2026-27 Federal Budget – Making tax simpler for small and medium businesses
The Government will amend the tax law to streamline the tax system for small and medium-sized businesses in relation to assets and PAYG instalments as set out below:
Instant asset write-off
From 1 July 2026, the Government will permanently extend the $20,000 instant asset write-off for small businesses with a turnover up to $10 million. Assets costing $20,000 or more can still be added to the small business simplified depreciation pool. The rule preventing small businesses from re-entering the simplified depreciation regime for five years after opting out will remain suspended until 30 June 2027.
PAYG instalments
From 1 July 2027, small and medium-sized businesses will be able to opt in to monthly PAYG instalments and use ATO-approved software to calculate and manage instalments depending on real-time business activity. However, taxpayers with a history of non-compliance will have to report and pay PAYG instalments monthly. The Government will also offer $10.9 million to the ATO to expand its pilot of dynamic PAYG instalment calculations.
2026-27 Federal Budget – Expanding venture capital tax incentives
VCLP
A Venture Capital Limited Partnership (VCLP) needs to meet the following key requirements:
- It must be a limited partnership established in Australia or a country with which Australia has a double taxation agreement.
- All general partners must be residents of Australia or a treaty country.
- The partnership must have at least $10 million in committed capital.
- It must meet reporting requirements to maintain registration.
- It can only invest in eligible venture capital investments (EVCIs).
To qualify as an EVCI, the investment must:
- Be in a company or unit trust (investee).
- Not be, or cease to be, a listed investment.
- Not exceed 30% of the VCLP’s committed capital.
- Be at risk in terms of value and earnings.
- Be in an investee with:
- Total assets (before investment) of no more than $250 million
- More than 50% of employees and assets located in Australia
- A predominant activity not involving property development, land ownership, construction, infrastructure, finance, insurance, or passive investment (with an allowance for developing technology used in finance, insurance, or passive investment).
ESVCLP
An Early Stage Venture Capital Limited Partnership (ESVCLP) must meet VCLP requirements plus additional conditions:
- Committed capital must be between $10 million and $200 million.
- Investments must follow an approved investment plan.
- The investee must not be listed when the first investment is made.
- Secondary acquisitions from existing investors must not exceed 20% of the partnership’s committed capital.
- The investee’s total assets must not exceed $50 million before investment.
Expanding venture capital tax incentives
From 1 July 2027, the following changes will apply to VCLPs and ESVCLPs:
- The VCLP investee asset cap will increase from $250 million to $480 million at the time of investment.
- The ESVCLP investee asset cap will increase from $50 million to 80 million at the time of investment.
- The ESVCLP tax incentive cap (where investment returns can be fully tax exempt) will increase from $250 million to $420 million.
- The maximum fund size for ESVCLPs will increase from $200 million to $270 million.
These changes will apply to both new and existing funds, including additional investments in businesses already held. ESVCLPs must continue to comply with existing investment plans or seek approval for a replacement plan.
The eligible venture capital investor program will close to new applications from 7:30 pm (AEST) on 12 May 2026.
2026-27 Federal Budget – Support for small business
As part of the 2026-27 Federal Budget, the Government will offer $8.2 million over three years from 2025-26 to extend the Small Business Debt Helpline and the NewAccess for Small Business Owners (NASBO) program until 30 June 2027. NASBO, launched in 2021, offers free, confidential mental health coaching for small business owners through trained coaches with small business experience.
The Small Business Debt Helpline provides free, independent, and confidential financial counselling to small businesses facing financial hardship, helping owners manage cash flow, negotiate with lenders and suppliers, and make informed business decisions.
2026-27 Federal Budget – Second tranche of improvements to Australian business registers
As part of the 2026–27 Federal Budget, the Government will provide $136.1 million over two years from 2026–27 to complete the second stage of improving Australia’s business registers. This includes synchronising director details with the Australian Charities and Not-for-profits Commission’s Charities Register, linking Director IDs to the Companies Register, improving Australian Business Number (ABN) authentication, and transferring ABN and superannuation lookup services to the ATO.