Quick Answer:
The instant asset write-off for small businesses is now permanently $20,000 from 1 July 2026. Company tax rates, the small business income tax offset, and GST cash accounting thresholds are unchanged for 2026-27.
Last year’s headline was about a shrinking instant asset write-off to $1,000. This year, the news is better: the write-off is back up and now permanent. If you run a small business, here is what actually changed for 2026-27, and what has stayed the same.
Quick Summary: Small Business Tax Changes 2026-27
The biggest change for small business owners this year is the instant asset write-off, which is now permanently set at $20,000 for eligible small businesses, rather than dropping to the $1,000 threshold 2026-27. Most other small business thresholds are unchanged.
- Instant asset write-off: permanently $20,000 from 1 July 2026 (up from expected $1,000)
- Company tax rates: 25% for base rate entities (turnover under $50 million), 30% for other companies
- Small business income tax offset: unchanged, up to $1,000 for sole traders and eligible partners in a partnership
- GST cash accounting: still available for businesses with turnover under $10 million
- Individual tax rate: bottom rate cut from 16% to 15% from 1 July 2026, relevant if you run your business as a sole trader
1. Instant Asset Write-Off: Back Up to $20,000, and Permanent
This is the change every small business owner has been waiting for. The instant asset write-off has been permanently increased to $20,000 from 1 July 2026.
Who qualifies: small businesses with an aggregated turnover under $10 million, using simplified depreciation. Eligible assets costing less than $20,000 each can be written off immediately in the year they are first used or installed ready for use, instead of being depreciated over several years.
Assets that cost $20,000 or more can go into the general small business pool for accelerated depreciation rates applied to all assets or use the standard rates of depreciation for individual assets based on their estimated life if not wanting to use the small business pool.
See the ATO’s instant asset write-off guidance for the full eligibility rules.
Example: a business buys a $18,000 delivery van fit-out in October 2026. Under the 2026-27 rules, the full $18,000 is deductible in the year it is installed ready for use.
Because this change is now permanent rather than a temporary extension, it is worth building into ongoing equipment planning rather than treating it as a one-off deadline to beat.
2. Company Tax Rates: Base Rate Entities Still at 25%
No change here for 2026-27, but it catches out business owners every year, so it is worth restating. Companies that qualify as base rate entities pay 25% tax. All other companies pay 30%.
To qualify as a base rate entity, a company needs an aggregated turnover under $50 million, and no more than 80% of its assessable income can be passive income (such as interest, dividends, rent, or royalties). If passive income makes up more than 80% of assessable income, the 30% rate applies regardless of turnover.
Full detail is on the ATO’s company tax rate changes page.
3. Small Business Income Tax Offset: Steady at $1,000
The offset for unincorporated small businesses, sole traders and individuals with a share of net small business income from a partnership or trust, is unchanged for 2026-27: 16% of net small business income, capped at $1,000, for businesses with an aggregated turnover under $5 million. See our top tax offsets guide for how this fits alongside the other offsets available this year.
4. GST Cash Accounting: Still Available Under $10 Million
Businesses with an aggregated turnover under $10 million can still choose to account for GST on a cash basis, which can help cash flow by aligning GST payable with money actually received. Businesses at $10 million or more must use the non-cash (accruals) method and full BAS reporting, and businesses at $20 million or more must report GST monthly rather than quarterly.
See the ATO’s guide to choosing a GST accounting method for the full turnover tests.
5. Individual Tax Changes That Affect Sole Traders
If you operate as a sole trader, your business income is taxed at your individual rate, so the individual tax changes for 2026-27 apply directly to you. The bottom tax rate dropped from 16% to 15% on income between $18,201 and $45,000. Our top tax offsets guide and work from home deductions guide cover both changes in more detail.
Before You Lodge: A Quick Checklist
- Check whether any equipment purchases this year qualify for the $20,000 instant asset write-off.
- Confirm your general small business pool assets are still tracked correctly at the new $20,000 threshold.
- Review whether your company still qualifies as a base rate entity if your turnover or passive income has changed.
- Check your GST accounting method still matches your current turnover.
- Sole traders should check the small business income tax offset and the individual rate change together, since both affect the same return.
- If you also hold an investment property alongside your business, our rental property deductions guide and ATO compliance and audit triggers guide cover what the ATO is checking most closely this year.
Why Professional Help Matters
Small business tax planning now means tracking several thresholds at once: turnover for the instant asset write-off, turnover and passive income for company tax rates, turnover for GST accounting, and your own individual rate if you are a sole trader. Getting one of these wrong can cost thousands of dollars in missed concessions or an unexpected bill.
At ITP, our business tax professionals work through these thresholds with clients across every structure, from sole traders to companies with growing turnover.
Don’t leave concessions unclaimed. Book a consultation with ITP to check which thresholds apply to your business this year.
Frequently Asked Questions
Yes. From 1 July 2026 it is a permanent feature of the tax law, not a year-by-year extension that needs to be renewed by Parliament.
Yes, it applies to any small business entity using simplified depreciation with an aggregated turnover under $10 million, regardless of structure.
They are added to the general small business simplified depreciation pool and depreciated at 15% in the first year and 30% in following years.
No. It remains $50 million, unchanged since 1 July 2018, alongside the passive income test of no more than 80% of assessable income.
Get on Top of This Year’s Changes
The instant asset write-off increase is the standout change for small business this year, but it is worth checking every threshold against your current turnover rather than assuming last year’s settings still apply. ITP Accounting Professionals has helped Australian small businesses navigate changes like these for decades. If you want a second set of eyes on your 2026-27 planning, get in touch with your local ITP office before your next lodgement.
Disclaimer: This article provides general information only and is not a substitute for professional tax advice for your specific situation. It reflects current tax law and ATO guidance as at September 2026. Before acting on any of these thresholds, speak with a qualified tax professional who can assess your circumstances.