The 2026–27 Federal Budget introduces major tax and business reforms that will affect individuals, investors, business owners, trusts, and employers over the next several years. Many changes begin from 1 July 2026, 1 July 2027, or 1 July 2028.

Capital Gains Tax (CGT) Changes From 1 July 2027:

• The current 50% CGT discount will largely be replaced with cost base indexation for future gains.
• A new 30% minimum tax on net capital gains will apply.
• Existing gains accrued before 1 July 2027 can still access the current 50% discount.
• These changes impact:

• Investment properties
• Shares
• Business sales
• Trusts and sole traders

Business owners and investors may face significantly higher tax when selling assets in future years.

Negative Gearing Changes For established residential properties purchased after 12 May 2026:

• From 1 July 2027, rental losses can no longer offset salary/wage income.
• Losses will only offset future rental income or capital gains from residential property.

Existing properties are grandfathered and unaffected. New builds remain fully negatively geared.

Trust Distribution Changes From 1 July 2028:

• Discretionary trusts will pay a minimum 30% tax on trust income.
• Beneficiaries receive non-refundable credits only.
• Low-income beneficiaries may lose the benefit of low tax rates.

This could significantly reduce the effectiveness of family trust income splitting strategies.

Superannuation Changes From 1 July 2026:

• Super balances above $3 million will pay an additional 15% tax on earnings above the threshold.
• The transfer balance cap increases from $2.0M to $2.1M.
• “Payday super” begins — employers must pay super at the same time as wages instead of quarterly.

$1,000 Instant Tax Deduction From 1 July 2026:

• Employees can choose a flat $1,000 work-related deduction without receipts.
• Taxpayers can still claim actual expenses if higher.

Useful for employees with lower work-related deductions.

$250 Working Australians Tax Offset From the 2027–28 financial year:

• Workers and sole traders may receive up to a $250 tax offset.
• This reduces tax payable rather than providing a cash payment.

Electric Vehicle (EV) FBT Changes Current full Fringe Benefits Tax exemption for EVs

will be reduced:

• Full exemption continues until 31 March 2027.
• After that:

• Only EVs under $75,000 retain full exemption.
• Higher-value EVs receive only partial concessions.

This may increase the after-tax cost of novated lease EV arrangements.

Instant Asset Write-Off Made Permanent From 1 July 2026:

• Small businesses with turnover under $10 million can permanently claim Immediate deduction for assets under $20,000.
• Applies per asset.

Provides long-term certainty for business equipment purchases.

Company Tax Loss Carry-Back Returns From 1 July 2026:

• Companies under $1 billion turnover can offset current losses against profits from the previous two years and potentially receive cash tax refunds.

Helpful for businesses experiencing downturns.

R&D Tax Incentive Changes From 1 July 2028:

• Core R&D incentives increase.
• More businesses become eligible.
• However:

• Supporting R&D expenditure will no longer qualify.
• Minimum claim threshold rises.

Fuel Excise Relief Ends

• The temporary fuel excise reduction ends on 30 June 2026.
• Fuel costs will increase again from 1 July 2026.

This 2026-27 Budget represents one of the largest tax system restructures in decades.

As we enter one of the most significant periods of proposed tax reform in recent decades, we encourage clients to remain informed about how these potential changes may affect their personal and business circumstances in the years ahead. While not every measure will apply to all taxpayers, business owners, investors, employers, and individuals with trusts or larger superannuation balances may be impacted should the proposals proceed into law.

At this stage, many of the announced measures remain proposals only and have not yet been legislated. As further details and draft legislation are released following the Federal Budget process, we will continue to carefully monitor developments and provide guidance once the law has been formally enacted and the implications are clearer.

With proposed commencement dates ranging from 1 July 2026 through to 1 July 2028, there is currently no immediate action required. We kindly ask clients to await further updates from our office before seeking specific advice on these measures, as the details may change significantly during the legislative process.

Once legislation has been passed, we will communicate any relevant actions or planning opportunities that may apply to your circumstances. In the meantime, please be assured that our team is closely monitoring all developments and will continue to keep you informed.