What Australian business owners need to know about the instant asset write-off, company losses and payday super
Three changes deserve a place in your business planning this year. The $20,000 instant asset write-off has been made permanent, a company loss carry-back measure can provide relief when a profitable company has a difficult year, and payday super has changed when employers must pay their workers’ superannuation.
These changes affect different businesses in different ways. A deduction does not make an unnecessary purchase worthwhile. A company loss does not automatically produce a refund. And sending super before a deadline does not necessarily mean it arrived on time. Here is what to check and what to do next.
The $20,000 instant asset write-off is permanent
For several years, the $20,000 instant asset write-off was extended one year at a time. That made it harder for business owners to plan equipment purchases: a decision about when to replace a computer, tool or piece of machinery could become a decision about whether a temporary tax threshold would still apply.
The Government has now made the $20,000 threshold permanent from 1 July 2026. Eligible small businesses can plan around a continuing threshold instead of waiting each year to see whether it will be extended.
Who can use it?
The instant asset write-off generally applies to a business with aggregated turnover of less than $10 million that uses the simplified depreciation rules for small business. Aggregated turnover is not always the same as the sales shown in one entity’s accounts: turnover of connected entities and affiliates may need to be considered.
For an eligible business, the threshold applies per asset. Several separate assets may each qualify if each costs less than $20,000. The asset must also be first used, or installed ready for use, for a taxable purpose in the relevant income year. Ordering an asset or paying a deposit is not, by itself, enough to establish that it is ready for use. The deduction is limited to the asset’s business-use portion.
Take a business that buys two separate pieces of equipment, each costing $12,000. Subject to the other rules, each can be assessed against the threshold separately. By comparison, one asset costing exactly $20,000 does not meet a “less than $20,000” threshold.
The cost used for the threshold also needs care. For a business entitled to claim GST credits, the relevant cost will generally exclude the claimable GST. For a business that cannot claim the GST credit, the GST may form part of the asset’s cost. Private use, installation costs, trade-ins and related purchases can also affect the calculation. Ask us to check a purchase if its cost is close to the threshold.
What happens if an asset costs $20,000 or more?
An asset that does not qualify for an immediate deduction under the threshold is generally added to the small business depreciation pool, where the simplified rules apply. Pool deductions are generally calculated at 15% in the first year and 30% in later years. This spreads the deduction over time rather than denying it altogether.
Special rules may apply to particular assets, including cars and certain capital works. This is one reason to check the treatment of a significant purchase before relying on an advertised “instant write-off”.
A tax deduction is only part of the purchase decision
An immediate deduction reduces taxable income; it does not reimburse the purchase price. Suppose a company spends $18,000 on an eligible asset and has enough taxable income to benefit from a deduction at a 25% tax rate. The tax reduction would be approximately $4,500, leaving a substantial cost for the business to fund. The result will differ if the asset has private use, the company’s tax position is different, or the deduction creates or increases a loss.
The best reason to buy equipment remains a business reason: it helps you do the work, improves capacity, replaces something unreliable or earns a worthwhile return. The permanent threshold gives you more freedom to make that decision when the equipment is needed. Before a large purchase, consider its total cost, expected benefit and effect on cash flow, as well as its tax treatment.
Company loss carry-back: when a difficult year follows profitable years
Ordinarily, when a company makes a tax loss, it carries that loss forward and may use it against taxable income in a future year, subject to the company loss rules. That can be valuable, but it may take time before the company earns enough profit to use the loss.
The new permanent two-year loss carry-back measure provides another possible outcome. It allows an eligible company to look back to tax paid in earlier profitable years and claim a refundable tax offset, rather than waiting to use the whole loss against future profits. The Government has stated that the measure applies from 1 July 2026 to companies with turnover of up to $1 billion.
For a company with a 30 June year end, the first potential loss year under the new measure is 2026–27. This is a tax return calculation, not a refund that arrives as soon as the accounts show a loss. Eligibility, the available earlier-year tax liabilities and the company’s franking account must all be reviewed.
How could a refund arise?
Imagine a company paid income tax during profitable years, then made a $200,000 tax loss in 2026–27. If its applicable tax rate for the calculation were 25%, the loss could suggest a potential offset of $50,000. That figure is only a starting point.
The refund may be limited by how much relevant tax the company paid in the two earlier years. It can also be limited by the balance of the company’s franking account. When a company pays franked dividends, it uses franking credits to pass the benefit of tax already paid to shareholders. The carry-back rules cannot simply return tax that has already supported those credits.
For example, if the loss supports a potential $50,000 offset but the relevant franking account balance limits the claim to $30,000, the company cannot assume it will receive the full $50,000. Any loss that has not been used may still be relevant for future years, subject to the ordinary loss rules. These calculations need to be made from the company’s actual tax and franking records.
Which businesses should pay particular attention?
Loss carry-back is a company measure. A loss made by a sole trader, partnership or trust does not become eligible simply because the business is small. The measure concerns eligible tax losses rather than capital losses. A company must also satisfy the applicable conditions for claiming the offset, including its tax return and election requirements.
It may be especially relevant to a company that has paid tax over the last two years but expects a weaker 2026–27 result. Causes might include a major customer loss, reduced demand, a temporary shutdown or substantial business expenditure. In those circumstances, a loss that can be carried back may provide cash sooner than a loss held for future profits.
Dividend planning deserves attention too. Decisions about franked dividends affect the franking account and can therefore affect the available offset. That does not mean dividends should be withheld solely to maximise a possible future refund. Owners need to weigh the company’s cash needs, shareholder circumstances and commercial plans. If your company may move from profit into loss, raise it during the year so the likely result can be modelled before decisions are locked in.
Payday super: the deadline now follows each payday
Payday super commenced on 1 July 2026. Employers now calculate super guarantee contributions as part of their regular payroll process. Generally, the contribution must reach the employee’s super fund within seven business days after payday, although an extended timeframe can apply in some circumstances, such as for certain new employees. The calculation is based on qualifying earnings under the new rules.
This is a substantial operational change for businesses accustomed to paying super quarterly. Each pay run now creates a short payment window. Weekly and fortnightly payrolls, in particular, leave little room to discover and correct an error at the end of the period.
The fund’s receipt matters
A payment instruction is not necessarily the same as a contribution received by a fund. Money may take time to move through a clearing house. An incorrect member number or fund detail may cause a payment to be rejected. If the business waits until the last day to send the payment, there may be no practical time left to fix a problem before the deadline.
The safest routine is to process super on payday, then check that the payment has been accepted and allocated. Build a clear responsibility into each pay run: someone should confirm both that payroll was processed correctly and that any rejected super payment was promptly investigated.
Businesses using payroll software should review how their payment service works in practice. Check when money leaves the business bank account, when the clearing house sends it on and what notification you receive if a fund rejects a contribution. An automated payment feature is helpful, but it does not remove the need to review exceptions.
What if a payment is missed or late?
A missed or late contribution can give rise to a super guarantee shortfall and additional charges. From 1 July 2026, the reporting process for affected paydays has changed: employers generally no longer lodge the former super guarantee charge statement for those paydays. The ATO provides for a voluntary disclosure before it issues an assessment. Prompt disclosure can affect the administrative uplift that forms part of the new charge, so timing matters.
If you discover a problem, do not wait until the next normal payroll cycle to investigate it. Identify the affected employee and payday, confirm what the fund actually received, correct the payment details and seek advice on the disclosure position. Keep the payment reports and rejection notices. They will help establish what occurred and when.
Cash flow planning is equally important. Under quarterly payments, a business might previously have held cash for weeks after paying wages before the related super fell due. That gap has largely disappeared. Your payroll forecast should include wages and super together, especially during seasonal or slower trading periods.
Directors should treat unpaid super as a personal risk
A company’s super obligations do not always remain only the company’s problem. Under the director penalty regime, directors can become personally liable for certain unpaid super guarantee charge amounts. Allowing a shortfall to accumulate while trying to trade out of financial pressure can therefore have serious consequences beyond the company’s immediate debt.
The practical lesson is to act early. If a company cannot meet an upcoming payroll and super payment, its directors need a clear picture of the shortfall and prompt advice about their options. Raising funds to keep trading may help the business, but it does not, by itself, resolve an unpaid super obligation.
Directors should receive regular, understandable payroll and super reports. At a minimum, they should be able to see which paydays have been processed, how much super was due, whether payments reached funds and whether any amount was rejected. This matters even where a bookkeeper, payroll provider or other team member carries out the transactions.
What should your business do now?
Start with the change that affects your next decision:
- Planning an asset purchase? Check your aggregated turnover, the asset’s full cost and business use, and when it will be ready for use. Then decide whether the purchase makes commercial sense.
- Expecting a weaker company year? Prepare a forecast, identify tax paid in the previous two years and review the franking account before estimating any loss carry-back benefit.
- Running payroll? Confirm that super is calculated each payday, sent early enough to reach the fund and checked for rejections. Include it in your short-term cash flow forecast.
- Already found a super shortfall? Address it promptly. The payment date, fund receipt date and timing of any disclosure can affect the outcome.
These rules can create useful opportunities and impose tighter responsibilities, sometimes for the same business. Accountants 2 Business can review how they apply to your circumstances, including a planned asset purchase, a company forecast or your payday super process, before a tax return or missed deadline makes the options narrower.
This article provides general information as at September 2026. Tax outcomes depend on your entity, records and circumstances; obtain advice before acting on a significant transaction or an identified super shortfall.
