For many Business Owners, CEOs and Tax Managers, the 2026 Federal Budget is shaping up to be a pivotal moment, with several key tax and incentive changes expected to impact employer strategies and potentially bottom lines. This article highlights the main areas to watch in Budget 2026, so you can prepare for what may lay ahead.
The Federal Budget 2026 is widely anticipated to introduce significant reforms across capital gains tax, business asset write-off, fringe benefits tax for electric vehicles (EVs), and R&D incentives.
Below, we break down the potential changes and what they could mean for your business.
Changes to the CGT Discount: Reduction or Tiered System Expected
There is strong speculation that the government will reduce the capital gains tax (CGT) discount, potentially moving to a tiered system based on income or asset type. This could increase the tax payable on capital gains for both individuals and trusts, potentially affecting business owners who hold assets outside traditional company structures.
📌 Key point: Review your asset holding structures and consider the timing of disposals.
Instant Asset Write-Off: $20,000 Threshold Under Review
The popular $20,000 instant asset write-off for small businesses is likely to be extended or modified, but with possible changes to eligibility or the threshold amount. Employers should watch for new rules that could affect capital expenditure planning.
📌 Key point: Plan asset purchases with potential changes in mind and monitor eligibility criteria.
EV FBT Changes: Tightening of Exemptions announced pre Federal Budget
Changes to the fringe benefits tax (FBT) exemption for electric vehicles (EVs) have been announced pre Budget, with a tightening of eligibility across a transitional period. This will likely increase the cost of providing EVs as employee benefits. As announced by Government, the changes will be brought in progressively through three phases and are estimated to save the Budget $1.7 billion over the five years from 2025-26. Current arrangements will be grandfathered.
- The existing electric vehicle discount will continue in full until March 2027.
- Between 1 April 2027 and 1 April 2029, the full FBT discount will apply only for EVs costing $75,000 or less. EVs costing more than $75,000 but below the luxury car tax threshold will receive a 25 per cent discount on their payable FBT.
- From 1 April 2029, all EVs below the luxury car tax threshold will receive the 25 per cent discount on payable FBT.
📌 Key point: Review your fleet strategy and consider the timing of EV acquisitions.
R&D Incentives: Eligibility and Compliance Changes Expected
Potential changes to the R&D tax incentive are on the table, including stricter eligibility (with exclusions for certain industries such as gambling and tobacco) and possible adjustments to rates or compliance requirements. Employers investing in innovation should prepare for more rigorous substantiation and reporting.
📌 Key point: Review your R&D activities and ensure robust documentation ahead of any changes.
What This Means for You
- Strategic planning: Employers should review their current tax positions, employee benefit offerings, and investment plans in light of these expected changes.
- Timing matters: Consider the timing of asset purchases, disposals, and incentive claims to maximise available benefits before new rules take effect.
- Stay informed: Monitor Budget announcements and seek professional advice to ensure compliance and optimise your tax position.
Next Steps
Andersen Australia will provide detailed analysis and practical guidance as the Budget measures are announced and legislated. Subscribe to our Budget 2026 coverage to stay ahead of the changes and ensure your business is prepared.
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This article is part of Andersen Australia’s ongoing Federal Budget 2026–27 coverage.
For detailed analysis across CGT, negative gearing, business tax, and more visit our dedicated Budget Page:
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