Parliament passes loss-carry back, IAWO measures

Loss carry‑back enables eligible companies to offset a loss against tax paid up to two years earlier, generating a refundable tax offset.

Treasurer Jim Chalmers said the measure will help 85,000 mostly small businesses, supporting productive investment and sensible risk‑taking and providing timely cash flow support to bolster resilience as well.

Businesses eligible for the $20,000 instant asset write-off can immediately deduct the taxable purpose proportion of eligible depreciating assets costing less than $20,000. The measures apply to any assets that are first used or installed for a taxable purpose on or after 1 July 2026.

Treasury estimated that the instant asset write-off will create a combined annual compliance cost reduction of $32 million for these small businesses.

“The legislation also includes the further implementation details we flagged at the outset of the tax reform process, providing certainty for people who acquire an interest in property as a result of inheritance or relationship breakdown,” Treasurer Jim Chalmers said.

The passage of the write-off follows numerous calls for its permanence after the government enacted extensions. 

This bill entered the lower house in June, following a 12-month extension of the write-off in 2025.

This follows the Housing Industry Association's (HIA) call for the write-off’s permanence in May.

“A permanent Instant Asset Write-Off as part of this year’s federal budget would be a practical, business-focussed reform that delivers immediate benefits, supporting investment and strengthening the industry’s capacity to deliver new homes," said HIA industry and policy chief executive, Simon Croft.

It will also “provide certainty to small and medium-sized businesses by removing the ongoing cycle of temporary extensions that has created uncertainty and compliance complexity in recent years,” Julie Abdalla, head of tax and legal at The Tax Institute, said previously.