Federal Budget 2026–27: What You Need to Know

The 2026-27 Federal Budget, delivered earlier this week introduced a number of proposed tax reforms and cost-of-living measures that could significantly impact individuals, investors, business owners, and future generations.

While many of the measures are still subject to legislation, they signal a major shift in Australia’s tax and investment landscape.

Some of the key announcements include:

Changes to Capital Gains Tax Concessions

The Government has proposed replacing the current 50% discount with an inflation indexation method for assets held longer than 12 months, together with a proposed 30% minimum tax on net capital gains. This change will apply to all CGT assets held by individuals, trusts and partnerships, including those which were acquired pre-1985 which are currently exempt from CGT. This change will apply only to gains arising on or after 1 July 2027. Capital gains arising before this date will still be eligible for the 50% discount (or the pre-1985 exemption where relevant).

Investors in new residential properties will still be able to choose between the 50% CGT discount or cost base indexation, in an effort to incentivise new housing supply.

Negative gearing reforms

From 1 July 2027, losses from established residential properties will only be deductible against rental income or capital gains from residential properties. If there are excess losses, this will no longer be able to be offset against other income and will instead be carried forward to be offset against residential property income in future years. These rules apply to properties acquired from 7:30PM AEST on 12 May 2026. Properties acquired prior to this will be exempt until the property is disposed of. There are several exemptions to the changes, including:

• Eligible new builds

• Properties in widely held trusts

• Properties in super funds

Minimum tax rate for discretionary trusts

From 1 July 2028, trustees of discretionary trusts will pay a minimum 30% tax on the trust’s taxable income, with beneficiaries (other than corporate beneficiaries) receiving tax credits for tax paid. This will apply to discretionary trusts only and will not apply to fixed trusts, widely held trusts, complying super funds, special disability trusts or deceased estates. Some types of income will be excluded from the minimum tax, such as primary production income and income from assets in a discretionary testamentary trust.

Transitional rollover relief would apply from 1 July 2027 to 30 June 2030 in order to restructure out of discretionary trusts.

New tax relief for working Australians

From 1 July 2026, individuals who derive income from work will be eligible for an instant tax deduction of up to $1,000 without needing to itemise individual work-related expenses if claiming less than $1,000. Those who are claiming work-related expenses greater than $1,000 can continue to do so in the usual way.

A permanent annual tax offset of $250 will be introduced from 1 July 2027 for individual taxpayers who derive income from work (e.g. wages, salaries and sole trader business income).

Personal income tax cuts

The previously legislated Stage 3 tax cuts are still set to proceed, with the 16% tax rate reducing to 15% from 1 July 2026 and to 14% from 1 July 2027.

Permanent instant asset write-off

The $20,000 instant asset write-off for small businesses (with aggregated turnover up to $10 million) will be made permanent from 1 July 2026.

Additional business and ATO measures

The Budget also included additional ATO funding for compliance and fraud detection, proposed changes to the PAYG instalment system for small and medium businesses, expanded loss carry-back rules for companies and reforms to the R&D Tax Incentive regime.

At Ipsum Advisors, we’ll be closely reviewing the detail behind these announcements and what they may mean for our clients moving forward.

If you would like to discuss how these proposed changes could impact your structure, investments, business or tax planning strategies, our team is here to help.

DISCLAIMER: This summary has been prepared by Ipsum Advisors for the benefit of our clients and community. It is intended as a general overview only and should not be relied upon as personalised financial or taxation advice. For a full and detailed