The 2026–27 Federal Budget, handed down on 12 May, introduced a bigger-than-usual tax reform agenda alongside a range of measures affecting Australian households, businesses and investors. To help unpack the key announcements, our Chief Investment Officer, Chris Ogilvie, has prepared a summary of the changes - what they involve, when they commence and who they are most likely to impact.
Importantly, many of the announced changes remain proposals and are not yet law. Details may change as legislation is introduced and debated through Parliament.
Changes to Investment and Tax Rules
Capital Gains Tax (CGT) Changes
From 1 July 2027, the Government is proposing to replace the current 50% CGT discount for individuals, trusts and partnerships with a system that adjusts gains for inflation, and applies a prospective minimum 30% tax rate on capital gains.
Transitional rules apply to existing investments. These rules include:
- There is no change to current CGT arrangements for assets acquired and sold prior to 1/7/2027
- Assets purchased after 1/7/2027 will be treated wholly under the new rules.
- Assets owned prior to 1/7/2027 yet sold after this date will be treated under the current arrangements for gains made prior to 1/7/2027, and under the new regime for gains made after 1/7/2027.
Exemptions will exist as follows:
New:
- Investors who buy new build properties, (which increase housing supply), can choose either the 50% CGT discount, indexation or the minimum tax rate when they sell the asset.
- Anyone on means-tested income support payments will be exempt from the 30% minimum tax. This includes those receiving full or part-age pension.
Continuing:
- The primary or main residence exemption continues to apply
- The 4 Small Business CGT exemptions remain unchanged.
- The 60% CGT discount applying to affordable housing.
What this might mean for you:
Timing of asset sales may become less effective as a tax strategy. Many investors had planned to sell investment assets, with associated capital gains, at a time where their marginal tax rates would be lower (such as in the early years of retirement). An assets value at 1/7/2027 will be determined by the taxpayer in their tax return the year the asset is realised. Having appropriate valuation documentation in place to support your assets value will be crucial.
Investment assets acquired prior to 20 September 1985 are currently free from CGT. This treatment will continue up to 1/7/2027 at which time gains from 1/7/2027 will be taxed at 30% after the inflation adjustment.
While taxation should never be a primary driver for investment decision making, the changes mean investors should be aware of the implications and consider how they may impact on your current strategy and plans.
Property Investment (Negative Gearing)
From 1 July 2027, the Government is proposing:
- Negative gearing on residential property acquired from 1/7/2027 will be limited to new-build properties only.
- Losses related to residential property will only be deductible against income derived from other residential properties, including capital gains. Excess losses can be carried forward to reduce residential property income in future years.
- Changes apply to individuals, partnerships, companies and most trusts including Discretionary Family Trusts.
Transitional arrangements apply for properties held prior to 1/7/2027 and they are as follows:
- Established properties held prior to 7:30pm on 12 May 2026 will be allowed to negative gear under current arrangements till the property is sold.
- Properties acquired after 7:30pm on 12 May 2026 can negatively gear up to 30 June 2027, thereafter the new negative gearing rules apply.
- Exclusions apply for widely held trusts – e.g. Managed Funds and Superannuation funds including SMSF.
What this might mean for you:
- Existing property negative gearing arrangements remain protected under transitional rules. No change.
- New property investments may favour new developments.
- Commercial property, managed funds and shares are exempt from the changes. Investors looking to use negative gearing as a strategy may favour these asset types in future.
- Future property strategies may need to be reviewed. The Government estimates these changes will reduce price growth in residential property by 2%. Some commentators are predicting this could be higher – up to 5%. There are of course a wide range of factors impacting residential housing price growth; however, it is anticipated these measures will apply downward pressure on prices.
Trust Structures
From 1 July 2028, the Government is proposing to apply a minimum 30% tax to the taxable income of discretionary trusts. Exclusions would apply to:
- Fixed and widely held trusts
- Testamentary Trusts
- Special disability trusts.
- Deceased estates
- Charitable Trusts
Transition arrangements include:
- Rollover relief for 3 yrs from 1/7/2027 for those who wish to restructure out of discretionary trusts into other types of entities such as a company or fixed trust. Details to be finalised following further consultation with stakeholders.
What this might mean for you:
- Trust structures may become less tax-effective for income distribution - especially income splitting strategies between individuals which has been a popular strategy.
- Beneficiaries will receive non-refundable credits for tax payable by the trustee. These credits will not be available, however, to corporate beneficiaries. Effectively double taxing corporate beneficiaries and delivering a blow to popular “Bucket company” strategies.
- Some restructuring options may become more relevant. Trustees of discretionary trusts should consider the proposed changes and work with their advisers to consider and model the impacts of the changes proposed.
Personal Tax and Cost-of-Living Relief
The Budget includes modest support measures:
- Income tax cuts for lower income brackets, including those already legislated from prior budgets.
- Starting 1 July 2026, the tax rate for income between $18,201 and $45,000 will fall from 16% to 15%, then to 14% on 1 July 2027.
- A new Working Australians Tax Offset (up to $250 p.a.) applies from 1/7/2027
- Applicable from 1/7/2026 is a $1,000 instant tax deduction for work-related expenses without requiring substantiation or records of expense. Donations, union and professional association and other applicable expenses can still be deducted with substantiated records.
What this might mean for you:
- Small but meaningful tax relief over time, albeit negated by bracket creep as marginal tax rates do not increase in line with CPI.
- Simplified claims for work-related expenses and potentially larger deductions for working Australians.
Superannuation Changes
There are no major proposed changes to Superannuation. Most changes relate to indexation of current thresholds and caps as well as confirming previously regulated and announced initiatives. Contribution limits will increase from 1/7/2026:
- The concessional contribution cap will rise from $30,000 to $32,500 pa
- The non-concessional contributions limit will rise from $120,000 to $130,000
- The Transfer Balance Cap will increase from $2 million to $2.1 million
Other changes include:
- Confirmation of previously outlined DIV 296 tax commencing from 1/7/2026 for those with large superannuation balances ($3m +) or very large superannuation balances ($10m+)
- More frequent super contributions from employers who are now required to submit mandated employer contributions within 7 days of each payday.
What this might mean for you:
- Superannuation system integrity has not been compromised. The Superannuation system continues to be capable of delivering enormous benefits to Australians planning for, entering or enjoying retirement.
- Greater opportunities to grow super tax-effectively. Important to review contribution strategies annually.
Aged Care and Retirement Support
The Government is increasing funding for:
- Home care services (including fully funded personal care)
- Residential aged care capacity and quality improvements
What this might mean for you:
Improved access to care services over time and a continued shift toward home-based care options
Business
The Government intends:
- Making small business instant write off a permanent measure to support small businesses. No changes to eligibility and current rules. For businesses with less than $10 million in turnover they will be able to deduct the full cost of eligible assets up to $20,000 per eligible asset.
- Reforming the treatment of company tax losses. From 1 July 2026 companies with turnover of less than $1 billion will be able to carry back a tax loss and offset it against tax paid up to two years earlier. This will apply to revenue losses only. From 1 July 2028 loss refundability will apply to startup companies. “Start Ups” with turnover less than $10 million who generate a tax loss in their first two years will be able to utilise the loss to generate a refundable tax offset.
What this means:
A positive step for small businesses creating greater certainty and benefiting potentially 85,000 and 25,000 companies respectively.
Other Changes
- Changes to private health insurance rebates may modestly increase costs for retirees
- Ongoing support for small businesses and innovation
We're here to help
We are actively reviewing these proposed changes and how they may impact our clients.
While these changes are not yet final, they highlight important considerations that should be explored with a financial adviser.
This may include
- Reviewing your investment strategy and asset ownership structures
- Considering the role of residential property in your portfolio
- Ensuring your superannuation strategy remains optimised.
- Planning well ahead for retirement and potential aged care needs
If you’d like to understand what this means for your personal situation, please contact us. Rest assured, we will be ready for the changes and will work with you to ensure your strategy remains aligned and optimised to deliver to your goals and objectives.
About the author
Chris Ogilvie is a highly experienced financial adviser and investment leader with over two decades in the profession. Since commencing his career in 1999, he has built a strong reputation for integrity, excellence, and delivering client-focused advice.
Chris began working alongside his father, Keith, at Cornerstone Financial Group, which grew into an award-winning and highly successful financial planning firm. Today, he serves as Chief Investment Officer across Ironbark Advice and Ironbark Private Wealth, where he leads investment strategy and mentors advisers across the business.
A respected industry leader, Chris is a past Chairman and Life Member of the AMP Financial Planners Association. He holds the Certified Financial Planner (CFP®) designation and SMSF Specialist Adviser accreditation.