Federal Budget: Effects on Hair, Beauty, and Makeup Businesses

On Tuesday 12 May 2026, Treasurer Dr Jim Chalmers handed down the Australian Government's 2026–27 Federal Budget. For Australia's hair, barbering and beauty sector, the Budget delivers a mix of positive measures designed to improve productivity, workforce capability and business investment, while also raising concerns about proposed tax reforms that could affect many small business owners.

As Australia's salon sector is overwhelmingly made up of small businesses, sole traders and family-owned enterprises, the overall impact of the Budget is best described as a mixed outcome. While there are several welcome initiatives, ongoing cost pressures and tax uncertainty remain significant challenges for business owners.

One of the most significant announcements for the sector is an $85.2 million investment to accelerate skills assessments and occupational licensing for migrant trades workers. The initiative aims to reduce the time it takes for qualified migrants to have their skills recognised and enter the Australian workforce. For salons continuing to experience workforce shortages, this has the potential to improve access to qualified overseas hairdressers and barbers, reduce recruitment delays and strengthen workforce capacity across metropolitan and regional Australia. The Government has also announced reforms to the permanent migration points test, placing greater emphasis on attracting younger, highly skilled and better-qualified migrants.

The Budget also provides $361.1 million over five years to strengthen Australia's employment services and support more Australians into work. While not specific to the personal services sector, improved employment pathways may help connect employers with job seekers, encourage workforce participation and support future apprenticeship recruitment.

For small business owners, one of the most welcome announcements is the permanent extension of the $20,000 Instant Asset Write-Off from 1 July 2026. Eligible businesses with an annual turnover of less than $10 million will be able to immediately deduct qualifying business assets, providing greater certainty for investment in salon equipment, furniture, technology and digital systems. After several years of temporary extensions, making this measure permanent gives businesses greater confidence when planning future investment.

The Budget also includes several broader productivity reforms welcomed by the small business sector. These include progressing the Government's "tell us once" approach across agencies, harmonising payroll tax and licensing arrangements between states and territories, expanding the use of Digital ID for government services, reducing compliance costs through regulatory reform and establishing a Productivity Commission inquiry into barriers affecting business productivity. Collectively, these initiatives aim to reduce administrative burden and make it easier to operate a small business.

The Government has also extended funding for the Small Business Debt Helpline and the NewAccess mental health coaching program, recognising the ongoing financial and personal pressures many business owners continue to face.

The Budget includes $35.2 million for Jobs and Skills Australia to continue labour market analysis and workforce planning, while changes to the Australian Apprenticeships Incentive System are expected to provide more targeted support for small and medium-sized employers and Group Training Organisations. The practical benefits for salon businesses will become clearer as the detailed reforms are implemented.

However, alongside these positive measures, the Budget has generated significant concern across the small business community regarding proposed tax reforms. The Council of Small Business Organisations Australia (COSBOA) has expressed concerns that proposed changes to Capital Gains Tax and the taxation of discretionary trusts could create additional complexity and potentially affect the retirement plans and long-term investment decisions of many small business owners. For salon owners who commonly operate through company or trust structures, these reforms will be important to monitor as further consultation occurs.

COSBOA also notes that while measures supporting productivity and regulatory reform are welcome, many small businesses continue to face increasing pressure from rising wages, energy costs, insurance premiums, rent, freight, fuel and compliance obligations. These cumulative cost pressures remain one of the biggest challenges facing Australia's small business community, including the personal services sector.

Overall, the 2026–27 Federal Budget delivers several positive initiatives for Australia's hair, barbering and beauty industry through workforce development, skilled migration, tourism, productivity reform and greater certainty around business investment. At the same time, the proposed tax changes and ongoing cost pressures reinforce the need for continued advocacy on behalf of the sector.

The Creative Skills Retail Council (CSRC) welcomes the Government's investment in workforce capability, productivity and small business resilience, while supporting calls for continued consultation on tax reforms to ensure they do not create unintended consequences for Australia's small business community.