Our summary of the 2026–27 Federal Budget, handed down on 12 May. The Budget contains a substantial package of tax changes affecting individuals, investors, businesses and trusts. The key points are summarised below, with full detail in the attached document.
Key points at a glance:
- CGT discount replaced — from 1 July 2027, the 50% CGT discount is replaced with cost base indexation plus a 30% minimum tax on real gains. Applies to all CGT assets including pre-1985 assets, with gains accrued before 1 July 2027 grandfathered. Investors in eligible new builds can elect either system, and income support recipients are exempt from the 30% minimum tax.
- Negative gearing limited to new builds — from 1 July 2027, losses on established residential property acquired after 7:30pm AEST 12 May 2026 can only be deducted against rental or residential property capital gains income. Properties held (or under contract) before that time are grandfathered.
- 30% minimum tax on discretionary trusts — from 1 July 2028, with exemptions for unit and widely-held trusts, complying super funds, special disability trusts, deceased estates and charitable trusts. Primary production income, certain vulnerable minor income, and income from existing testamentary trust assets are also excluded. Three-year rollover relief from 1 July 2027 to assist restructuring.
- $20,000 instant asset write-off made permanent — for small businesses with turnover up to $10 million, from 1 July 2026.
- Loss carry-back reinstated — companies with global turnover under $1 billion can carry losses back two years, from 1 July 2026. Separately, loss refundability for start-ups (turnover under $10 million, first two years of operation) from 1 July 2028.
- $1,000 instant tax deduction — from the 2026–27 income year, individuals can claim a flat $1,000 for work-related expenses without itemising (charitable donations and professional memberships still claimable on top).
- Working Australians Tax Offset — a new $250 permanent tax offset for income from work, from the 2027–28 income year, lifting the effective tax-free threshold to $19,985 (or $24,985 with LITO).
We will continue to keep members informed as legislation is introduced and further detail becomes available.
