The June 2026 quarter Survey of Business Expectations shows some relief after a very weak March quarter, but no one should confuse a bounce from a very low base with strength when it comes to business confidence.
Cost of doing business remains the top concern, followed by profitability, government policies and compliance plus broader economic factors. Inflation is still biting, especially for businesses unable to pass on higher costs quickly or in full. Some niche markets are holding up where customers have greater spending capacity, while others face softer demand and less room to move.
The end of the financial year is always a reset point, but this year it comes with more noise around tax, restructuring and what May’s Federal Budget changes mean in practice. The proposed capital gains tax and family trust changes have become a major confidence issue because they may impact reinvestment, succession and long-term business decisions.
Many South Australian businesses use trust structures, either to operate the business or hold assets. The survey shows a large share of respondents expect the proposed 30 per cent minimum tax on trust income to have a moderate or severe impact, and many are considering restructuring.
That does not mean every business should rush to restructure. Treasury has flagged exclusions for some trust types and income streams, while other businesses may see little practical change to effective tax rates. In some cases, the rule changes may enable businesses to simplify their structures. It is important that owners understand their current structure and what the changes could mean before making decisions. That also fits with the survey results, with many respondents having already sought professional advice and others planning to do so.
The real issue is not just the taxes; it is the uncertainty and the way it changes behaviour. We are already having conversations with business owners about the trade-off between reinvesting in the business versus taking more profit off the table over time. If trusts or future capital gains are likely to be taxed more heavily that will influence investment decisions now.
Productivity is another important part of the story. Businesses are trying to do more with less, yet red tape and compliance keep taking time away from the work that actually drives the business, like producing unique products or providing high quality service to customers. The challenge is that you cannot improve what you do not measure. While many businesses track productivity, a sizeable share still do not. The focus should be simple, useful measures, not another internal administration exercise.
Strategic planning starts before the numbers. Businesses need to understand their point of difference, what drives performance and where opportunities lie: whether through innovation, efficiency, scale, customers, technology or people. Only then should that be fed through to the financials, but looking at profit is not enough. Businesses also need to understand the balance sheet, cash reserves, working capital and cash flow. Cash is still king and running out hurts even if the profit and loss results look fine on paper.
In this environment, the strongest businesses will step back from the day-to-day, understand what really drives performance, and carefully plan despite the uncertain environment. They will also make informed and considered decisions when it comes to the impact of taxation.
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