This bill became law on Aug 26th, 2026.
Budget, tax & economy
Eligible companies can use a current tax loss to reclaim tax paid in either of the previous two years.
The government said letting companies reclaim earlier tax would improve cash flow during temporary downturns and encourage investment and sensible risk-taking. It expected this to benefit up to 85,000 companies each year, mostly small businesses. It said the permanent $20,000 asset deduction could serve up to 4.1 million businesses and cut their paperwork costs by about $32 million a year.
Before 2026, Australia’s tax rules generally made companies wait to use losses against future income, while small businesses faced a temporary rather than permanent low-cost asset write-off and PNG Chiefs employees and some residential-property owners had narrower exemptions. The 2026–27 Budget responded to delayed business cash flow and the need to support investment by proposing loss carry-backUsing a current loss against earlier profits., a permanent $20,000 write-off and targeted exemptions; Parliament passed the bill in August and Royal Assent on 26 August turned those measures into law.
Claire Chandler (Liberal) argued that the $20,000 asset limit was too low because productive equipment often costs more. She said the limit should instead be $50,000. Chandler also accused the government of taking too long to protect people receiving rental properties after a death or relationship breakdown.
Hon Dr Jim Chalmers MP introduced this bill. It passed on the voices.
Did it become law?
Yes
Became law 26 Aug 2026
Final passage
Passed without a counted vote
Members called out ‘aye’ or ‘no’ — no individual votes were recorded.
Passage speed
62 days
From introduction to the latest recorded parliamentary step
Meaning
Eligible companies can use a current tax loss to reclaim tax paid in either of the previous two years. This starts from 1 July 2026.
Small businesses can immediately deduct the business-use share of each eligible asset costing less than $20,000. The permanent threshold rises from $1,000.
Small businesses with an equipment poolGrouped business assets deducted over several years. below $20,000 can deduct the entire balance. The permanent threshold rises from $1,000.
Small businesses that left the simplified equipment-deduction system can re-enter without waiting five years until 30 June 2027.
PNG Chiefs Limited employees pay no Australian income tax on work payments for 2025–26 and the next nine income years.
People receiving certain rental properties after a death or relationship breakdown can keep the property's existing tax treatment. The change applies from 2027–28.
160‑1 What this Division is about A corporate tax entity can choose to “carry back” a tax loss it had for an income year against the income tax liability it had for either or both of the previous 2 income years. The entity gets a refundable tax offset as a proxy for the tax the entity would save if it deducted the loss in the income year(s) to which the loss is “carried back”. The refundable tax offset: (a) is capped at the entity’s franking account balance; and (b) is only available if the entity is not a significant global entity for the loss year.Treasury Laws Amendment (Tax Reform No. 2) Act 2026
15 Application of amendments (1) The amendment of paragraph 328‑180(1)(b) of the Income Tax Assessment Act 1997 made by this Schedule applies to a depreciating asset if: (a) you first used the asset, for a taxable purpose, on or after 1 July 2026; or (b) you first installed the asset ready for use, for a taxable purpose, on or after 1 July 2026. (2) The amendments of paragraphs 328‑180(2)(a) and (3)(a) of the Income Tax Assessment Act 1997 made by this Schedule apply to an amount included in the second element of the cost of an asset if the amount is so included at any time on or after 1 JTreasury Laws Amendment (Tax Reform No. 2) Act 2026
7 Subsection 328‑210(1) Omit “$1,000”, substitute “$20,000”. 8 Subsection 328‑210(3) (example) Repeal the example, substitute: Example: Cassidy’s Gardens is a small business entity for the 2024‑25 income year and chooses to use this Subdivision for that year. The business has an opening pool balance of $28,500 for its general small business pool for that year. During that year, Cassidy acquired a new ride‑on lawn mower for $21,000. The taxable purpose proportion of its adjustable value is: $21,000 x 80% business use estimate = $16,800 Cassidy also sold her business car for $29,600 durinTreasury Laws Amendment (Tax Reform No. 2) Act 2026
16 Section 328‑180 (heading) Omit “2026”, substitute “2027”. 17 Subsection 328‑180(1) (paragraph (b) of the definition of increased access year) Omit “2026”, substitute “2027”. 18 Subsection 328‑180(1) threshold change day means the day on which Schedule 2 to the Treasury Laws Amendment (Tax Reform No. 2) Act 2026 commences. Note: The Schedule amends certain thresholds in Subdivision 328‑D of the Income Tax Assessment Act 1997 from $1,000 to $20,000 in relation to, at a general level, matters on or after 1 July 2026. The $1,000 amount is still relevant to the earlier (temporary) increaseTreasury Laws Amendment (Tax Reform No. 2) Act 2026
2 At the end of Division 51 51‑130 PNG Chiefs Limited employment (1) An amount of your *ordinary income or *statutory income is exempt from income tax if the amount is included in your ordinary income or statutory income for the 2025‑26 income year or any of the next 9 income years and: (a) if the amount is ordinary income—the amount is derived from PNG Chiefs Limited in respect of your employment, or former employment, with PNG Chiefs Limited; or (b) if the amount is statutory income—the amount is from PNG Chiefs Limited in respect of your employment, or former employment, with PNG ChiefsTreasury Laws Amendment (Tax Reform No. 2) Act 2026
26‑156 Extension of exceptions for non‑quarantined residential dwellings—dwelling acquired by surviving spouse (1) This section applies if: (a) your *spouse holds an *ownership interest in a *residential dwelling; and (b) your spouse dies and you *acquire the ownership interest (or part of the ownership interest) in the residential dwelling, either as a surviving joint tenant or because the interest *passes to you as beneficiary in the estate of your deceased spouse. Residential dwelling originally acquired before 2026 Budget time (2) If your deceased *spouse *acquired the *ownership inteTreasury Laws Amendment (Tax Reform No. 2) Act 2026
Context
Before 2026, Australia’s tax rules generally made companies wait to use losses against future income, while small businesses faced a temporary rather than permanent low-cost asset write-off and PNG Chiefs employees and some residential-property owners had narrower exemptions. The 2026–27 Budget responded to delayed business cash flow and the need to support investment by proposing loss carry-backUsing a current loss against earlier profits., a permanent $20,000 write-off and targeted exemptions; Parliament passed the bill in August and Royal Assent on 26 August turned those measures into law.
2026–27 Budget announces the tax changes
The Government announced loss-relief reforms and a permanent $20,000 instant asset write-offAn immediate deduction for eligible business equipment. to improve business cash flow, reduce compliance costs and support investment.
Australian Taxation Office ↗Dr Jim Chalmers introduces the bill
The bill brought forward measures to give eligible companies faster relief for recent losses and expand deductions and exemptions for specified taxpayers.
Parliamentary timeline ↗House passes the bill
The House agreed to the bill at third reading after considering two government amendments, allowing it to proceed to the Senate.
Parliamentary timeline ↗Parliament passes the bill
Both Houses passed the bill in the same form, completing parliamentary approval of the tax changes.
Parliamentary timeline ↗Royal Assent turns the bill into law
The Governor-General gave Royal Assent, converting the bill into an Act whose measures commence and apply according to their specified dates.
Parliamentary timeline ↗Legislative route
The bill was formally presented to the chamber and read a first time, which starts its parliamentary journey.
Introduced and read a first time
A minister or sponsoring member moved the second reading, opening the main debate on the bill's purpose and principles.
Second reading moved
Referred to Committee (25/06/2026): Senate Economics Legislation Committee; Committee report (13/08/2026)
Report tabled 13 Aug 2026
APH bill page notesThe chamber agreed to the bill at second reading, meaning it accepted the bill in principle and allowed it to continue.
Second reading agreed to
The chamber considered amendments before the bill moved to the next stage.
Consideration in detail debate
The chamber agreed to the bill at third reading, which completed passage through that chamber.
Third reading agreed to
The bill was formally presented to the chamber and read a first time, which starts its parliamentary journey.
Introduced and read a first time
A minister or sponsoring member moved the second reading, opening the main debate on the bill's purpose and principles.
Second reading moved
The bill reached this recorded parliamentary step.
The chamber agreed to the bill at second reading, meaning it accepted the bill in principle and allowed it to continue.
Second reading agreed to
The chamber agreed to the bill at third reading, which completed passage through that chamber.
Third reading agreed to
Both houses passed the bill in the same form, completing parliamentary passage.
Finally passed both Houses
The Governor-General gave Royal Assent, turning the bill into an Act.
Key criticism
Claire Chandler (Liberal) argued that the $20,000 asset limit was too low because productive equipment often costs more. She said the limit should instead be $50,000. Chandler also accused the government of taking too long to protect people receiving rental properties after a death or relationship breakdown.
Chandler said the Liberal-led Coalition still supported the bill, including its help for business cash flow and investment. Lisa Darmanin (Labor) said the property changes preserve existing tax treatment in specified cases involving inheritance or relationship breakdown.
Housing risks and rushed drafting
Sean Bell warned that the housing tax changes had been rushed and that the broader negative-gearing reforms could increase rents and damage the housing market, even though this bill corrected unintended effects after death or relationship breakdown.
Write-off threshold too low
Claire Chandler argued that the permanent instant asset write-offAn immediate deduction for eligible business equipment. should go further by increasing the per-asset threshold from $20,000 to $50,000, while still supporting the bill.
Further sources
Votes
The bill passed both chambers on the voices, so there is no list of individual Aye and No votes for final passage.
House agreed to the bill's third reading on the voices, so there is no list of individual Aye and No votes for final passage in that chamber.
Passed on the voices
In a voice vote, members call out Aye or No and the presiding officer judges which side has it. Individual names are only recorded if a formal division is called.
Senate agreed to the bill's third reading on the voices, so there is no list of individual Aye and No votes for final passage in that chamber.
Passed on the voices
In a voice vote, members call out Aye or No and the presiding officer judges which side has it. Individual names are only recorded if a formal division is called.
Amendments grouped by chamber. Where APH reports aggregate counts, the package card summarizes the matching public amendment sheets by source theme.
House
Government amendments extend negative gearing exceptions for certain residential dwellings transferred after a spouse or co-owner dies, while clarifying acquisition timing and new-dwelling status rules.
Passed on the voices
The chamber agreed to this amendment package without a counted vote. APH records the agreed count by amendment, while the source documents are grouped into amendment sheets.
Parliamentary debate
Start here — lead voices
Chalmers urges the House to pass the bill, arguing that permanent loss carry-backUsing a current loss against earlier profits. and the $20,000 instant asset write-offAn immediate deduction for eligible business equipment. will strengthen businesses, encourage investment and reduce compliance costs, while the PNG tax exemption will provide certainty for the new rugby league franchise.
Read in Hansard ↗Cash welcomes the bill's repeal of the tax consequences for widows and other vulnerable people, but says the government should never have introduced them and has acted only after sustained coalition pressure.
Read in Hansard ↗Bell says the bill is needed to reverse the government's unintended taxes on property transferred after death or divorce, but condemns the rushed process and warns that the broader tax changes will increase rents and damage the housing market.
Read in Hansard ↗Darmanin supports the bill, arguing that its tax changes will strengthen business investment and resilience, reduce compliance burdens for small businesses, support the PNG Chiefs partnership and advance fairer housing tax settings.
Read in Hansard ↗All speeches by bloc
3 speakers · 4 contributions · 3 support
“The second tranche of the government's budget tax reform is a set of practical measures that will help businesses invest, grow and remain resilient. But, as we know, it's part of something bigger. The governments' agenda recognises that our tax settings should work for people, support investment and productivity and help more Australians achieve the security that comes from owning a home. We are making it easier for Australians to buy a home. We are delivering tax cuts for workers. We are creating a fairer balance between the taxation of Labor and assets. We are building a tax system that supports productive investment rather than complexity and loopholes. I commend this bill to the Senate.”Read the full speech in Hansard ↗
Hansard records 2 separate contributions by Katy Gallagher on this bill. They are grouped here so the speaker is listed once.
Second reading speech
Gallagher supports the bill as a major part of the government's tax reform package, arguing that permanent loss carry-backUsing a current loss against earlier profits. and the instant asset write-offAn immediate deduction for eligible business equipment. will strengthen businesses, encourage investment and reduce compliance costs.
“We are proud of this Bill and we are proud of our ambitious tax reform package.”Read this contribution in Hansard ↗
Second reading speech
Gallagher strongly supports passing the bill, saying it advances the government's broader budget tax reforms and includes measures such as the instant asset write-offAn immediate deduction for eligible business equipment. and loss carry-backUsing a current loss against earlier profits..
“I thank those who have contributed to this debate. I welcome the passage of this, and I know the Treasurer and the PM also welcome the passage of this bill. It's another step forward in delivering on comprehensive tax reform work that was included in the budget in May. There will be further legislation to come, and I can only dream and hope that it passes the Senate as smoothly as this bill is passing the Senate this morning. Perhaps we can deliver that, and I will be one very happy repping minister in this chamber.”Read this contribution in Hansard ↗
“It's what our plan to create a more productive economy, to cut $10 billion of red tape, to grow GDP by $13 billion by working with the states and to encourage innovation and risk-taking is all about as well. We are proud of this bill, and we are proud of our ambitious tax reform package, and that's why we commend this bill to the House.”Read the full speech in Hansard ↗
3 speakers · 3 support
“The coalition's position has been very simple from the beginning. This was hurting Australians. You needed to axe it. The legislation had unfair consequences. You should never have passed it. You knew it had unfair consequences and you refused to fix it. So I have to say I welcome the capitulation by the Prime Minister today. It doesn't go nearly far enough, quite frankly. Our commitment to the Australian people—we'll take this all the way to the election, and if we're elected, we'll implement it—is that we are going to axe all of Labor's toxic taxes because we believe in aspiration. We believe in the Australian people. We believe in you getting out there and doing what you can every day to actually have a fair go and perhaps build some wealth to plan properly for your retirement.”Read the full speech in Hansard ↗
“I want to be very clear: the coalition will be supporting this bill. But those opposite shouldn't be smiling too broadly, because the evidence before the Senate economics committee inquiry into this bill, in which I participated, was very clear: while Australian small businesses welcome the measures in this bill, many believe that they do not go far enough, and that, particularly given the broader impact of this government's budget, more support is required for our business sector. If you speak to small businesses today—we heard from many of them during the committee inquiry, and I speak to many in my home state of Tasmania—the overwhelming feeling at the moment is not one of confidence; it is caution, it is uncertainty, and, increasingly, it is a concern from businesses that survival is becoming more and more difficult. Business owners are asking themselves simple questions: can I afford to invest? Can I afford to hire? Can I afford to grow? The answer depends, largely, on whether government policy settings make those decisions easier or harder.”Read the full speech in Hansard ↗
“People across the country saw exactly what was going on here, and I am proud of my colleagues for having sustained a campaign to call on the government to wheel back this punitive set of taxes, to make the changes necessary and to restore some humanity to the budget for vulnerable communities in this country—people that, frankly, should not have had to experience this. Again, I have a question that remains outstanding and that is: did this government intend to do this or was it an oversight? Either way, shame on this government. I commend Angus Taylor, the Leader of the Opposition, for sustaining this campaign to bring about change, and I do therefore commend the bill to the Senate.”Read the full speech in Hansard ↗
1 speaker · 1 unclear
“This legislation that we're actually dealing with, the Treasury Laws Amendment (Tax Reform No. 2) Bill 2026—the fix for the widow tax wasn't initially in this legislation. That was added in, and I suspect they've picked this bill because they desperately needed a Treasury laws amendment on which to attach this fix. They had to find a solution. They knew they'd screwed up. So they've picked this one and said, 'We'll shoot that up the list and rush that through too.' Then, as part of the process for fixing the mistakes they caused by rushing everything through and trying to hide scrutiny, they've done a guillotine with many more bills attached to it, which are all going to be dealt with without debate and without scrutiny. One has to wonder: Why are we doing it again? Why are we doing it like this? Why are we shutting down debate and blocking scrutiny? As we have seen with this legislation and with the widow tax, when you do this, Labor makes mistakes. In their rush to grab your taxes—their desperation—they literally legislated a version of a death tax. That is what they have done. Today, we are here trying to fix it.”Read the full speech in Hansard ↗
Record
House · Introduced and read a first time
Introduced
The bill was formally presented to the chamber and read a first time, which starts its parliamentary journey.
House · Second reading moved
Second reading opened
A minister or sponsoring member moved the second reading, opening the main debate on the bill's purpose and principles.
House · Second reading agreed to
Second reading agreed
The chamber agreed to the bill at second reading, meaning it accepted the bill in principle and allowed it to continue.
House · Consideration in detail: amendments considered
Amendments agreed
The chamber considered amendments before the bill moved to the next stage.
House · Third reading agreed to
Third reading agreed
The chamber agreed to the bill at third reading, which completed passage through that chamber.
Senate · Introduced and read a first time
Introduced
The bill was formally presented to the chamber and read a first time, which starts its parliamentary journey.
Senate · Second reading moved
Second reading opened
A minister or sponsoring member moved the second reading, opening the main debate on the bill's purpose and principles.
Senate · Second reading debate
Second reading debate
The bill reached this recorded parliamentary step.
Senate · Second reading agreed to
Second reading agreed
The chamber agreed to the bill at second reading, meaning it accepted the bill in principle and allowed it to continue.
Senate · Third reading agreed to
Third reading agreed
The chamber agreed to the bill at third reading, which completed passage through that chamber.
Parliament · Finally passed both Houses
Passed both houses
Both houses passed the bill in the same form, completing parliamentary passage.
Assent · Assent
Assent
The Governor-General gave Royal Assent, turning the bill into an Act.
Senate Economics Legislation Committee
Report tabled 13 Aug 2026
Referred to Committee (25 June 2026): Senate Economics Legislation Committee; Committee report (13 Aug 2026)
APH bill page notes
