Small Business Tax Concessions 2025–26: The Complete Guide for Australian Business Owners
Key Takeaways
- Small businesses can access the instant asset write-off, simplified depreciation and the small business income tax offset.
- The small business CGT concessions can reduce or eliminate CGT on the sale of active business assets.
- Most concessions apply to businesses with aggregated turnover under $10 million.
- CGT concessions use a $2 million turnover test or a $6 million net asset value test.
With 30 June 2026 just weeks away, now is the time for Australian small business owners to take stock of the tax concessions available to them. The Australian tax system offers a surprisingly generous suite of concessions specifically designed for small businesses — but many owners either don’t know they exist or aren’t sure if they qualify.
From the extended $20,000 instant asset write-off to powerful capital gains tax (CGT) concessions that can eliminate a tax bill entirely, understanding what’s on offer could make a significant difference to your bottom line this financial year.
Here’s your complete guide to the key small business tax concessions for 2025–26.
Who Qualifies as a ‘Small Business Entity’?
Before diving into the concessions, it’s important to understand the eligibility thresholds. Most small business concessions are tied to your aggregated annual turnover — that is, your business’s turnover plus the turnover of any associated or affiliated entities.
The key thresholds for 2025–26 are:
- Under $2 million: Access to small business CGT concessions (turnover test)
- Under $5 million: Eligible for the Small Business Income Tax Offset (SBITO)
- Under $10 million: Access to simplified depreciation, GST concessions, and PAYG instalment concessions
- Under $50 million: Eligible for the reduced 25% company tax rate (base rate entities)
If you’re unsure which threshold applies to your business, a registered tax agent can help you calculate your aggregated turnover correctly.
The $20,000 Instant Asset Write-Off: Still Available in 2025–26
One of the most popular concessions for small businesses is the instant asset write-off (IAWO). For 2025–26, the $20,000 threshold has been extended for businesses with an aggregated turnover under $10 million.
This means you can immediately deduct the full business-use portion of any eligible asset costing less than $20,000 — rather than depreciating it over several years. The write-off applies per asset, so you can claim multiple assets in the same year.
Key points to remember:
- The asset must be first used or installed ready for use before 30 June 2026
- A car limit of $69,674 applies to passenger vehicles
- Assets costing $20,000 or more go into the small business depreciation pool (15% first year, 30% in subsequent years)
- If your pool balance falls below $20,000 at year end, you can write off the entire remaining balance
The suspension of the five-year lock-out rule (which prevents businesses from re-entering the simplified depreciation regime after opting out) also continues until 30 June 2026 — giving businesses more flexibility.
Small Business Income Tax Offset (SBITO)
If you’re a sole trader — or receive a share of net small business income from a partnership or trust — you may be entitled to the Small Business Income Tax Offset.
For 2025–26, the offset is calculated at 16% of your net small business income, capped at $1,000 per person per year. The ATO calculates this automatically from your tax return, so you don’t need to apply separately.
This offset is available to businesses with an aggregated turnover under $5 million and can provide a welcome reduction in your personal tax bill.
Small Business CGT Concessions: Potentially Your Biggest Tax Win
If you’re selling a business asset — or planning to retire — the small business CGT concessions can be extraordinarily valuable. In some cases, they can eliminate your capital gains tax liability entirely.
Who Can Access Them?
To qualify, your business must meet one of two tests:
- Aggregated turnover under $2 million, OR
- Net assets of $6 million or less (the maximum net asset value test — excluding your family home, personal assets, and superannuation)
The asset being sold must also be an active asset — one used in the course of carrying on your business for at least half of your ownership period.
The Four CGT Concessions
Once you meet the basic eligibility conditions, you can apply up to four concessions:
- 15-Year Exemption: If you’ve owned the asset for at least 15 years and you’re aged 55 or over and retiring, the entire capital gain is disregarded. This is the most powerful concession available.
- 50% Active Asset Reduction: Reduces your capital gain by 50%. This stacks on top of the general 50% CGT discount available to individuals and trusts — meaning you could reduce a gain by up to 75%.
- Retirement Exemption: Disregards up to $500,000 in capital gains over your lifetime. If you’re under 55, the amount must be contributed to superannuation.
- Rollover: Defers the capital gain if you acquire a replacement active asset within two years of the CGT event.
The lifetime CGT cap for contributions to superannuation under these concessions is $1,865,000 for 2025–26.
GST and BAS Concessions
If your aggregated turnover is under $10 million, you can elect to account for GST on a cash basis — meaning you only report GST when you actually receive or make payments, rather than when invoices are issued. This can significantly improve cash flow management.
You may also be eligible for annual BAS reporting rather than quarterly, reducing your compliance burden.
What’s Changed for 2025–26?
A few important updates apply this financial year:
- Superannuation Guarantee rises to 12% from 1 July 2025. Ensure your payroll is updated.
- ATO interest charges are no longer deductible from 1 July 2025. This includes the shortfall interest charge (SIC) and general interest charge (GIC) — so it’s more important than ever to pay on time.
- Payday Super is coming on 1 July 2026, requiring employers to pay super at the same time as wages. Start preparing your systems now.
ATO Compliance Focus Areas: What to Watch
The ATO has increased its compliance activity for small businesses in 2025–26. Key focus areas include:
- Contractor income reporting — the ATO cross-checks data from the Taxable Payments Reporting System (TPRS)
- GST compliance — particularly for businesses with a history of late BAS lodgements
- CGT concession claims — the ATO is scrutinising whether eligibility conditions have been correctly applied
- Past stimulus claims — including the Technology Investment Boost and Skills and Training Boost
Maintaining thorough digital records and ensuring your Single Touch Payroll (STP) reporting is up to date is essential.
Make the Most of These Concessions Before 30 June
The small business tax concessions available in 2025–26 represent a genuine opportunity to reduce your tax liability — but only if you act before 30 June and ensure you meet the eligibility criteria. With the ATO increasing its compliance focus, it’s also more important than ever to get your claims right.
At TaxServe Australia, our experienced tax professionals help Brisbane and Queensland small business owners navigate these concessions with confidence. Whether you’re looking to maximise your instant asset write-off, understand your CGT position, or simply ensure your EOFY tax return is optimised, we’re here to help.
📞 Contact TaxServe Australia today to book your EOFY tax planning session. Don’t leave money on the table this 30 June.
Sources
- Australian Taxation Office – Small Business Income Tax Offset
- Australian Taxation Office – Simpler Depreciation for Small Business
- Australian Taxation Office – Small Business CGT Concessions
- Australian Taxation Office – $20,000 Instant Asset Write-Off
- GrowthProf – Small Business Tax Updates 2025–26
- Wolters Kluwer – ATO’s Focus Areas for Small Businesses in 2025
Frequently Asked Questions
What tax concessions are available to small businesses in Australia?
Eligible small businesses can access the instant asset write-off, simplified depreciation, the small business income tax offset, small business CGT concessions, immediate deductions for prepaid expenses, and simplified trading stock rules.
What is the small business CGT concession?
The small business CGT concessions can reduce or eliminate capital gains tax on the sale of active business assets. They include the 15-year exemption, the 50% active asset reduction, the retirement exemption and the rollover, subject to eligibility tests.
What turnover qualifies as a small business for tax?
Most small business concessions apply to businesses with an aggregated annual turnover under $10 million, though some concessions (such as the CGT concessions) use a $2 million turnover test or a $6 million net asset value test.