Key corporate tax measures in the 2026/27 Federal Budget

The 2026/27 Federal Budget has been handed down and as expected, while it included certain measures which will likely impact a number of corporate businesses (such as the loss refundability changes), the most significant tax changes were made at the shareholder / investor level (such as the significant and far-reaching changes to the capital gains tax (CGT) regime).

We take a closer look at some of the key corporate tax measures below.

It is important to note that while there were a number of other non-corporate measures that were announced such as a 30% tax on 'discretionary trusts' and the removal of negative gearing on most residential property, these non-corporate measures are not covered below given that the focus of the below is the key corporate tax measures.

CGT changes

As noted above, most of the CGT measures will have an impact at the investor / shareholder level rather than the company level.

For example, as part of the measures, the CGT discount will be removed for capital gains arising after 1 July 2027 (subject to limited exceptions) and replaced with an indexation regime.  

As the CGT discount is not available to companies, the removal of the CGT discount will have little impact at the company level (such as a company disposing of CGT assets as part of its operations), but it will have a significant impact at the shareholder / investor level (i.e. when shareholders / investors dispose of their shares in companies).

Another material aspect of the CGT changes is that they will apply to pre-20 September 1985 CGT assets (Pre-CGT Assets) (though only in respect of gains after 1 July 2027).  Previously Pre-CGT Assets were effectively outside the net of the CGT regime.

While the full detail of the CGT changes is currently unknown and there are many aspects of the changes that are still unclear at this early stage (including the changes impacting Pre-CGT Assets), it is anticipated that the measure will have a significant impact on compliance and reporting responsibilities of taxpayers particularly in respect of assets acquired prior to 1 July 2027 but disposed of after that date.

Loss refundability changes

From 1 July 2026, companies with an aggregated annual global turnover of up to AUD $1b can carry back tax losses and offset them against tax paid for up to two years earlier.  Importantly, the loss carry back will only apply to revenue losses and will be limited by a company's franking account balance.

Further, from 1 July 2028 there will be an introduction of a targeted loss refundability regime for small start-up companies (with aggregated annual turnover of less than AUD $10m).  From that point forward, such eligible small start-up companies that generate a tax loss in their first two years of operation will be able to utilise the loss to generate a refundable tax offset.  Importantly such offset will be restricted to the value of fringe benefits tax and withholding tax on wages paid in respect of Australian employees in the loss year.

Instant asset write-off

From 1 July 2026, there will be a 'permanent' extension of the $20,000 instant asset write-off regime.

In essence the regime allows small businesses with an aggregate annual turnover of less than $10 million to immediately deduct the cost of eligible assets if the cost of the asset is less than $20,000 (subject to the satisfaction of other criteria).

Reforms to the 'Research and Development Tax Incentive'

From 1 July 2028 there will be a number of significant reforms that will be implemented in respect of the 'Research and Development Tax Incentive' (R&DTI) regime, including but not limited to an increase of the offset for core research & development (R&D) expenditure by around 25 to 50 per cent, through a 4.5 percentage point increase in core R&D offset rates, a removal of  eligibility of supporting R&D expenditure for the R&DTI and increasing the  maximum R&DTI expenditure threshold from $150 million to $200 million.

The R&DTI has been a key compliance focus of the Australian Taxation Office in recent years, and therefore it is not a surprise that the budget included such an R&DTI focussed measure.

For more information or assistance on the tax changes affecting corporates, please contact our Tax team.

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