The Australian Senate approved the Treasury Laws Amendment (Tax Reform No. 2) Bill 2026, locking in a permanent corporate loss carry-back regime, a permanent AUD 20,000 instant asset write-off for small business, and a decade-long income tax exemption for PNG Chiefs Limited employees tied to Papua New Guinea's 2028 NRL entry.
The Australian Senate approved the Treasury Laws Amendment (Tax Reform No. 2) Bill 2026 on 19 August 2026, following its passage by the House of Representatives on 18 August 2026.
The Bill is a legislative package designed to implement key business tax reforms and regional sports initiatives announced in the 2026–27 Federal Budget.
The legislation proposes three significant tax changes:
Schedule 1: Permanent loss carry-back regime
This measure provides corporate tax entities with a refundable tax offset by allowing them to carry back tax losses to earlier profitable years.
Corporate tax entities (companies, corporate limited partnerships, and public trading trusts) with an aggregated annual global turnover of under AUD 1 billion (excluding significant global entities). The claimant must have met tax return lodgement and assessment requirements for the current and previous five income years.
Eligible entities can carry back a revenue loss incurred in an income year starting on or after 1 July 2026 against tax paid in either or both of the two preceding income years.
The offset equals the loss (net of exempt income in the carry-back year) times the loss year’s corporate tax rate, capped at the entity’s year-end franking account balance, so companies can’t reclaim tax on profits already paid out as franking credits.
An integrity rule blocks the offset where voting control changes specifically to obtain it, though genuine cases like family succession or relationship breakdowns are exempt.
Schedule 2: Permanent AUD 20,000 instant asset write-off
This schedule provides small business entities with ongoing certainty to encourage capital investment. The legislation permanently raised the instant asset write-off threshold from AUD 1,000 to AUD 20,000, for assets first used or installed ready for use from 1 July 2026. It replaces the annual extend-or-expire cycle with a fixed rule businesses can actually plan around.
Eligibility stays capped at businesses with aggregated turnover under AUD 10 million. Assets priced at AUD 20,000 or above still go into the general small business pool: 15% depreciation in year one, 30% in each year after. And if that pool balance drops below AUD 20,000 at year-end, the whole thing can be written off in one go.
The five-year lock-out rule, which blocks re-entry to simplified depreciation once a business opts out, is also suspended for another 12 months, to 30 June 2027, so opted-out businesses aren’t locked out of the new threshold.
Schedule 3: PNG Chiefs Limited employment exemption
This one’s a tax carve-out for PNG’s push to get an NRL team, PNG Chiefs Limited, into the competition by 2028 under the Pacific Rugby League Partnership.
Anyone employed by the club gets a full Australian income tax exemption on their earnings, salaries, match fees, bonuses, allowances, the lot. It applies retrospectively from 1 July 2025 through to 30 June 2035, so a full decade of coverage backdated to catch the current income year.
The exemption also overrides Australia’s usual residency and sourcing rules, so Australian residents playing for the club don’t get taxed on worldwide income, and visiting players don’t get taxed on match income earned in Australia. It’s designed to line up with PNG’s own exemption under its Income Tax Act 2025. Since the income is exempt outright, the club also skips PAYG withholding and FBT obligations.
