Treasury Laws Amendment (Tax Reform No. 1) Bill 2026
Income Tax Rates Amendment (Tax Reform No. 1) Bill 2026
The Treasury Laws Amendment Bill 2026 and the Income Tax Rates Amendment Bill 2026 have passed both Houses of Parliament, with several amendments, and have received Royal Assent. The Treasury Laws Amendment Bill 2026 now includes a new Schedule 5, which makes changes to limit SMSFs from using limited recourse borrowing arrangements (LRBAs) unless they relate to investments in business real property as described in section 66 of the SIS Act, effectively ruling out LRBAs for residential property going forward.
This change comes into effect 45 days after the amending Act receives Royal Assent and applies prospectively only. Existing SMSF borrowing arrangements entered into prior to the commencement remain unaffected, as are refinancing arrangements relating to pre-commencement borrowings, and arrangements where the underlying asset was contracted for before commencement, even if settlement happens afterwards.
Changes have been made to Schedule 1 of the Bills to remove the Minister’s power to decide which capital gains tax (CGT) assets qualify for the 50% CGT discount for trusts and individuals. It also increases the turnover limit for the small business 50% CGT active asset reduction from $2m to $10m, starting from the income year that includes 1 July 2027. The law now includes a set list of exempt recipients from the minimum tax.
Schedule 2 also removes various Ministerial discretionary powers. The Minister won’t be able to exempt certain residential properties, entity types, businesses, or classes of dwellings from the loss quarantine rules. These exemptions are now determined by the legislation rather than by Ministerial decision.
For Schedule 3, the Working Australians Tax Offset is now calculated using a formula written directly into the legislation, instead of allowing the Minister to decide the relevant amount.
Treasury Laws Amendment (Tax Reform No. 2) Bill 2026
A second amendment Bill has been introduced to Parliament that includes various new tax measures announced in the Budget. These include:
- allowing companies to carry back tax losses,
- making the $20,000 instant asset write-off for small businesses permanent, and
- providing tax exemptions for the new PNG Chiefs rugby league team.
According to Schedule 1, eligible companies can use current-year losses to minimise the tax they paid in the previous two years and receive a tax refund. The refund is limited to the amount of tax previously paid or the company’s franking account balance, whichever is lower. To qualify, the company needs to have a global annual turnover of less than $1 billion. This measure applies to tax losses from income years starting on or after 1 July 2026 and is an alternative to carrying losses forward to future years.
Schedule 2 makes the $20,000 instant asset write-off permanent from 1 July 2026. Small businesses with an annual turnover under $10 million will be able to immediately claim a tax deduction for eligible business assets costing less than $20,000 threshold for the small business depreciation pool will also become permanent. In addition, businesses that leave the simplified depreciation system will continue to be allowed to rejoin it without waiting five years, with this concession extended until 30 June 2027.
Schedule 3 provides an income tax exemption for employment income earned by people working for PNG Chiefs Limited, the new Papua New Guinea-based rugby league franchise.
Private Health Insurance Amendment (Modernising the Private Health Insurance Rebate) Bill 2026
The Government has introduced a Bill to change the private health insurance rebate. At present, people aged 65 and over receive a higher rebate. From 1 April 2027, this higher rebate will be removed. Instead, the rebate will be based only on a person’s income, regardless of their age.
Treasury Laws Amendment (Delivering an Efficient and Trusted Tax System) Bill 2026
The Treasury Laws Amendment Bill 2026 has now passed both houses of Parliament and is due to become law after receiving Royal Assent. The Bill makes several amendments to the ITAA 1997, including:
- Remove the $2 threshold for deductions for contributions or gifts
- Need trustees of closely held trusts to report the tax file number of beneficiaries in the trust tax return, replacing the obligation to file a TFN report for the quarter in which a beneficiary quotes their tax file number to the trustee.
- Exclude tobacco and gambling-related activities from the R&D tax incentive
- Small and technical amendments to superannuation and ASIC legislation, including SMSF Public Trustee director appointments.