2026-27 Federal Budget – What it means for you

Handed down 12 May 2026

The 2026-27 Federal Budget is the most reform-heavy Budget in a generation. The headline changes target capital gains tax, negative gearing and the way family trusts are taxed.

Most of the major changes do not take effect until 1 July 2027, and the new trust tax not until 1 July 2028. That gives you time to plan. But the planning needs to start now, because decisions made before those dates determine the protections and concessions available to you.

Timeline at a glance

Organised by when each change takes effect.

When	What changes	Who it affects
Already in effect	Fuel excise cut, 32c/litre reduction on petrol and diesel	Everyone
Already in effect	ATO interest charges (GIC and SIC) no longer deductible	Businesses and individuals with ATO debt
Already in effect	HELP debt cut by 20%, minimum repayment threshold lifted to $67,000	Anyone with a HELP or student loan
1 July 2026	$1,000 instant tax deduction, no receipts needed for work expenses under $1,000	All employees and sole traders
1 July 2026	$20,000 instant asset write-off, permanently extended for small business (turnover under $10m)	Small business owners
1 July 2026	Personal tax cut, 16% rate drops to 15% on income $18,201 to $45,000	All individual taxpayers
1 July 2026	Payday Super, super paid at the same time as wages	All employers
1 July 2026	Loss carry back reintroduced, offset losses against tax paid in prior 2 years	Companies with turnover under $1 billion
1 July 2026	Division 296 super tax, 30% effective rate on earnings above $3m balance	High super balance holders ($3m+)
1 April 2027	Private Health Insurance rebate, age-based uplift removed	PHI holders aged 65+
1 July 2027	CGT reform, 50% discount replaced by cost base indexation and 30% minimum tax on real gains	Individuals, trusts and partnerships with investment assets
1 July 2027	Negative gearing, losses on established properties (purchased after 12 May 2026) only offset rental income	Property investors (new purchases)
1 July 2027	$250 Working Australians Tax Offset, effective tax-free threshold lifts to about $19,985	All wage earners and sole traders
1 July 2027	Trust restructure rollover relief, 3-year window to move out of discretionary trusts tax-free	Business owners and investors using family trusts
1 July 2027	Monthly PAYG instalments, opt-in for small and medium businesses	Business owners
1 July 2028	30% minimum tax on discretionary trust income, payable by the trustee	All discretionary (family) trust holders
1 July 2028	Loss refundability for startups, first-two-year losses refunded as a tax offset	New companies, turnover under $10m
1 July 2028	R&D Tax Incentive reform, higher offsets and lower intensity threshold	Companies with qualifying R&D spend
1 April 2029	EV FBT, permanent 25% discount replaces full exemption for eligible electric vehicles	Businesses providing company EVs

Highlighted rows mark the changes most likely to affect business owners and investors.

The major changes, explained plainly

1. Capital gains tax: the 50% discount is going

Currently, if you sell an asset held for more than 12 months (shares, property, business goodwill), only half the gain is taxable. That 50% discount is being replaced from 1 July 2027.

Under the new system, gains accrued after 1 July 2027 will be taxed using cost base indexation (your purchase cost is adjusted for inflation), with a minimum tax rate of 30% applying to any real gain. If you are already taxed above 30%, nothing changes. If your income is lower, including retirees, you will still pay at least 30% on gains realised after that date.

Gains accrued up to 30 June 2027 are protected. The old 50% discount still applies to that portion. To work this out, all CGT assets will need a valuation as at 30 June 2027.

One important detail: pre-CGT assets are now caught.
Assets purchased before September 1985 were previously exempt from capital gains tax entirely. Under the new rules, any gain accruing on those assets after 1 July 2027 will be subject to the 30% minimum tax. If you hold pre-CGT assets, particularly older family properties or business assets, this needs attention.

If you operate through a family trust, a conversation about structure should be on your agenda before June 2027.

2. Negative gearing: limited to new builds

Negative gearing is where a rental property runs at a loss (expenses exceed rent), and that loss reduces your taxable income from other sources like your salary. From 1 July 2027, this is only available on new residential builds.

For established properties purchased after 7:30pm AEST on 12 May 2026, losses can only offset rental income from other residential properties. They cannot reduce your wage, salary or business income. Excess losses carry forward to future rental income.

If you already own investment property, you are protected.
Properties held at Budget night (including properties under contract but not yet settled) are fully grandfathered. You can continue to negatively gear them against all income for as long as you hold them. The change only affects established residential properties purchased after 12 May 2026.

Commercial property, shares and other investment types are not affected.

The practical effect is that investors buying established residential property from here will need to run the numbers differently. Rental yield matters more than it used to.

3. Family trusts: a 30% tax floor on income from 2028

This is the change with the broadest impact on business owners and investors. From 1 July 2028, the trustee of a discretionary (family) trust will pay a minimum tax of 30% on the trust’s taxable income, regardless of who the income is distributed to and what rate they would otherwise pay.

Today, trusts allow income to be allocated to family members on lower tax rates, reducing the overall tax bill. That advantage is being largely removed.

Beneficiaries will still include their share of income in their own tax returns and will receive a credit for the tax paid by the trustee, but that credit is non-refundable. A family member with no other income will still have an effective 30% tax rate applied to their trust distribution.

Some exclusions apply: primary production income, fixed trusts, superannuation funds, charitable trusts, deceased estates, and certain income for vulnerable minors.

There is a three-year window to restructure, and it starts 1 July 2027.
The Government is offering rollover relief (both income tax and capital gains tax) for three years from 1 July 2027 to move assets out of a discretionary trust into a company or fixed trust without triggering a tax event.

This window is genuinely valuable, but it needs planning well in advance. State government stamp duty implications also need to be mapped before any restructure.

If you operate through a family trust, a conversation about structure should be on your agenda before June 2027.

The good news, relief for individuals and business

$1,000 instant tax deduction, this tax year

From the 2026-27 income year, you can claim a $1,000 deduction for work-related expenses on your tax return without itemising receipts. If your actual expenses are higher than $1,000, you can still claim the full amount in the usual way. Charitable donations, professional association membership fees, income protection insurance and union fees can still be claimed on top.

$20,000 instant asset write-off, now permanent

Small businesses (turnover under $10m) can immediately deduct assets costing less than $20,000 in the year of purchase. From 1 July 2026, this is locked in permanently. No more annual extensions, no more uncertainty around purchasing decisions.

Personal tax cut, already legislated

The 16% tax rate on income between $18,201 and $45,000 drops to 15% from 1 July 2026, and to 14% from 1 July 2027. The $250 Working Australians Tax Offset adds further relief from 2027-28, lifting the effective tax-free threshold to roughly $19,985.

Loss carry back, reintroduced for companies

Companies with global turnover under $1 billion can now carry a tax loss back against tax paid in the prior two income years and receive a cash refund. This applies from the 2026-27 income year and provides real cash flow relief for businesses coming out of a tough period.

Super, already law from 1 July 2026

Payday Super.  Super must be paid at the same time as wages. Employers who delay will face updated penalties and charges. This is already legislated. Systems and payroll processes should be reviewed now.

Division 296, higher tax on large super balances.  If your total super balance exceeds $3m, earnings on the excess are subject to an additional 15% tax (total 30%). Thresholds will be indexed to CPI from 2027.

Low Income Super Tax Offset expansion.  The LISTO eligibility threshold increases to $45,000 and the maximum offset rises to $810 from the 2027-28 income year.

Property investment, quick reference

Whether you own property now or are considering purchasing, your timing matters.

When purchased	Negative gearing	Capital gains tax
Owned before 12 May 2026	Grandfathered, full negative gearing continues	Old 50% CGT discount on gains to 30 June 2027; new rules on gains after that date
Purchased 12 May 2026 to 30 June 2027 (established property)	Can negatively gear until 30 June 2027 only	New rules apply to gains accrued from 1 July 2027
Purchased from 1 July 2027 (established property)	Losses restricted to rental income only	New rules apply from purchase date
New builds, any purchase date	Negative gearing continues in full	Choice of 50% discount or new indexation + 30% minimum

Already in force, worth a quick reminder

A few measures from earlier reforms are already operating and affect most clients.

• HELP debt cut by 20% in 2025; minimum repayment threshold lifted to $67,000 and indexed annually.
• ATO interest charges (GIC and SIC) are no longer tax-deductible from 1 July 2025.
• Medicare levy low-income thresholds increased from 1 July 2025 for singles, families, seniors and pensioners.
• Luxury car tax, updated fuel-efficient car definition and indexation method from 1 July 2025.

What to do now

This Budget rewards those who plan early. The major changes do not take effect until 1 July 2027 (with the trust tax from 1 July 2028), but the decisions made before those dates determine what protections and concessions you can access.

If you hold a discretionary trust
Talk to us before June 2027. The three-year rollover relief window opens then, but the planning needs to happen now. Moving to a company structure may make sense for you, but it requires proper modelling.

If you own investment property
Review your portfolio with both the CGT and negative gearing changes in mind. Properties held now are protected, but the tax position on any future sale will be different, and valuations as at 30 June 2027 will matter.

If you hold pre-CGT assets
These were untouchable until now. From 1 July 2027 they enter the CGT system for the first time. Get a valuation, understand the exposure, and consider whether any action before that date makes sense.

If you run a business
The permanent $20,000 write-off is now locked in, so plan your asset purchases accordingly. If you operate through a trust, a structural review is warranted. Payday Super is live, so confirm your payroll is compliant.

If you are an employee
The $1,000 instant deduction applies this tax year. Keep it simple if your work expenses are under $1,000. If they are higher, maintain your records as usual.