The 2026–27 Federal Budget has introduced a range of proposed changes that could have a meaningful impact on investors, property owners, business owners and retirees.
The 2026–27 Federal Budget has introduced a range of proposed changes that could have a meaningful impact on investors, property owners, business owners and retirees.
While many of the announcements had been widely expected before Budget night, the scale of some of the proposed tax reforms is significant. In particular, changes to capital gains tax, negative gearing and discretionary trusts may reshape how Australians think about wealth accumulation, tax planning and investment structures.
At the same time, the superannuation system was not directly overhauled in this Budget. That may reinforce super’s role as a tax-effective long-term savings vehicle, particularly when compared with some of the proposed changes outside super.
It is important to remember that most Federal Budget announcements are still proposals only and are not yet law. As legislation is introduced, details may change.
Below, we outline some of the major measures and what they could mean for investors.
If you are unsure how the proposed changes will affect your situation, ensure to speak with a Financial Adviser.
Book a meeting with an independent Financial Adviser.
Table of contents
One of the most significant Budget announcements is the proposed removal of the 50% capital gains tax discount for capital growth that accrues on or after 1 July 2027.
Under the proposal, assets held for more than 12 months would instead use CPI indexation to adjust the cost base when calculating the gain. A 30% minimum tax rate would also apply to capital gains calculated under this method for most taxpayers.
This would effectively return Australia to an older CGT calculation model, while also introducing a more complex transitional framework.
For investors, this could affect:
Broadly, the new approach would create three categories:
Importantly, the proposal does not apply in the same way to:
This means investors may need to revisit whether their current ownership structure is still the most appropriate for their long-term goals.
The Budget also proposes major changes to negative gearing for residential investment properties.
From 1 July 2027, losses from eligible residential investment properties would no longer be available to offset other forms of assessable income, such as salary and wages. Instead, those losses would be quarantined and carried forward to offset future investment income or gains.
The proposed change applies only to residential investment properties acquired from 7:30pm on 12 May 2026, being Budget night.
The measures would not apply to:
For investors considering a property purchase, this could affect:
For some investors, the key issue may no longer be whether a property is negatively geared, but whether the loss can actually improve short-term cash flow outcomes.
Another major proposal is the introduction of a 30% tax rate on discretionary trust income from 1 July 2028.
Currently, discretionary trusts can distribute taxable income to beneficiaries, who are then taxed at their own marginal tax rates. Under the proposed rules, the trustee would instead pay tax at 30%, unless a higher tax rate applies.
For many families and business owners, this would represent a substantial change to how trusts are used in tax planning and wealth management.
Discretionary trusts are commonly used for:
A flat trust tax rate may reduce flexibility and change the value of existing trust structures for some households.
The Budget papers also indicate that rollover relief may be available from 1 July 2027 for three years, which could support restructuring into other arrangements such as companies.
Given the complexity of trust planning, this is an area where tailored advice will be especially important.
Not all of the Budget measures were restrictive.
The Government has announced that the $20,000 instant asset write-off for eligible small businesses will become a permanent measure from 1 July 2026.
To qualify, a business must have aggregate turnover of up to $10 million.
This means eligible small businesses can continue to immediately deduct the full cost of eligible assets costing less than $20,000 in the income year the asset is first used or installed ready for use.
This provides greater certainty for small business owners when planning:
Rather than waiting each year to see whether the write-off will be extended again, businesses can now plan with more confidence.
The Budget also builds on previously announced personal tax changes.
The current 16% personal income tax rate is set to decrease:
In addition, from 1 July 2026, individuals earning income from work may be able to claim a standard tax deduction of up to $1,000 instead of claiming certain work-related expenses individually.
The Government also announced a Working Australians Tax Offset of up to $250 per year from 1 July 2027 for people earning income from work.
While these measures may not dramatically change long-term wealth outcomes on their own, they may slightly improve disposable income and simplify tax claims for some workers.
For households already managing rising living costs, even small changes may still be relevant.
Although the Budget did not directly change the core taxation arrangements for superannuation, a number of previously announced or indexed changes are still important.
These include:
For many Australians, these changes may create opportunities to:
In the context of the proposed Budget changes outside super, superannuation may become even more important in long-term wealth planning.
At this stage, there is no need to make rushed decisions. These are still proposed measures, and the law may change before any reforms take effect.
However, this Budget is significant enough that many Australians should consider reviewing their strategy, especially if they:
The right response will depend on your circumstances, ownership structures, time horizon and broader financial goals.
Speaking to a Financial Adviser can be beneficial if your situation is complicated, or if you are unsure how the proposed changes will affect your situation.
Speak with an independent Financial Adviser.
The 2026–27 Federal Budget may mark a major shift in how investment income, capital growth and wealth structures are taxed in Australia.
Even before the measures become law, they may prompt important conversations around strategy, timing and structure. For many investors, the key question is not just what has been announced, but how those proposed changes may affect their financial plan over the long term.
If you would like help understanding what these proposals could mean for your personal situation, seeking tailored financial advice can help you make informed decisions with confidence.
Sources:
Tax reform | Budget 2026–27
Australian Federal Budget 2026-7 - Adviser overview | BT Professional
Important information: The information above is general in nature and is based on Budget announcements made on 12 May 2026. These measures are proposals only and may be subject to legislative change. It does not take into account your personal objectives, financial situation or needs. You should seek personal advice before acting on any of this information.
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