumstances vary significantly. Small business concession eligibility depends on specific calculations including aggregated turnover and business structure. Always consult with a qualified tax professional who can assess your specific situation and provide advice tailored to your business needs. ITP Tax Professionals disclaims any liability for decisions made based solely on the general information provided in this article.