The Treasury Laws Amendment (Tax Reform No. 2) Bill 2026 lets eligible corporate entities carry back losses from income years starting 1 July 2026 against tax paid in the prior two years, permanently lifts the instant asset write-off threshold to AUD 20,000 for small businesses with turnover under AUD 10 million, and exempts PNG Chiefs Limited NRL employment income from Australian tax through the 2034-35 income year.
Australia’s Parliament has introduced a Bill to implement Budget 2026–27 measures, including the introduction of loss carry-back provisions and the permanent extension of the small business instant asset write-off.
The Treasury Laws Amendment (Tax Reform No. 2) Bill 2026 introduces three primary changes to Australian tax law to bolster business investment and regional sports partnerships:
Loss carry-back tax offset (Schedule 1)
This measure allows eligible corporate tax entities to choose to carry back a tax loss incurred in an income year starting on or after 1 July 2026, and apply it against income tax paid in either or both of the two previous income years.
The offset is available to corporate tax entities that are not “significant global entities,” which broadly restricts the measure to entities with a global annual income of less than AUD 1 billion. The entity must also have met its income tax return lodgement requirements for the current year and the preceding five years.
The refund is capped by both the tax actually paid in the relevant prior years and the entity’s surplus franking account balance, preventing companies from reclaiming tax already passed on to shareholders as franking credits.
AUD 20,000 instant asset write-off for small business entities (Schedule 2)
This schedule permanently increases the instant asset write-off threshold from AUD 1,000 to AUD 20,000, effective for assets first used or installed ready for use for a taxable purpose on or after 1 July 2026.
Small business entities with an aggregated annual turnover of less than AUD 10 million can immediately deduct the full cost (the taxable purpose proportion) of eligible depreciating assets costing less than AUD 20,000.
In addition to single assets, the bill permanently sets the “low pool value” threshold to AUD 20,000. This means a small business can claim a deduction for the entire balance of its general small business pool if that balance falls below AUD 20,000 at the end of an income year.
Income tax exemption for PNG Chiefs Limited employment (Schedule 3)
This measure provides an Australian income tax exemption for ordinary and statutory income derived from employment with the PNG Chiefs Limited, the newly established Papua New Guinea-based National Rugby League (NRL) franchise.
The exemption covers salary, wages, match fees, allowances, and bonuses. It applies to assessments for the 2025-26 income year and the following nine income years (through to 30 June 2035).
