2026-27 Federal Budget – Loss carry back for some companies and loss refundability for small start-up companies
Loss carry back
From 1 July 2026, companies with global turnover under $1 billion will be able to carry back revenue tax losses and offset them against tax paid in the previous two years. The measure will only apply to revenue losses and will be limited by the company’s franking account balance.
Loss refundability
From 1 July 2028, start-up companies with annual turnover under $10 million that make a tax loss in their first two years will be able to convert that loss into a refundable tax offset. The offset will be limited to the amount of fringe benefits tax and withholding tax paid on wages for Australian employees in the loss year.
2026-27 Federal Budget – Better targeting the Research and Development Tax Incentive
R&D Tax Incentive Reform (from 1 July 2028):
- Increase the offset for core R&D spending by about 25–50% through a 4.5 percentage point rise in core R&D offset rates.
- Lower the intensity threshold from 2% to 1.5%, allowing more firms doing substantial core R&D to qualify for higher offset rates.
- Remove supporting R&D expenditure from eligibility for the R&D Tax Incentive (R&DTI).
- Help growing firms access the refundable tax offset for longer by raising the turnover limit for the highest offset rate from $20 million to $50 million.
- For firms under $50 million turnover, maintain older firms’ eligibility for the higher offset rate, but limit refundability to firms less than 10 years old.
- Increase the maximum R&DTI expenditure limit from $150 million to $200 million.
- Improve assurance for smaller claims by raising the minimum R&D expenditure threshold from $20,000 to $50,000. Research activities below this must be done with a registered Research Service Provider or Cooperative Research Centre to qualify.