Treasurer Jim Chalmers handed down the 2026–27 Federal Budget Tuesday night, described as one of the most ambitious budgets in decades. We have pulled together the key measures most relevant to you as our client.
Income Tax Cuts
Good news — more tax cuts are coming:
- From 1 July 2026, the tax rate on income between $18,201–$45,000 drops from 16% to 15%.
- From 1 July 2027, it drops further to 14%.
- A new $250 Working Australians Tax Offset applies from 2027–2028.
$1,000 Instant Tax Deduction
From the 2026–2027 tax year, workers can claim a $1,000 deduction for work-related expenses without needing receipts. If your actual expenses exceed $1,000, you can still claim the higher amount the usual way.
Property Investors — Negative Gearing Changes
This is one of the biggest changes from last night:
- Negative gearing on established residential properties purchased after 7:30pm AEST on 12 May 2026 will be restricted — losses can no longer be offset against other income (e.g. your salary).
- You can still carry forward unused losses to offset against future rental income or property gains.
- Properties already held (as of last night) are fully grandfathered — no change for existing investors.
- New builds remain fully eligible for negative gearing.
Capital Gains Tax (CGT) — Major Reform from July 2027
- The existing 50% CGT discount (for assets held more than 12 months) will be replaced with cost-base indexation and a 30% minimum tax on real capital gains.
- This applies to all CGT assets (shares, property, etc.) — not just real estate.
- Transitional rules protect gains already accrued — only gains arising after 1 July 2027 are affected.
- The main residence exemption is preserved.
- Super fund CGT arrangements are also preserved.
- Investors in new residential builds can choose between the old or new CGT rules.
Pre-1985 (Pre-CGT) Assets — Important Proposed Change Proposal
If you own assets acquired before 20 September 1985, these have historically been exempt from Capital Gains Tax entirely. Under the proposed CGT reforms, this may change:
- From 1 July 2027, future gains on pre-CGT assets could be partially brought into the tax system.
- Only gains accruing after 1 July 2027 would be affected — gains already accrued up to that date are protected.
- This is still a proposal and is not yet legislated, but it represents a significant shift if passed.
Family Trusts — New 30% Minimum Tax Not Yet Law
From 1 July 2028, a 30% minimum tax will apply to discretionary (family) trust distributions. This removes the ability to split income to lower-rate family members to reduce overall tax.
- A 3-year restructure rollover (from 1 July 2027) is available for those who wish to move assets out of trusts before the rules take effect.
- This measure is not yet law — legislation is still to be introduced.
Superannuation
- Division 296 Tax (now legislated): If your total super balance exceeds $3 million, an additional 15% tax will apply to earnings on the amount above $3 million, bringing the effective tax rate to 30%. This has now passed the Senate and is expected to be law imminently.
- Low Income Super Tax Offset boosted: Around 1.3 million lower-income Australians will benefit from an increased offset.
- The main residence exemption and super fund CGT arrangements are explicitly protected from the CGT changes above.
What Should You Do Now?
Most of these changes are either grandfathered or apply from 2027 or 2028 — so there is time to plan. However, the negative gearing change is effective immediately.
If any of the above measures are relevant to your situation, please don’t hesitate to reach out. We are here to help you navigate these changes and make sure your financial plan remains on track.
This communication is general in nature and does not constitute personal financial advice. Please contact us to discuss how these changes may apply to your individual circumstances.
