Overview
Australia's hospitality industry has been quietly cracking. A record 11.2 percent of business failures over the past year have been in hospo, according to CreditorWatch data reported by the AFR, and venues that have stayed open have been getting creative — Melbourne operators including the Elpiet Group have been running "fuel on us" deals to coax customers back out of the suburbs. Last night's federal budget responded with something close to a multi-part lifeline.
The headline change is the return of "loss carry-back" — a Covid-era mechanism that lets businesses claim back tax they paid in past profitable years against current losses, generating cash refunds from the ATO. In his 2026–27 budget speech, Treasurer Jim Chalmers confirmed a permanent two-year loss carry-back for all companies up to $1 billion in turnover — meaning eligible businesses can apply current losses against tax paid in the prior two years. Chalmers said the change would "bolster resilience and risk taking." When the same mechanism ran during the pandemic, refunds were estimated at up to $5 billion nationwide, according to The Australian.
That sits alongside three more measures targeted at the cost pressures hospo has been complaining about for years. The instant asset write-off for small businesses is being made permanent (useful for fitouts, equipment and kitchen upgrades), the fuel excise has been more than halved, and the heavy vehicle road user charge has been cut to zero — the latter two designed to ease the freight costs that have been pushing up the price of everything from beer kegs to fresh produce. Chalmers also put petrol companies "on notice" by doubling the consumer watchdog's maximum penalties and ramping up enforcement.
Why it matters: as the AFR reported, hospo has been bearing the brunt of the cost-of-living crisis — and a recent string of high-profile shutdowns across Victoria, the Sydney Morning Herald reported, includes restaurants that had been running for decades. The industry has been asking for direct intervention for two years.
In CreditorWatch's April Business Risk Index, the firm's CEO Patrick Coghlan said "small businesses are facing a much tougher operating environment than they were a year ago, and the pressure is showing in cash flow, payment defaults and tax arrears. Rising costs and higher interest rates mean even small shifts in business conditions can have outsized effects." The new tax measures don't undo the past two years, but they meaningfully tilt the playing field for venues currently still standing.
Read the 2026 federal budget in full.
Lead image: Jack Carlin
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