Now lawMoney & Tax Introduced in the House of Representatives, 25 Jun 2026

Small businesses keep the $20,000 write-off for good

This tax law helps small and medium companies through a bad year. It makes the $20,000 instant claim for equipment a lasting part of tax law. It also frees a new Papua New Guinea rugby league team from Australian tax, and fixes the so-called widow tax.

Official name: Treasury Laws Amendment (Tax Reform No. 2) Bill 2026

Who it affects

• Companies with yearly sales under $1 billion: If they make a loss from 2026-27, they can get cash back based on tax they paid in the two years before.
• Small businesses with yearly sales under $10 million: They can claim the full cost of items under $20,000 in the year they start using them. There is no end date.
• Players and staff of the Papua New Guinea (PNG) Chiefs team: Their pay from the club is free of Australian income tax for ten years from 2025-26.
• Widows, widowers and separated partners who own homes they rent out: They keep the tax treatment their rental home had before it passed to them.

Budget tax plan part two

This bill is the second part of the tax plan in the 2026-27 Budget. The Budget is the government's yearly plan for tax and spending. The first part was the Tax Reform No. 1 Act.

That first law cut back two tax breaks. One halved the tax on profits from selling things you own. The other, called negative gearing, lets people use a loss on a rental home to cut the tax on their wages.

The Treasurer, Dr Jim Chalmers, is the minister in charge of the economy. He says this second part helps businesses invest and take sensible risks.

It has three main parts. A fourth was added during debate in the House of Representatives, the larger house of Parliament.

Tax back after a loss

Right now, a company that makes a loss for tax can only carry it forward. That means it can use the loss to cut its tax in later years when it makes a profit.

That does not help much if the company is short of cash now.

Part 1 lets a company carry a loss back instead. It can use it against either or both of the two years before, when it paid tax. It then gets money back as cash.

This applies to losses in tax years starting on or after 1 July 2026. Only companies with sales under about $1 billion a year can use it.

The refund is worked out using the company's tax rate in the year of the loss. It cannot be more than the tax the company paid in the earlier years.

It also cannot be more than the company's franking account. That is a record of tax the company paid but has not yet passed on to its shareholders. Shareholders are the people who own part of the company.

The company must have handed in all its tax returns for the past five years. Only losses from normal trading count, not losses from selling things it owns.

Similar rules applied in 2013. They applied again during the COVID-19 pandemic, from 2020-21 to 2022-23.

The government's notes give an example. Company A paid $1.25 million in tax in 2025-26. It then makes a $2.2 million loss in 2026-27.

At a 25% tax rate, its refund would be $550,000. But its franking account holds $500,000. So it gets a $500,000 refund.

Write-off made permanent

Normally, a business claims the cost of equipment bit by bit over several years. A rule called the instant asset write-off lets a small business claim the whole cost at once. The lasting limit in the law was only $1,000.

For years the government has lifted it to $20,000 one year at a time.

Part 2 makes $20,000 the lasting limit. It is for businesses with sales under $10 million a year. It covers items first used or put in from 1 July 2026.

Small businesses can also lump cheaper items into one group to claim. That group also gets a lasting $20,000 limit.

A lock-out rule usually stops a business that left the simple system from coming back for five years. A pause on that rule now lasts to 30 June 2027.

Say you are a plumber and buy a $12,000 trailer in October 2026. You can claim all $12,000 in your 2026-27 tax return.

The government says the change saves small businesses about $32 million a year in paperwork.

Tax exemption for PNG Chiefs

On 12 December 2024, the leaders of Australia and Papua New Guinea announced a rugby league deal. Papua New Guinea is Australia's nearest neighbour to the north.

Part of the deal is a new team from Papua New Guinea, the PNG Chiefs. It will join Australia's top rugby league competition by 2028.

In 2025, Papua New Guinea passed a law so players and some staff pay no income tax there. But some of them could still be taxed in Australia. One example is match fees for games played here.

Part 3 frees pay from working for the Chiefs from Australian income tax. It covers wages, match fees, allowances and bonuses.

It runs for the 2025-26 tax year and the nine years after, to 30 June 2035.

Widow tax fixed

Under the first tax law, homes bought before Budget night keep negative gearing. Budget night was 7.30pm on 12 May 2026. New builds keep it too.

Senator David Pocock, who belongs to no party, pointed out a problem. Say two people own a rental home together. One dies, or the couple breaks up, and the home passes to one owner.

Tax law could treat that as a new purchase. The partner left could then lose negative gearing and some breaks on tax when they sell. This became known as the widow tax.

Part 4 was added by a government change in the House on 18 August 2026.

It lets the home keep its old treatment when it passes to the husband or wife left behind. The same goes for a co-owner after a death, or a former partner after a breakup.

Start date

The Treasurer put the bill to the House of Representatives on 25 June 2026. The House passed it on 18 August 2026 with two government changes.

The Senate, the second house of Parliament, passed it on 19 August 2026.

The Governor-General, the King's stand-in, signed it into law on 26 August 2026. It became Act No. 71 of 2026.

The loss rule applies to tax years starting from 1 July 2026.

The equipment claim and Chiefs parts start on 1 October 2026. That is the first day of the next three-month period after the law was signed.

The equipment claim covers items first used from 1 July 2026. The Chiefs tax break reaches back to 2025-26.

Its journey through Parliament

Official sources

• Bill page on aph.gov.au
• Text of the bill
• Explanatory memorandum
• Bills Digest

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