Entity Setup
Small Business Relief & Entity Setup: Instant Write-offs, Loss Carry-Backs, & Restructuring Paths
For small business owners, Budget 2026-27 brings permanent write-offs, access to loss carry-back, and trust restructuring opportunities — crucial for setting up or revamping your business entity.
By NomadicTax Research Team • 5-8 min read • July 26, 2026
## Small Business Tax Relief Highlights from Budget 2026-27
Budget 2026-27 includes significant measures designed to ease tax burdens and improve cash flow for small and growing businesses:
- **Permanent $20,000 instant asset write-off**: Small businesses (turnover up to $1 billion, subject to conditions) can immediately deduct eligible assets up to $20,000 from 1 July 2026.([ministers.treasury.gov.au](https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/media-releases/backing-small-businesses-tax-relief?utm_source=openai))
- **Two-year loss carry-back**: From 1 July 2026, companies with turnover up to $1 billion can carry back losses incurred in financial years back to offset taxable profits in prior two years, speeding refunds.([ministers.treasury.gov.au](https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/media-releases/backing-small-businesses-tax-relief?utm_source=openai))
- **Entity restructuring support**: Expanded rollover relief for small businesses wanting to transition from discretionary trusts to other structures is also part of support measures.([ministers.treasury.gov.au](https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/media-releases/backing-small-businesses-tax-relief?utm_source=openai))
- **The $250 Working Australians Tax Offset (WATO)**: For working individuals, including many sole traders, this permanent offset begins 2027-28, further reducing tax liability.([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai))
## Structuring or Restructuring Your Entity — What to Know
- If currently operating via a **discretionary trust**, evaluate whether distributing profits or changing structure before new trust minimum rates (30 %) from 1 July 2028 makes sense.
- Business entities expecting rising profits should model if **loss carry-back** helps more than deferred deductions under old structure.
- Using the **instant write-off** means smaller capital purchases should be expensed immediately rather than depreciated across years — boosts cash flow and simplifies bookkeeping.
- Make sure changes are properly documented and follow legal process to avoid unintended tax or GST issues.
## Practical Examples
- **Eve**, who runs a consulting business as a sole trader: she buys new laptops and office furniture—can use the $1,000 instant deduction (once law enacted) plus instant write-off for small assets up to $20,000 to get tax deductions in year of purchase.
- **Frank Pty Ltd**, turnover $900 million: makes a big loss in 2026-27 due to investment; using two-year loss carry-back, he offsets that loss against profitable years 2024-25 and 2025-26, getting a refund or reduced tax liability.
- **Green Family Trust** wanting to simplify structure: may convert to company or family business entity before 2027-28 to reduce exposure to new trust minimum rates and compliance changes.
## Setup Steps & Checklist
1. Identify whether your entity turnover fits within thresholds for relief.
2. Keep detailed records of asset purchases, turnover, losses.
3. Project profitability and consider making strategic purchases or structuring decisions before new rules take effect.
4. Consult legal or tax specialist for trust transitions to avoid breaches of trust deeds or triggering capital gains events.
5. Watch for legislation passing to ensure reliefs are legally enforceable.
## Why This Matters
These changes aim to ease burdens in volatile times and shift Australia’s tax architecture toward greater simplicity and fairness. For small businesses, savvy structuring and timing decisions in asset purchases and entity setup can deliver material savings — and reduce risk of falling foul of rules as reforms take hold.