Tax minimisation strategies for small businesses in Australia (2026)

A practical guide to reducing your tax bill as an Australian small business owner – from super contributions and instant asset write-offs to investment property, before the Budget 2026-27 rules change.

June 16, 2026 · 14 min read

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TL;DR

Tax time in 2026 is more complex than usual – and more urgent. The Budget 2026-27 announced major changes to negative gearing, capital gains tax, and discretionary trusts, all taking effect from 1 July 2027 or 2028. That gives small business owners roughly 12 months to act under the current rules. The most impactful strategies right now: max out your concessional super contributions ($30,000 cap for 2025-26, cutting your tax rate on that income from up to 47% down to 15%), claim the $20,000 instant asset write-off on eligible purchases before 30 June, and review your business structure before the trust minimums kick in.

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Running a small business in Australia means wearing a lot of hats. Tax planning usually ends up squeezed between payroll, client work, and the hundred other things that don’t wait. The result, for most business owners, is a tax bill that’s higher than it needs to be – not because of anything they’ve done wrong, but because they haven’t had the time to look at what’s available.

That gap matters more in 2026 than it has in years. The Budget 2026-27 handed down in May reshaped several of the most commonly used tax strategies – negative gearing, capital gains discounts, and discretionary trusts – with changes starting from 1 July 2027. That gives business owners a window to act under the current rules, but it is a window.

This guide runs through the main strategies, what’s changing, and where the genuine opportunities are right now.

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1. Max out concessional super contributions first

This is the one strategy that almost every accountant mentions first, and for good reason. Concessional super contributions – employer contributions, salary sacrifice, or personal deductible contributions – are taxed at just 15% inside the super fund rather than at your marginal income tax rate.

For the 2025-26 financial year, the concessional contributions cap is $30,000 per person. If your marginal rate is 45% (income above $190,000) plus the 2% Medicare levy, every dollar you redirect into super saves you 32 cents in tax. On the full $30,000, that’s a potential tax saving of around $9,600 compared to taking that same income as salary.

“100% be maxing out your super contributions. If your husband puts $10,000 of pre-tax income into super, instead of being taxed 47% on that $10K, he’s taxed 15%. It’s like an immediate 60% return on investment.” – davidblacksheep, r/AusFinance

Two things make this particularly useful for small business owners. First, if you’re self-employed, you can make personal super contributions and claim them as a tax deduction – you don’t need an employer to salary sacrifice. Second, the carry-forward rule allows you to use unused concessional cap amounts from the previous five years, as long as your total super balance is below $500,000. That means a year where you couldn’t contribute much doesn’t go to waste.

The cap rises to $32,500 in 2026-27, so the opportunity only grows. Note that contributions are taxed at 30% instead of 15% if your income plus super contributions exceeds $250,000 – this is called the Division 293 tax – so high earners should check the numbers with their accountant.

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2. Use the $20,000 instant asset write-off – now made permanent

For years the instant asset write-off has been an “almost permanent” measure, extended year after year. The Budget 2026-27 finally made it permanent.

From 1 July 2026, small businesses with aggregated turnover under $10 million can permanently deduct assets costing less than $20,000 immediately, rather than depreciating them over time.

For the current 2025-26 year, the same $20,000 per asset threshold already applies. According to the ATO’s instant asset write-off page:

• Multiple assets can each qualify as long as each individual asset costs less than $20,000
• Both new and second-hand assets qualify
• The asset must be first used or installed ready for use before 30 June 2026 to qualify this financial year
• Car limit rules apply to passenger vehicles (the limit is $69,674 for 2025-26)

One thing trips people up: the $20,000 threshold applies to the total cost of the asset, not just the business-use portion. So if you buy a ute for $40,000 and use it 80% for work, the full $40,000 still exceeds the threshold – the asset goes into the small business pool instead.

If you’re planning purchases before 30 June, equipment, tools, software licences, computers, and office furniture all commonly qualify. Get the asset operational before the end of June – “purchased but not yet set up” won’t cut it.

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3. Choose the right business structure (and know what’s changing)

How your business is structured affects your tax rate, how you can split income, and what strategies you can access. The main options each come with trade-offs.

Sole trader: Simple to run and you pay tax at individual rates. The top marginal rate of 45% (plus 2% Medicare levy) applies to income above $190,000. You also get access to the small business income tax offset – up to $1,000 per year for businesses with turnover under $5 million.

Company: A base rate entity with aggregated turnover under $50 million pays 25% company tax, compared with a personal top rate of 47%. That rate difference can be significant once profit passes $150,000. The downside is that profits retained in the company face tax again when distributed as dividends, though franking credits can reduce double taxation for shareholders.

Discretionary trust: Trusts allow a trustee to distribute income to beneficiaries at different marginal rates – typically a spouse, adult children, or a bucket company – which can substantially reduce the family’s overall tax burden. For many small business families, this has been the most flexible structure.

“One method is owning a trust with distributions going into a bucket company.” – Equity1988, r/AusFinance

However, there’s a significant change coming. The Budget 2026-27 announced a minimum 30% tax on discretionary trusts from 1 July 2028. Rollover relief runs from 1 July 2027 to 30 June 2030, giving businesses three years to restructure if they want to. This doesn’t necessarily mean trusts stop being useful – but the income-splitting advantage for high-earning families narrows considerably when every distribution faces at least 30% tax.

If you’re currently operating as a sole trader and the numbers suggest a restructure makes sense, note that small business restructure roll-over provisions are available for businesses with aggregated turnover under $10 million, allowing restructures without triggering CGT. This is worth discussing with your accountant before the trust changes take effect.

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4. Claim the small business income tax offset

If you’re operating as a sole trader or have a share of income from a partnership or trust, and your aggregated turnover is under $5 million, you’re likely eligible for the small business income tax offset.

The offset is 16% of the tax payable on your net small business income, capped at $1,000 per year. It’s not means-tested – if you earn $400,000 as a sole trader with a $5 million cap, you’re still eligible. The ATO calculates it automatically from your tax return, so there’s nothing to actively apply for. It’s essentially a $1,000 rebate you’d be leaving on the table if you’re unaware it exists.

Worth noting: the offset doesn’t apply to companies. It’s for unincorporated structures only.

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5. Negative gearing on investment property – the window is closing

Negative gearing is the strategy of deducting investment property losses – where interest, maintenance, rates, and depreciation exceed rental income – against other income like business profits or salary. At a 47% marginal rate, every dollar of deductible loss effectively reduces your after-tax cost by 47 cents.

For small business owners who own both a business and an investment property, this has been a legitimate way to use property investment losses to reduce the tax on business income. The current rules allow this on both established and new residential properties.

That changes from 1 July 2027.

Under the Budget 2026-27, negative gearing against other income (wages, business profits) will be restricted to new builds from 1 July 2027. Investors who buy established residential properties after Budget night – which was in May 2026 – will still be able to deduct losses, but only against residential property income from other properties. They can carry losses forward to future years, but won’t be able to offset them against business income or wages.

Properties held before Budget night are fully grandfathered. Properties acquired before 1 July 2027 on new builds receive the full current treatment.

The CGT change compounds this. From 1 July 2027, the 50% CGT discount will be replaced with an inflation-based model, with a minimum 30% tax on capital gains. Investors in new builds get to choose between the two systems. Properties acquired before 1 July 2027 are unaffected by the CGT change.

For small business owners thinking about property investment, the practical implication is straightforward: established properties acquired now under current rules are fully grandfathered. New builds acquired before 1 July 2027 also lock in the current treatment. After that date, the calculus changes significantly.

If you’re considering an investment property purchase before these changes take effect, Mel Finance has over 10 years of experience helping investors structure property loans efficiently. Given the timing, it’s worth a conversation sooner rather than later.

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6. Home office and vehicle deductions

These are the most commonly claimed – and most commonly under-claimed – deductions for small business owners who work from home or use a vehicle for work.

Home office: The ATO allows two methods. The fixed rate method is 67 cents per hour for every hour you work from home (from 2022-23 onwards). This covers electricity, phone, internet, computer consumables, and stationery. You need a diary or records tracking hours worked from home.

The actual cost method claims the real cost of each expense on a proportional basis – more work upfront but potentially more valuable if you run dedicated home office equipment, pay high power bills, or have a large home specifically set up for the business.

For most sole traders, the fixed rate method is worth running through both approaches to see which comes out ahead.

Vehicle: The ATO allows two methods for claiming vehicle deductions for a car used in your business. The cents per kilometre method allows 88 cents per kilometre (2024-25 rate) for up to 5,000 business kilometres per year. No receipts needed, just a record of how many business kilometres you drove and why.

The logbook method covers the business-use percentage of all vehicle costs – fuel, insurance, registration, servicing, and depreciation. More paperwork (you need a 12-week logbook), but worthwhile if your car is heavily used for business and your costs are high. Logbooks are valid for five years.

A third option for employees (not sole traders) is the novated lease – but for business owners, the logbook approach usually yields the higher deduction.

One genuinely overlooked move: the small business pool allows assets that exceed the $20,000 instant write-off threshold to depreciate at 15% in the first year and 30% in subsequent years – faster than general depreciation rules. A $40,000 work vehicle that doesn’t qualify for the write-off still depreciates faster under the small business pool than it would under default rules.

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7. Small business CGT concessions – the most valuable provisions most owners haven’t read properly

If you’re planning to sell your business or a business asset, the small business CGT concessions are the most significant tax provisions available to you – and they’re genuinely complicated enough that most owners don’t realise what’s available.

There are four separate concessions, all with their own eligibility conditions. The basic eligibility test requires either aggregated turnover under $2 million, or net assets under $6 million.

Concession	What it does
15-year exemption	100% CGT exemption if you’ve held the active asset for 15+ years and are retiring or permanently incapacitated
50% active asset reduction	Reduces the capital gain by 50% – on top of the individual 50% CGT discount
Retirement exemption	Exempt up to $500,000 lifetime (contributed to super if under 55)
Roll-over	Defer the gain into a replacement asset (up to 2 years to acquire)

An individual selling a business asset at a gain might access the individual 50% CGT discount, then the 50% active asset reduction, then the retirement exemption – and end up with zero CGT payable. The CGT changes in Budget 2026-27 affect the individual discount for gains arising after 1 July 2027, but the small business concessions themselves remain untouched by that announcement.

This is the area where professional advice pays for itself most clearly. The eligibility conditions are detailed – the asset has to be an “active asset,” you need to have owned it the right way, and the concessions need to be applied in the right order.

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8. New from 2026-27: loss carry-back for companies

One genuinely useful addition from the Budget 2026-27: from the 2026-27 income year, eligible companies that make a loss can carry that loss back and apply it against tax paid in the prior two income years, generating a cash refund.

The example from the Budget papers illustrates it well. A restaurant with $1 million turnover makes $50,000 profit in 2025-26 and pays $12,500 in company tax at the 25% rate. In 2026-27, it buys $65,000 of equipment (all assets under $20,000 each) and deducts them immediately under the instant asset write-off. Combined with its operating profit, it ends up with a $15,000 loss. Under the loss carry-back, it can apply that loss against the prior year’s tax, generating a $3,750 refund – cash in hand rather than a deferred tax asset.

This is significant for businesses investing heavily in equipment or experiencing cyclical revenue. Previously, a company with losses had to carry them forward indefinitely. Now there’s a path to actual cash refunds on prior-year tax payments. It applies to eligible companies – sole traders and partnerships aren’t included.

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Putting it all together: timing matters this year

The 2026 financial year ends 30 June. Before then:

• Super contributions need to reach the super fund by 30 June to count for 2025-26 – don’t leave this to the last week
• Asset purchases need to be installed and ready for use by 30 June, not just ordered
• Check unused concessional cap amounts from the prior five years – you may be able to contribute more than the standard $30,000

The 2026-27 Budget changes sit in the background of all of this. Negative gearing on established property is still fully available now. The 50% CGT discount still applies to gains crystallised before 1 July 2027. Discretionary trusts have until 1 July 2028 before the minimum 30% rate kicks in, with a rollover period starting 1 July 2027 for those who want to restructure.

“Share investing is the ONE tax minimisation strategy available to low and middle income Australians… Tax from 47%.” – r/AusFinance, Budget 2026-27 megathread

The frustration in communities like r/AusFinance reflects something real: the accessible strategies for ordinary business owners are shrinking. Super contributions, the instant asset write-off, and the small business concessions remain intact. But some of the more flexible structures – trusts, broad negative gearing – are becoming more constrained. That makes it more important, not less, to use the strategies that still work, and to use them well.

An accountant who specialises in small business tax is the right first move. Many of these strategies interact – super contributions, CGT concessions, and structure all affect each other. The person who can see the whole picture saves you more than any single tactic will.

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New Venture Wealth is an Australian accounting and advisory firm specialising in SMSF accounting and wealth structuring. They help business owners, professionals, and investors establish and manage Self-Managed Super Funds (SMSFs), ensuring compliance while creating tax-effective strategies for long-term wealth creation.

For investors looking to purchase property through superannuation, New Venture Wealth provides guidance on SMSF structures, ongoing accounting, compliance requirements, and strategic advice tailored to individual circumstances. Their expertise helps clients understand the complexities involved in SMSF property investments and how these structures can align with broader retirement and wealth objectives.

With potential changes to negative gearing approaching, understanding your investment and borrowing position now—rather than after 1 July 2027—can help you make more informed decisions and ensure the right structure is in place before market conditions and legislation evolve.

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Frequently Asked Questions

What is the most effective tax minimisation strategy for small businesses in Australia?

Maximising concessional superannuation contributions is widely regarded as the most powerful legal tax minimisation strategy for Australian small business owners. By contributing up to the $30,000 cap (2025-26), you pay just 15% tax on that income instead of your marginal rate – which can be as high as 47%. That difference can save you over $9,600 in a single year. Learn more at ATO: Concessional contributions cap. A good tax adviser can help you combine this with other strategies for maximum effect.

What is the instant asset write-off threshold for 2025-26?

For the 2025-26 income year, eligible small businesses with an aggregated turnover under $10 million can immediately deduct the full cost of any asset costing less than $20,000. This applies per asset, so multiple assets can each be written off in the same year. The Budget 2026-27 permanently extends the $20,000 instant asset write-off from 1 July 2026. Full details at ATO: Instant asset write-off.

Are trust structures still worth setting up in 2026?

Discretionary trusts still allow income to be split among family members on lower marginal rates, which can significantly reduce a family’s overall tax. But the 2026-27 Budget announced a minimum 30% tax on discretionary trusts from 1 July 2028, with three-year rollover relief from 1 July 2027 for those who want to restructure. Anyone considering a new trust should get tax advice now – the benefits may still outweigh compliance costs depending on your situation, but the window is narrowing. See Budget 2026-27: Tax reform.

How does negative gearing work for small business owners investing in property?

Negative gearing lets you deduct investment property losses (where expenses exceed rental income) against other income like business profits. Under current rules, this applies to all residential property. But from 1 July 2027, the Budget 2026-27 limits this to new builds only – investors who buy established properties after Budget night can carry losses forward but can’t offset them against wages or business income. Properties bought before Budget night are grandfathered.

What are the small business CGT concessions and how much tax can they save?

The small business CGT concessions are four separate tax breaks available to businesses with aggregated turnover under $2 million. Used together, they can reduce or fully eliminate CGT on the sale of active business assets. The four concessions are: the 15-year exemption (hold an active asset for 15+ years, pay zero CGT), the 50% active asset reduction, the retirement exemption (up to $500,000 lifetime, tax-free into super), and the roll-over (defer gains). These are some of the most valuable tax provisions available to small business owners. See ATO: Small business CGT concessions.