Government pushes for investment risk taking

The government has introduced a package of reforms in the budget in a bid to support resilience, investment and risk taking as well as unlock patient capital for young and expanding firms.

It said it will permanently extend the $20,000 instant asset write-off from July 2026 for small businesses with turnover of up to $10 million.

These businesses will be able to immediately deduct eligible assets costing less than $20,000 rather than depreciating them over several years. This measure is estimated to reduce receipts by $890 million over the next five years.

"Making the $20,000 instant asset write-off permanent will benefit small business whether they are a sole trader, a partnership, or run through a trust or company, and is particularly valuable for sole traders who often face higher administrative burdens relative to their size," the budget read.

This measure is estimated to reduce compliance costs for small businesses by around $32 million per year.

Starting this year, the government will also introduce a new instant tax deduction of up to $1000 which will simplify work-related expense deductions. This will deliver 6.2 million workers an average tax benefit of $205 for 2026/27.

"This will help workers cut back on paperwork and save them time and money at tax time. The ATO estimates the measure will collectively save individuals $380 million in compliance costs each year," the budget read.

Starting July 2027, the government said it will also adjust asset and fund size caps for venture capital to compensate for inflation since they were last set.

It noted this will help unlock more foreign and local investment in the sector and help align with modern company valuations.

"Tax incentives support venture capital investment in startups and high-growth businesses in recognition that these businesses can struggle to access traditional forms of commercial funding and often need 'patient' capital to meet long investment timeframes," the budget read.

"However, some asset and fund size caps to access these tax incentives have not been updated in decades."

This measure is estimated to decrease receipts by $10 million and increase payments by $14.7 million over the next five years.