The Growth Opportunities Hidden in the 2026-27 Federal Budget

Zac Hayes
3 hours ago
7 min read

I sat down with a wine after the Treasurer’s speech last Tuesday and worked through the budget detail until well after midnight.

There is a lot in this one. More than any budget I have worked through in a decade.

The property and trust reform headlines have taken up most of the attention, and there are real challenges in there that I will cover in detail in my next article.

But before we get to the harder conversation, I want to spend some time on what most clients are not going to hear about: the genuine growth opportunities the government has put on the table for small business owners.

This is one of the most pro-investment, pro-innovation and pro-cash-flow budgets I have seen in years, and the headlines are obscuring it.

Here are the eight things I will be actively working with BWC clients to access over the next three years.

1. AI Accelerator grants: $70 million on the table

The government has committed $70 million to AI Accelerator grants specifically to back Australian businesses building AI capability.

For owner-operators thinking about how AI fits into the business, whether that is automating bookkeeping, customer service, sales workflows, scheduling, content generation or internal operations, there is now a dedicated government program funding that work.

The grant rounds, eligibility criteria and quantum per grant have not been published yet. They will roll out through the relevant agency over the next 12 months. We are going to be tracking the openings closely.

If you are a BWC client and you have been thinking about an AI project for your business, flag it with us now so we are ready to put your application together when the round opens.

This is exactly the kind of grant where preparation done in advance, including clear project scope, defined outcomes and a costed plan, separates the applications that get funded from the ones that do not.

2. R&D Tax Incentive overhaul: real money for tech-enabled businesses

The Research and Development Tax Incentive is being reformed from 1 July 2028 in ways that genuinely help small and growing firms:

The offset for experimental core R&D is being increased by 25 to 50%.
The intensity threshold is being reduced to 1.5%, meaning more businesses qualify for the higher offset.
The turnover threshold for the refundable offset is being lifted to $50 million, up from $20 million, and refundability is limited to firms operating for less than 10 years. This protects young, fast-growing businesses.
The maximum expenditure cap goes to $200 million.
The minimum project threshold is raised to $50,000.

Treasury estimates this will unlock $400 million per year in additional R&D investment by young firms.

If you are running a tech-enabled business, a manufacturer iterating on a product, a SaaS operation building new features, or anyone developing something experimental that requires technical investigation to resolve, there is a serious chance you have been doing R&D-eligible work without realising it.

The reform makes the maths meaningfully better from FY29.

For BWC clients in this category, this is one of the genuine cash-back opportunities in the budget.

3. Loss refundability for start-ups: wage tax back as cash

From 2028-29, start-ups in their first two years of operation can claim a refund for tax losses, capped at the value of FBT and PAYG withholding tax paid on employee wages. Up to 25,000 young companies are expected to be eligible each year.

What this means in plain English is this: if you are standing up a new business that is spending money to grow before it turns a profit, the government will give you back cash for the value of the employment taxes you have paid.

It is effectively a wage subsidy delivered through the tax system, and it lands cash in the business at exactly the moment new ventures need it most.

If you are a current BWC client thinking about launching a new venture or a new entity, this changes the timing of when the new venture becomes cash-positive. It is worth factoring into the launch plan from FY29.

4. Venture capital tax incentives expanded: easier path to raise

From 1 July 2027, the Early-Stage Venture Capital Limited Partnership (ESVCLP) and Venture Capital Limited Partnership (VCLP) programs are being expanded to align with modern company valuations.

The structures will be modernised to reflect what start-up valuations actually look like in 2026 rather than 2007.

Translation: more Australian businesses will be eligible to receive tax-concessional VC investment, and the existing programs will work for companies at the valuations they are actually raising at now, rather than only at much smaller pre-money figures.

For BWC clients running businesses that may eventually need capital to scale, particularly in tech, health, advanced manufacturing or food production, the expanded eligibility makes capital raising materially easier from FY28 onwards.

5. The $125 billion specialist investment vehicles pipeline

The budget strengthens the Investor Council, the coordinating body, and what the government is calling the Investor Front Door, a single coordinated entry point for major investment proposals.

Up to $125 billion is being deployed by the government’s specialist investment vehicles, including:

Clean Energy Finance Corporation (CEFC): clean energy, energy efficiency and low-emissions technology
National Reconstruction Fund (NRF): advanced manufacturing, renewables, value-added agriculture, medical science, defence and enabling capabilities
Northern Australia Infrastructure Facility (NAIF): Northern Australia projects across multiple sectors
Export Finance Australia (EFA): exporters, including SMEs

These are not grants. They are concessional loans, equity investments and guarantees that sit alongside private capital.

For BWC clients in any of those sectors, particularly clean energy, manufacturing, food production, exports or anything Northern Australia-based, there is a genuine pathway to co-investment from the Commonwealth that most operators do not realise exists.

If your business sits anywhere near these themes, it is worth a 30-minute conversation with us about whether one of these vehicles is right for you.

6. Monthly PAYG instalments: cash flow on your terms

A quieter measure that still matters: from 1 July 2027, businesses can opt in to monthly PAYG instalments rather than the standard quarterly cycle.

In addition, the ATO is expanding its dynamic PAYG instalment pilot, where the ATO calculates your instalment using your real-time business software data and removes interest charges if the calculation turns out wrong.

For businesses with lumpy or seasonal cash flow, the ability to move to monthly instalments better aligns tax payments with actual cash position. It smooths out the quarterly bumps that catch operators out every March, June, September and December.

Not glamorous, but a real cash flow improvement.

7. The $20,000 instant asset write-off: now permanent

This one most people have heard about.

The $20,000 instant asset write-off is being made permanent from 1 July 2026, with no more annual “will-they-won’t-they”.

Small businesses with turnover under $10 million can immediately deduct eligible assets costing under $20,000, every year, in perpetuity.

The threshold applies per asset, so multiple sub-$20,000 purchases can all qualify in the same year.

The advantage of permanence is not really about the threshold itself. It is about certainty.

You can now plan capital expenditure across financial years without worrying about whether the deduction is going to be there. That changes how owner-operators make equipment and technology investment decisions.

Reminder: spending money to save tax is still not a winning strategy. The instant asset write-off makes commercially justified spending more cash-flow-friendly. It does not make unnecessary spending worthwhile.

8. Loss carry-back: permanent, with two-year lookback

This is the one I am most excited about for our existing client base.

From 2026-27, companies with turnover up to $1 billion can carry losses back against tax paid in the prior two income years to claim a cash refund.

Around 85,000 companies are expected to benefit, the vast majority of them small businesses.

Here is how it works in practice.

Take a small business like a cafe. Let’s call it Sarah’s Cafe.

It is set up as a Pty Ltd company. In FY26, Sarah is expecting around $40,000 of profit and paying around $10,000 of tax at the 25% small business rate.

In FY27, she decides to expand into supplying ready-cooked meals to local supermarkets. She buys $55,000 of new equipment: a $19,000 coffee machine, $19,000 of furniture and $17,000 of heaters.

Under the permanent instant asset write-off, every one of those items is deductible in full in the year of purchase. Total deduction: $55,000.

Sarah’s expected FY27 profit before the deduction was $50,000. After the deduction, she is reporting a $5,000 tax loss for FY27.

Under the old rules, she would carry that loss forward indefinitely, hoping to use it against future profit.

Under the new permanent loss carry-back regime, she can apply that loss against the tax she paid in FY26, which was $10,000 at the 25% small business rate, and get a cash refund of $1,250 paid directly into her business bank account.

So Sarah:

Deducts $55,000 of legitimate business investment immediately
Pays zero company tax in FY27
Gets $1,250 cash back from the ATO from the prior year’s tax

That is real cash flow at a time when she is expanding the business.

For any operator with lumpy profitability, such as a strong year followed by a heavy investment year, this is genuinely useful.

On balance

This budget gives with one hand and takes with the other.

The growth opportunities above are real, and most clients will not hear about them unless someone walks them through it.

My job at BWC is not just to flag the bad news. It is to find the parts of the budget that actually help your business grow.

Some of our clients will come out better off on net under this budget. That includes operators thinking about AI projects, businesses doing genuine R&D, start-ups in their first two years burning cash to grow, founders raising VC capital, and companies plugging into the specialist investment vehicles.

The right conversations now will determine which side of that line you land on.

That said, the property and trust reforms are significant, and they affect a lot of our client base directly.

That is the conversation for the next article.

What’s next

Part 2: The Hard News: What Negative Gearing, CGT and Trust Reforms Mean for YouThe structural changes coming in 2027 and 2028, what they mean for property investors and families running discretionary trusts, and why nobody needs to panic.

Part 3: What to Do About It: Your Action Plan Across the Next 18 MonthsThe specific decisions for each client type, the timeline of actions across FY26 to FY30, and how to position your structure for the new rules.

This article provides general information only and does not take your personal circumstances, objectives or financial situation into account. It is not tax, financial or legal advice. The 2026-27 Federal Budget measures described above were announced on 12 May 2026 and most require enabling legislation to take effect. Detail and effective dates may shift through the legislative process. You should obtain advice specific to your circumstances before acting on any of the information set out above.

To talk through which of these opportunities fit your business, get in touch via thebwc.com.au.