Australia to cut personal and corporate taxes
Sydney (13 May)
Working Australians will be able to claim an annual A$250 tax offset from the 2027-28 tax year, while businesses will be able to claim loss-based deductions from July, the Australian Government said in its 2026-27 Budget.
The Working Australian Tax Offset will increase Australia’s effective tax-free income threshold to A$19,985 and apply to 11.3 million people, the Government said. But the scheme is not going to apply to asset income, it added.
Treasury forecasters expect the scheme to cost A$3 billion in 2028-29 and A$3.4 billion in 2029-2030.
“The new offset will help Australian workers to keep more of what they earn, incentivise participation for lower-income workers and help with the cost of living,” Prime Minister Anthony Albanese, Treasurer Jim Chalmers, and Finance Minister Katy Gallaher said in a joint statement.
The Government will also introduce a raft of reforms to encourage investment and risk-taking, it said.
Businesses generating up to A$1 billion in turnover will be able to use losses to claim up to two years’ worth of refunds from 2026-27, the Government said. Start-ups will also be able to claim losses as direct refunds, up to the value of their employment-related tax payments, from 2026-27, it added.
Treasury forecasters expect the two schemes to cost A$2.8 billion in lost revenue and payments over the next five years.
Australian non-mining investment will rise by 3% in 2026-27 and 2.5% in 2027-28, down from 5% in 2025-26, Treasury forecasts show. Investment may slow because of technology-related supply chain delays and elevated fuel costs, the Government said.
Treasury’s forecasts assume that oil prices will average $100/barrel (A$138/barrel) in April-June 2026, before falling to $80/barrel by June 2027. Elevated oil prices pose downside risks to economic activity, it said.
By Avinash Govind