The RBA Just Hiked Again… Here's What Smart Business Owners Are Doing Right Now
The Reserve Bank of Australia made it official on 5th May 2026: the cash rate has been lifted by 25 basis points to 4.35%. It's the third consecutive hike in 2026, and it fully unwinds the three rate cuts Australians benefited from last year.
For mortgage holders, the reaction is predictable (more pain). But for business owners, the picture is more nuanced.
Yes, borrowing costs are rising.
Yes, customers are tightening their belts.
But this environment also creates a set of very specific tax planning opportunities that most business owners aren't taking advantage of.
Here's what those businesses are doing differently right now.
1. They're Reviewing Their Loan Interest Deductions
Every dollar of interest you pay on a business loan is potentially tax deductible. While that's not new, it becomes much more relevant when your interest bill is climbing.
With rates now at 4.35% and potentially heading higher, the interest on a $500,000 business loan has increased materially over the past year. Many business owners are paying significantly more in interest than they were 12 months ago, and they're not capturing it properly at tax time.
The key question to ask: is every dollar of interest on your business borrowings being allocated correctly and deducted in full? Are any loans mixed between personal and business use? The ATO scrutinises those closely, and you need to get the split right.
A conversation with your accountant now (not in July) can make a meaningful difference.
2. They're Timing Their Asset Purchases Strategically
The instant asset write-off provisions allow eligible businesses to immediately deduct the cost of eligible depreciating assets. This is a powerful tool in any year, but in a year where cash flow is under pressure, timing your purchases to land before June 30 can deliver a real tax benefit at exactly the moment you need it.
The mistake most business owners make is waiting until after EOFY to buy that piece of equipment, vehicle, or technology upgrade they needed. By then, the deduction moves to the next financial year (and so does the cash benefit).
If you've been putting off a capital purchase, now is a good time to have a tax conversation before you pull the trigger.
3. They're Questioning Their Business Structure
When margins are healthy, structure feels like an academic conversation. When costs rise and revenue comes under pressure, it becomes urgent.
The way your business is structured - whether you're operating as a sole trader, a company, a trust, or some combination - has a direct impact on how much tax you pay. It also affects your ability to split income, retain earnings, access the small business CGT concessions, and protect assets.
A rate rise environment, where cost pressures mount and profits may dip, is often the trigger that makes a restructure worth the effort. If you haven't reviewed your structure in the last two to three years, it's worth a conversation.
4. They're Rethinking How They Pay Themselves
Business owners have choices that employees don't: salary, trust distributions, dividends, or a combination. In a high-rate, high-inflation environment, getting this wrong can cost thousands.
For example, drawing a higher salary than you need increases your personal tax exposure. Taking a trust distribution when your trust deed isn't set up correctly can trigger ATO scrutiny. Paying yourself dividends from a company without understanding the franking credit implications can create unexpected tax bills.
The right mix depends on your structure, your personal situation, and your income level — and it should be reviewed annually, not set-and-forget.
5. They're Booking a Tax Planning Meeting Now, Not in July
This is the one that separates proactive business owners from reactive ones.
Tax planning before June 30 is fundamentally different from tax preparation after June 30. Before the end of the financial year, you can still make decisions that change your outcome. After June 30, all you can do is report what happened.
The best time to see your accountant about tax is when there's still time to do something about it.
With June 30 approaching and a volatile economic environment creating both risks and opportunities, this is the year to be proactive.
Common Mistakes to Avoid
Assuming the rate rise doesn't affect your tax position; it does, through deductibility, cash flow, and asset decisions
Waiting until after EOFY to speak to your accountant… by then, most planning levers are gone
Conflating a cash flow problem with a tax problem - they can look similar but require different solutions
Ignoring structure because it feels complicated; the cost of the wrong structure compounds over time
Making significant financial decisions (buying assets, changing how you pay yourself) without a tax conversation first
What to Do Next
If you're a business owner and you haven't had a tax planning conversation yet this financial year, now is the time. Not because we're telling you to, but because the window for making decisions that actually change your tax outcome is closing.
A rate rise like yesterday’s is a prompt. Use it.
Reach out to us to book a tax strategy session at hello@refreshadvisory.com.au