What the 2026-27 Federal Budget Means for Tradies and Construction Business Owners
The Federal Treasurer handed down the 2026-27 Budget on 12 May 2026. Buried inside a package of tax reforms and savings measures are several changes that will directly affect how construction and trade businesses are structured, how you invest, and how much tax you pay.
The $20,000 Instant Asset Write-Off Is Now Permanent
This is the big one for tradies.
If your business turns over less than $10 million a year, you can immediately write off any asset that costs under $20,000 rather than depreciating it slowly over several years. Think tools, equipment, trailers, or machinery.
Previously, this was a temporary measure that was extended year after year, making planning a headache. From 1 July 2026, it's permanent. That means you can now confidently factor it into your purchasing decisions without waiting to see if the Government renews it.
What it means for you: If you've been holding off on buying that new piece of equipment, this gives you certainty. Buy it before 30 June, and it counts for this financial year. Buy it after 1 July, and it still applies going forward.
You Can Now Carry Back Tax Losses
This one is a bit more technical, but it's worth understanding.
From 1 July 2026, if your company makes a loss each year, you can offset that loss against tax you already paid in the previous two years — and potentially get a refund.
This applies to companies with less than $1 billion in global turnover, so it covers most of the trade and construction businesses operating as companies.
What it means for you: If you have a tough year, a big job falls through, a client doesn't pay, or costs blow out, you're not just stuck carrying that loss forward and hoping for a better year. You can look back and potentially recover some of the tax you paid when times were good.
New R&D Tax Incentive Rules (From 1 July 2028)
If your business does any innovative work developing new building methods, testing new materials, or building technology into your operations, you may already be claiming the R&D Tax Incentive. Some changes are coming from 1 July 2028.
The good news: the R&D premium (the extra offset you get for doing R&D) is going up by 4.5 percentage points. For smaller businesses, the refundable offset rate jumps from 18.5% to 23%.
The catch: the refundable offset (the one that pays out as cash if you're not in profit) will only be available to businesses under 10 years old. If your business is older than that, you can still claim, but it won't be refundable.
Also, the minimum spend threshold is going up from $20,000 to $50,000, so very small R&D claims won't qualify unless you're spending with a registered research provider.
What it means for you: If you're a newer business doing innovative work, the incentive is more attractive than ever. If you're an established business, check with your accountant whether your R&D claims still stack up under the new rules.
Your Tax Rate Is Going Down (A Little)
If you draw a salary from your business, there's a modest personal tax cut on the way.
The tax rate on income between $18,201 and $45,000 drops from 16% to 15% as of 1 July 2026, and then to 14% as of 1 July 2027.
On top of that, a new $250 Working Australians Tax Offset kicks in from the 2027–28 financial year. It's not a massive saving, but it's a saving.
If You Use a Discretionary Trust - Read This
Many trade and construction businesses operate through a family discretionary trust. A significant change is coming into effect on 1 July 2028.
Distributions from discretionary trusts will be subject to a minimum 30% tax rate, regardless of the tax rate of the person receiving the distribution. This is designed to reduce the tax benefit of splitting income among lower-income family members.
The Government is offering a three-year window from 1 July 2027 for businesses to restructure from a discretionary trust into a company or fixed trust, with some protection from capital gains tax during the transition.
What it means for you: If you currently use a trust to distribute income to a spouse or family members on lower incomes, the tax savings from doing that will shrink significantly. Now is the time to have that conversation with your accountant — before 1 July 2027, when the transition window opens.
Fuel Excise Relief - But Only Temporarily
With fuel prices still elevated due to global energy disruptions, the Government halved the fuel excise on petrol and diesel from 1 April 2026 to 30 June 2026.
If your business runs a fleet of utes, vans, or heavy vehicles, you've likely felt some relief at the bowser over the past couple of months. However, the Government has confirmed it will not extend this relief beyond 30 June 2026, so fuel costs will rise again from 1 July.
Electric Vehicles and Your Business (FBT Changes)
If you've been taking advantage of the Fringe Benefits Tax exemption on electric vehicle leases, some changes are coming through existing leases won't be affected.
From 1 April 2027, the full FBT exemption will apply only to electric vehicles priced under $75,000. Vehicles between $75,000 and the Luxury Car Tax threshold will receive a 25% FBT discount instead.
From 1 April 2029, all eligible electric vehicles under the Luxury Car Tax threshold will be subject to a 25% FBT discount, but the full exemption will be removed.
What it means for you: If an EV salary sacrifice arrangement is something you've been thinking about for yourself or your employees, acting sooner rather than later means you'd be grandfathered under the more generous rules.
The Bigger Picture
The economy isn't in great shape right now. Inflation has picked up again, interest rates are rising, and the Reserve Bank has already hiked rates three times this year. That's putting pressure on household budgets, which flows through to how much people spend on renovations, new builds, and discretionary construction work.
The Budget forecasts real economic growth slowing from 2.25% this financial year to 1.75% in 2026–27. That's not a recession, but it does mean a softer environment for businesses that depend on consumer or housing sector spending.
If you're in trades or construction, now is a good time to make sure your business is right-sized, your pricing models are reflective of the standards and value that you deliver, your terms of trade are tight, your cash flow is healthy, and you're getting every tax concession you're entitled to.
What to Do Next
The Budget contains some genuinely useful measures for trade and construction businesses, particularly the permanent instant asset write-off and the loss carry-back provisions. But some of the bigger structural changes (especially around trusts) need attention before the deadlines hit.
Our advice: don't wait. Book a conversation with your accountant or adviser now to review your structure, your upcoming equipment purchases, and whether any of these changes require action on your part.
This article contains general information only and does not constitute financial or tax advice. Please speak with a qualified adviser before making decisions based on this content—source: Deloitte Federal Budget 2026-27 Report.