The Federal Budget includes a handful of measures aimed at reducing compliance friction for small and medium businesses, particularly around depreciation and PAYG instalments.
In practical terms, the changes are designed to make it easier to claim deductions for eligible assets and to help tax instalments track your actual trading results more closely. Here's what's changing.
1. $20,000 instant asset write‑off to be locked in
From 1 July 2026, the Government will permanently extend the $20,000 instant asset write‑off for eligible small businesses with turnover up to $10 million.
- What this means: if you buy and install an eligible asset that costs less than $20,000, you can generally claim an immediate deduction (subject to the usual rules).
- Assets $20,000 or more: these can continue to be allocated to the small business simplified depreciation pool and deducted over time.
2. Simplified depreciation “lock‑out” rules stay on hold (for now)
The rules that normally stop a business from re‑entering the simplified depreciation regime for five years after opting out will remain suspended until 30 June 2027. This keeps flexibility on the table for businesses that have moved in and out of the simplified rules in recent years.
3. PAYG instalments: moving closer to real‑time
The Government will provide $10.9 million to the ATO to expand its pilot of dynamic PAYG instalment calculations and broaden access to monthly PAYG instalments.
From 1 July 2027, eligible small and medium businesses will be able to opt in to:
- Reporting and paying PAYG instalments monthly, and
- Using an ATO‑approved calculation embedded in accounting software to calculate and vary instalments.
Why it matters:
For many businesses, instalments calculated off historic results can feel out of step with current trading conditions. A more dynamic approach should help instalments better reflect real‑time business activity potentially improving cash flow predictability and reducing large “true‑up” adjustments at tax time.
Non‑compliance focus: businesses with a demonstrated history of non‑compliance may be required to report and pay PAYG instalments monthly.
What should you do next?
- Asset purchases: if you’re planning equipment or technology upgrades, consider timing and eligibility to maximise deductions under the $20,000 threshold.
- Accounting software: check whether your software provider is likely to support ATO‑approved dynamic calculations ahead of 1 July 2027.
- Cash flow planning: if monthly PAYG becomes attractive (or mandatory), we can help you model the impact and adjust forecasts.
Speak with BlueRock's Business Accounting & Tax Consultants
If the changes in the 2026-2027 Federal Budget impact your business or personal situation, submit the form below and we'll connect you with the right expert to help you optimise your position.
