Tax incentives for Australian small businesses. Instant asset write-off, loss carry-back, R&D tax incentive, and small business CGT concessions.
The instant asset write-off allows eligible small businesses to immediately deduct the business portion of the cost of an asset in the year it is first used or installed ready for use. For 2026, the threshold is set at $20,000 for businesses with an annual turnover of less than $10 million. This incentive helps SMEs manage cash flow by accelerating depreciation deductions.
The loss carry-back offset enables eligible companies to claim a refundable tax offset if they have made a tax loss. This offset allows businesses to carry back losses to offset profits from previous years, providing a cash flow benefit. The scheme is applicable for the 2026 income year, allowing businesses to carry back losses to the 2019-20, 2020-21, 2021-22, 2022-23, 2023-24 and 2024-25 income years.
The R&D Tax Incentive supports companies conducting eligible research and development activities. For SMEs with an annual turnover of less than $20 million, the programme offers a 43.5% refundable tax offset. This incentive encourages innovation by reducing the financial risk associated with R&D investments.
Small business owners can benefit from several Capital Gains Tax (CGT) concessions:
The small business income tax offset provides unincorporated small businesses with a tax offset of up to $1,000 per year. The offset is calculated as 16% of the income tax payable on the business income received from a small business entity with a turnover of less than $5 million.
| Incentive | Description | Eligibility |
|---|---|---|
| Instant Asset Write-Off | Immediate deduction for assets up to $20,000 | Turnover under $10 million |
| Loss Carry-Back Offset | Offset losses against previous profits | Eligible companies with tax losses |
| R&D Tax Incentive | 43.5% refundable tax offset | Turnover under $20 million |
| Small Business CGT Concessions | Various CGT exemptions and rollovers | Eligible small business owners |
| Small Business Income Tax Offset | Up to $1,000 tax offset | Turnover under $5 million |
The threshold for the instant asset write-off in 2026 is $20,000 for businesses with a turnover of less than $10 million.
The loss carry-back offset allows SMEs to claim a refundable tax offset by carrying back losses to offset profits from previous years, improving cash flow.
SMEs with an annual turnover of less than $20 million conducting eligible R&D activities can claim a 43.5% refundable tax offset.
The 15-year CGT exemption applies if a business has owned an asset for at least 15 years and the owner is aged 55 or over and retiring, or is permanently incapacitated.
The small business income tax offset is calculated as 16% of the income tax payable on the business income received from a small business entity with a turnover of less than $5 million, up to $1,000 per year.
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