2026/27 Federal Budget – What It Means for You
By Bec Pauley
May 2026
With any investment decision you make – whether it is starting or buying a business, buying an investment property or shares, just to name a few – there are twists and turns that you can’t control. This can include pandemics, wars a downturn in the economy or the rules can be changed. The 2026/27 Federal Budget proved the last point beyond doubt. The goalposts have been moved.
So, let’s start. Here is our summary for you on what we feel is most relevant for our clients.
Negative Gearing Changes
From 1 July 2027:
Current negative gearing rules will be limited to new residential properties only.
For existing properties:
Losses will no longer offset other income including wages.
Instead losses will be carried forward to be used against future property income and capital gains.
Important:
Properties owned before 12 May 2026 are not affected (grandfathered); it will only be for any new investment properties purchased.
What this means for you:
Future property investments need to be more carefully considered when funding these purchases. However, these changes don’t apply to self-managed superannuation funds or to other asset classes, such as shares and commercial properties.
Capital Gains Tax (CGT) on Investments
From 1 July 2027:
The current 50% discount will be removed for assets purchased from this date.
A new system proposed is:
Cost bases are adjusted for inflation (indexation), and.
Minimum 30% tax on the capital gain after indexation.
Assets owned prior to starting this new system will receive the 50% discount to its value up to 1 July 2027 and indexation and the minimum tax will apply to the portion of the gain from 1 July 2027.
Pre-CGT assets (bought prior to 12 September 1985) will be assessed for CGT for the gain from 1 July 2027 based on its value at that time.
What this means for you:
Currently, the most someone pays for CGT is 23.5% of the gross capital gain. The new rules mean you will still pay CGT at your marginal income tax rate of the full gain after indexation, but a 30% floor will apply. Companies and self-managed superannuation funds are not affected by these new rules.
Trusts - What’s Changing
From 1 July 2028:
A flat 30% tax may apply to income distributed from discretionary trusts (such as family trusts).
Beneficiaries receive non-refundable tax credits.
Trusts such as superannuation funds, deceased estates and fixed trusts are excluded.
Income from primary production and income from existing testamentary trusts are excluded.
What this means for you:
Trusts still offer asset protection but may not be as effective for tax planning purposes. However, there is plenty of time before these rules come in to place to work out if your structure needs to change. There will also be restructure rollover relief available if a new structure will be a better fit for your business.
Business Owners
$20,000 instant asset write-off now permanent.
Option to pay PAYG instalments monthly.
What this means for you:
There is now certainty around the deductibility of asset purchases and better cash flow management.
Salary and Wage Earners
New $250 tax offset from 2027–28.
Up to $1,000 work-related deductions without receipts available from the 2027 financial year.
Increase to low-income Medicare levy thresholds.
| Medicare low-income threshold | Threshold as at 30 June 2025 | Threshold from 1 July 2025 |
|---|---|---|
| Singles | $27,222 | $28,011 |
| Families | $45,907 | $47,238 |
| Single - seniors & pensioners | $43,020 | $44,268 |
| Family - seniors & pensioners | $59,886 | $61,623 |
| Family - for each dependent child or student | $4,216 | $4,338 |
What this means for you:
Small tax savings and a simpler tax return process for most individuals.
To conclude
Though probably not as many rule changes as the AFL in recent times, the goalposts have been reset in terms of tax legislation. Remember, these are only proposals at this point and require passing both houses of Parliament. Also, some of the details were a bit light on and do need clarification.
Please do contact us to discuss how this effects your personal situation. We will also keep you up to date with how these proposed changes proceed further.
ATO Verify Call Feature Helps Fight Scams
Scam calls pretending to be from the ATO are becoming more convincing, especially as tax time approaches. To help Australians avoid being caught out, the ATO has introduced a simple new feature in its app called Verify Call.
The process is straightforward:
Open the ATO app
Tap Verify Call
Instantly check whether the caller is genuine
If there’s no confirmation, hang up.
It’s a practical tool designed to remove the guesswork and help protect individuals and businesses from increasingly sophisticated scam activity.
With tax season approaching, now is a good time to make sure you have the app set up and ready to use. Learn more at the Australian taxation office website.
