Federal Budget 2026–27: Key Tax, CGT, Negative Gearing & Business Changes

The 2026–27 Federal Budget contains a number of proposed tax, investment, superannuation, business and structural changes that may be relevant for individuals, investors, business owners, trustees and family groups.

While every Federal Budget contains measures that deserve attention, this Budget may prove to be one of the more consequential for private clients, investors and family groups in many years. The significance is not simply the number of announcements, but the nature of the proposed changes. Measures affecting capital gains tax, negative gearing and discretionary trusts go to the way many Australians hold investments, structure family wealth, manage business interests and plan for succession.

A central theme of the Budget is the recalibration of certain investment and structuring concessions, alongside targeted relief for workers and selected business investment. In particular, the proposed changes to capital gains tax, negative gearing and discretionary trusts may require careful review over the coming years.

Importantly, the Budget is not law. Some measures will require legislation, regulatory change, administrative guidance or further consultation before they take effect. The final form of these measures may change, including the detail of transitional rules, commencement dates, exemptions and practical administration. Clients should seek tailored advice before acting on any announcement.

Key measures at a glance

Area	Budget announcement	What to consider
Personal tax	Proposed $250 Working Australians Tax Offset from 2027–28.	Review eligibility and broader year-end tax position.
Work-related deductions	Proposed instant deduction of up to $1,000 from 2026–27.	Compare the simplified deduction with actual substantiated expenses.
Capital gains tax	Proposed replacement of the 50% CGT discount with indexation from 1 July 2027, with a 30% minimum tax on real capital gains.	Review unrealised gains, disposal timing and cost-base records.
Negative gearing	Proposed restrictions for established residential property acquired after 7:30pm AEST on 12 May 2026.	Model after-tax cash flow before acquiring, selling or restructuring property.
Discretionary trusts	Proposed 30% minimum tax on discretionary trust income from 1 July 2028.	Review distribution strategies, bucket companies, Division 7A exposure and trust documentation.
Electric vehicles	Proposed changes to the EV FBT concession over time.	Review vehicle value, lease timing and salary packaging policies.
Business tax	Proposed permanent $20,000 instant asset write-off and two-year loss carry-back for eligible companies.	Review asset purchases, cash flow and franking account position.
Superannuation	No major structural change announced, but planning remains important.	Review contributions, pension requirements, liquidity and investment exposure.

Personal tax relief

The Budget includes targeted personal tax measures intended to provide modest cost-of-living relief and simplify compliance for many working Australians. These include a proposed $250 Working Australians Tax Offset from the 2027–28 income year and an instant deduction of up to $1,000 from the 2026–27 income year for eligible individuals earning income from work.

For some taxpayers, the proposed instant deduction may simplify record-keeping. However, it should not automatically be assumed to produce the best outcome. Individuals with actual work-related deductions above the proposed threshold may still be better placed substantiating their actual expenses.

The practical impact will depend on each taxpayer’s income, work-related expenses, deduction profile and broader tax position.

Before 30 June, individuals should consider reviewing work-related expenses, income timing, deductible expenses, realised or unrealised capital gains and superannuation contribution opportunities.

Capital gains tax reform

One of the more significant Budget announcements is the proposed reform of the capital gains tax rules.

The Government proposes to replace the current 50% CGT discount with cost base indexation from 1 July 2027. The Budget also refers to a 30% minimum tax on real capital gains. The proposed changes are expected to apply to gains accruing after 1 July 2027, rather than gains that have already accrued.

This may affect the after-tax outcome of selling growth assets, including investment properties, share portfolios, trust-held assets, business assets and other long-held investments.

The transition rules are expected to be important. Investors may need to distinguish between gains accrued before and after 1 July 2027, which could place greater emphasis on valuations, acquisition records, improvement costs and cost-base documentation.

Any decision to sell, retain or restructure an asset should be assessed in light of the client’s broader tax, investment, commercial and family objectives. Tax should not be the only consideration. Acting in response to a proposed tax change may create immediate tax liabilities, transaction costs or commercial disruption.

Investors should consider reviewing assets with significant unrealised gains, the timing of planned disposals, ownership structures and whether valuations may be required.

Negative gearing reform

The Budget proposes to restrict negative gearing for established residential property acquired after 7:30pm AEST on 12 May 2026, with the changes applying from 1 July 2027.

Under the proposed approach, losses from affected established residential investment properties would generally no longer be deductible against other income, such as salary and wages. New builds are expected to receive more favourable treatment.

The proposed rules may be particularly relevant for investors with high debt levels, low rental yields, multiple properties, high marginal tax rates or property held within a family group structure.

The extent of any change will depend on acquisition timing, whether the property is established or newly built, expected cash flow, debt structure, ownership structure and future CGT exposure.

Before acquiring, selling or restructuring residential property, investors should consider the after-tax cash flow of the investment, the commercial rationale for the transaction and the potential interaction with the proposed CGT changes.

Discretionary trusts

The Budget proposes a 30% minimum tax on discretionary trust income from 1 July 2028.

Discretionary trusts are commonly used for family businesses, investment portfolios and intergenerational wealth planning. The proposed changes may affect distribution strategies, bucket company arrangements, family group planning and succession planning.

The impact will depend on the trust deed, the nature of the income, the beneficiaries, the use of corporate beneficiaries and the broader structure of the family group.

Trustees and family groups should consider reviewing trust deeds, distribution powers, historical distribution strategies, bucket company arrangements, Division 7A exposure, unpaid present entitlements and annual trust distribution documentation.

The proposed commencement date provides a planning window, but clients should avoid rushing into restructures before the legislation and transitional rules are clear. In many cases, the right first step will be to understand the likely exposure and preserve flexibility.

Electric vehicle FBT concessions

The Budget proposes changes to the electric vehicle fringe benefits tax concession over time.

The changes may be relevant for employers, employees using salary packaging, business owners and clients considering novated lease arrangements. The timing of the lease, the value of the vehicle and the applicable thresholds may materially affect the after-tax outcome.

Before entering into or renewing an EV arrangement, clients should consider vehicle value, lease commencement date, luxury car tax thresholds, employer policy settings and the total after-tax cost compared with alternative arrangements.

Business tax measures

The Budget includes measures directed at business investment, cash flow and productivity. These include making the $20,000 instant asset write-off permanent for eligible small businesses and introducing a two-year loss carry-back measure for companies with turnover below $1 billion from 1 July 2026, subject to franking account limitations.

These measures are primarily timing benefits. They may bring forward deductions or tax relief, but they do not remove the underlying commercial cost of investment or business losses.

For businesses, the practical impact will depend on asset purchase plans, commercial need, timing of expenditure, taxable income forecasts, cash flow, franking account balances, business structure and, where relevant, R&D activity and documentation.

Business owners should consider reviewing planned asset purchases, whether expenditure is commercially justified, timing of deductible expenses, taxable income and cash-flow forecasts, franking account balances, business structure and R&D documentation where relevant.

Superannuation and wealth planning

The Budget does not remove the importance of superannuation as a long-term wealth accumulation and retirement planning structure. If concessions for personally held investments are reduced, superannuation may remain comparatively tax-effective for many clients, subject to contribution caps, preservation rules and individual circumstances.

Key areas of relevance may include concessional contribution caps, unused carry-forward concessional contributions, non-concessional contribution opportunities, spouse contributions, pension minimums, SMSF liquidity and investment exposure, and estate planning arrangements.

Superannuation remains highly rules-based. Contributions made at the wrong time, or in excess of available caps, can create unintended tax consequences.

Before 30 June, clients should consider reviewing concessional contribution caps, unused carry-forward concessional contributions, non-concessional contribution opportunities, spouse contributions, pension minimums, SMSF liquidity, investment exposure and estate planning arrangements.

Pre-30 June planning priorities

With several Budget measures expected to affect tax, investment and structuring decisions, clients should use the period before 30 June to review their current position and preserve flexibility.

Key areas to review include:

• personal deductions, taxable income and superannuation contribution timing;
• unrealised capital gains, asset sale timing and cost-base records;
• residential property cash flow, gearing and acquisition timing;
• business asset purchases, deductible expenses and cash flow;
• trust distribution resolutions and beneficiary profiles;
• SMSF contribution caps, pension requirements and liquidity; and
• family group ownership structures and succession planning.

Given the potential breadth of the proposed reforms, this Budget should be viewed less as a prompt for rushed decisions and more as a reason to review existing arrangements, identify areas of exposure and prepare for further advice once the legislative detail becomes clearer.

How Wilson Pateras can assist

The Budget announcements may affect clients differently depending on their income profile, asset mix, investment time horizon, debt levels, business structure, trust arrangements and broader family objectives.

Wilson Pateras can assist by helping clients move from headline announcements to practical decision-making. This may include:

• reviewing unrealised capital gains and the possible impact of the proposed CGT changes;
• modelling the after-tax cash flow of existing or proposed residential property investments;
• reviewing discretionary trust structures, distribution strategies, bucket company arrangements and Division 7A exposure;
• assessing whether business asset purchases, deductions or loss carry-back opportunities should be considered before or after 30 June;
• reviewing superannuation contribution opportunities, pension requirements and SMSF liquidity;
• considering the interaction between tax, investment, estate planning and asset protection objectives; and
• preparing for future changes while avoiding unnecessary or premature restructuring.

For many clients, the best response will not be immediate action. It will be a considered review of current arrangements, likely exposure and available options once further detail becomes available.

To discuss how the Budget announcements may affect your personal, business or family group position, please contact your Wilson Pateras advisor.