2026 Federal Budget: What recruitment and staffing firms should be planning for now

The 2026 Federal Budget contains several proposed tax changes that may materially affect recruitment and staffing businesses, particularly owner-managed agencies, firms using trust structures, and businesses planning for growth, succession or future sale.

One of the headline measures is the proposed replacement of the 50% CGT discount with cost base indexation from 1 July 2027. For business owners contemplating a future sale, merger or succession event, this is a significant planning point. The current discount would continue to apply to gains accrued before 1 July 2027, but gains after that date would be calculated using indexation, with a 30% minimum tax applying to realised gains. This makes accurate valuations, record-keeping and transaction timing more important than ever.

The proposed changes to discretionary trusts are also highly relevant. From 1 July 2028, trustees of discretionary trusts would be subject to a minimum 30% tax on trust taxable income, unless a higher rate applies. Many private recruitment businesses and family groups use trusts to hold shares, business assets or investment structures. While beneficiaries may receive non-refundable credits, the measure could affect annual distribution planning, cash flow and the relative attractiveness of trust structures. The proposed three-year rollover relief from 1 July 2027 may provide an opportunity to review whether existing structures remain fit for purpose.

For recruitment firms, the Budget also contains measures that may support investment and resilience. The permanent $20,000 instant asset write-off may assist smaller agencies investing in technology, payroll systems, cybersecurity, automation tools or office equipment. For incorporated agencies, the proposed permanent two-year company loss carry back rules may also be useful where growth investment, market disruption or margin pressure results in a tax loss after prior profitable years. These measures will not remove the need for disciplined cash flow management, but they may provide useful tax timing benefits for agencies investing in capability.

Finally, it is important to remember that these Budget measures are proposals only at this stage. Before becoming law, the relevant legislation will need to pass through Parliament, including the Senate, and receive Royal Assent. Given the significance of the measures outlined above, particularly the proposed CGT, discretionary trust and business tax changes, it is quite possible that the final legislation may differ from the current Budget announcements. Recruitment and staffing business owners should therefore monitor developments over the next six to nine months and avoid making structural or transaction decisions based solely on the proposals as currently framed.