2026-27 Federal Budget: What the Changes Mean for You

The 2026-27 Federal Budget, delivered on 12 May 2026, is one of the most significant overhauls of the Australian tax system in nearly three decades. Treasurer Jim Chalmers announced changes to capital gains tax, negative gearing, trust distributions, superannuation, and more. Almost every one of our clients will be affected in some way.

Here’s a plain-English summary of the key measures and what they mean for you.

The Big One: Capital Gains Tax Discount Replaced

From 1 July 2027, the 50% CGT discount will be replaced by cost base indexation for capital gains, combined with a new 30% minimum tax on net capital gains. This applies to shares, investment properties, and business assets held by individuals, trusts, and partnerships.

The good news: the 50% discount still applies to all gains arising before 1 July 2027. If you’re considering selling an asset, timing now matters more than ever.

Negative Gearing Changes

Existing investment properties are fully protected. If you already own a negatively geared property, nothing changes for you. However, for established residential properties purchased after 7:30pm AEST on 12 May 2026, rental losses will no longer be deductible against salary income from 1 July 2027 — only against rental income or capital gains from residential properties. New builds remain fully eligible.

Discretionary Trusts: 30% Minimum Tax From 2028

From 1 July 2028, trustees of discretionary trusts will be required to pay a minimum 30% tax on trust income. Beneficiaries will receive non-refundable credits — but for lower-income beneficiaries, a significant portion of that tax could be permanently lost. The legislation is yet to be released, so no planning decisions should be made based on the announcement alone.

A three-year rollover relief window opens from 1 July 2027, allowing businesses to restructure out of discretionary trusts without triggering CGT. This is a genuine and time-limited opportunity.

$1,000 Instant Work Deduction

From 1 July 2026, eligible working Australians can claim a flat $1,000 deduction for work-related expenses without receipts. It’s a choice — if your actual expenses are higher, you should still claim them. When we prepare your return, we’ll work out which approach gives you the best result.

$250 Working Australians Tax Offset

A new permanent $250 tax offset for workers earning wages, salary, or sole trader income. It doesn’t apply until the 2027-28 financial year, but it’s a standing feature of the tax system from then on.

Superannuation: Key Changes From 1 July 2026

Three changes worth knowing:

• Balances over $3 million: Earnings on the portion above $3M will now attract an additional 15% tax — bringing the rate to 30%. This is now law.
• Transfer balance cap: Increases from $2.0M to $2.1M, creating a planning opportunity for those approaching retirement.
• Payday super: Employers must pay super at the same time as wages from 1 July 2026. Small business owners need to update payroll systems before then.

Instant Asset Write-Off Now Permanent

The $20,000 instant asset write-off for small businesses (turnover under $10M) is now a permanent feature of the tax system from 1 July 2026. No more year-by-year extensions — but timing and eligibility still matter, so talk to us before making significant purchases.

Loss Carry-Back for Companies

From 1 July 2026, companies with global turnover under $1 billion can carry back a tax loss and offset it against tax paid in the previous two financial years — receiving a cash refund. If your company was profitable in 2024-25 or 2025-26 and is now experiencing a downturn, this could be valuable.

Electric Vehicles: FBT Exemption Winding Back

The full FBT exemption for EVs under novated lease remains until 31 March 2027. After that, it applies only to EVs priced at $75,000 or below. EVs above that price will move to a 25% discount. If you have an existing arrangement or are considering a new one, contact us before making any changes.

What Should You Do Now?

These changes are significant and broad. For many clients, the right response will be a review of existing arrangements. Some measures are already in effect, some start 1 July 2026, and others don’t kick in until 2027 or 2028 — but waiting isn’t a strategy.

We’ve sent our full Budget Edition newsletter to all clients. If you’d like a copy, or want to talk through what these changes mean for your specific situation, get in touch with us today.

The information in this post is general in nature. Professional advice should be obtained before acting on any information contained herein. Liability limited by a scheme approved under Professional Standards Legislation.