The start-up offset is still a proposal. Where does it belong in the forecast?

The proposed start-up loss refundability measure has a clear place in future planning, but it has no place yet as available cash. The ATO has confirmed that the measure is not yet law.

The prediction sitting inside the forecast

Once a tax measure has a name and a set of parameters, it is easy to treat it as a future line in a model. A company has losses. The proposed measure is called loss refundability. The natural prediction is that those losses will produce cash back, which can then be used in planning for the business.

Before reading on, consider where that assumption would appear in a typical advice file. Would it be included in a cash flow forecast, a capital planning discussion, or a conversation about how long the founders can continue funding the company?

The problem is not that the assumption is irrational. It is that the assumption answers the wrong question. The proposed rules describe what could happen if the measure becomes law and the company meets the relevant conditions. They do not create funding that a company can currently rely on.

That makes the status of the measure part of the advice, not a footnote to the tax calculation.

What the proposal would do

The ATO says the Government announced the measure on 12 May 2026 as part of the 2026-27 Federal Budget.

Under the proposed measure, eligible start-up companies with aggregated annual turnover of less than $10 million would be able to utilise their tax losses in each of their first 2 years of operation to claim a refundable tax offset. The offset would be capped at the amount of PAYG withholding and FBT payments made.

• The turnover test matters.
• The first 2 years of operation matter.
• The link to PAYG withholding and FBT payments matters because the proposed offset is capped by those payments.

So even on its own terms, the proposal is not a blank cheque for accumulated losses. Its potential value depends on the company’s circumstances and on the conditions ultimately applying to the measure.

But those conditions are still part of a proposal. That is the point most likely to be lost when a future benefit is placed in a spreadsheet beside current revenue, expenses and funding requirements.

The proposed date does not make the measure available

The ATO’s 16 September 2026 update says the changes will apply to income years starting on or after 1 July 2028. It also says eligible companies will first be able to claim the refundable tax offset in their 2028-29 income tax returns.

Those statements provide a proposed structure for the measure. They do not change the separate statement on the same ATO page that the measure is not yet law.

That is why a proposed commencement date should not be read as an entitlement date. The date tells an adviser how the policy is intended to operate if the measure proceeds. It does not support treating the offset as current funding, or as funding that is certain to be available at the point a founder needs it.

The distinction is especially important where the business has limited liquidity. A forecast that includes a future offset as though it were guaranteed can make the company appear better funded than it is. A capital planning conversation can then become anchored to money that the company cannot currently claim.

Give the assumption a label that survives the file review

The practical response is to separate the current position from the proposed position in both the model and the advice record.

• First, state that the measure is proposed and not yet law.
• Second, show the proposed offset as a contingent scenario, not as base cash flow.
• Third, keep the business decision standing without the offset.

This is not an argument for ignoring the announcement. It is an argument for preserving the difference between monitoring a policy and relying on it.

The advice conclusion is conditional

The ATO’s update gives advisers enough information to identify the proposed mechanism and begin a properly labelled scenario. It does not give clients a current right to claim the offset.

For now, the correct advice file says both things at once: the measure could become relevant to eligible start-up companies under the proposed settings, and it is not yet law. Until that status changes, the refundable tax offset belongs in contingent planning, not in the company’s available cash position.