2026-27 Federal Budget

The 2026-27 Federal Budget is looking to reshape the tax system by targeting property investments and trust structures on a level not seen in decades. Proposed changes signal a real shift when it comes to building and protecting wealth.

Focused on cost‑of‑living relief, major tax reform and long‑term fiscal repair, the Budget has been delivered in a challenging environment of elevated inflation and slowing economic growth.

Some of the key measures handed down include:

• CGT & Negative Gearing Reform
  Significant changes aimed at reducing investor demand for established property and improving housing affordability.

• Trust Tax Changes
  Introduction of a minimum 30% tax on discretionary trust distributions, meaning fewer benefits from directing income to lower‑taxed family members.

• Tax Relief Measures
  Targeted support for working Australians via a new tax offset and simplified deductions.

How might these changes affect your financial position?

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INCOME + CASHFLOW

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The introduction of the Working Australians Tax Offset (WATO) and a $1,000 instant tax deduction will provide working Australians with targeted relief by effectively increasing how much an individual can earn before paying tax. The impact at an individual level will be modest.

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SUPERANNUATION

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Whilst no significant new announcements were made to existing superannuation legislation, the raft of changes introduced in relation to CGT, negative gearing and discretionary trusts will serve to make the concessionally taxed environment of superannuation and pension accounts even more attractive.

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INVESTMENTS (PROPERTY, SHARES, STRUCTURES)

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This budget targeted property investments and trust structures at a level not seen in decades. The 50% discount on capital gains will be removed and replaced by a return to the indexation method with a minimum Capital Gains Tax rate of 30%. In addition, the benefits of negative gearing are being wound back significantly and ring fenced to income derived from the property asset rather than offsetting against all other forms of taxable income.

The impact will be dramatic, with forward estimates showing a slow-down in price growth and an increase in new first home buyers of 75,000.

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RETIREMENT + OLDER AUSTRALIANS

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For those over 65, in addition to the changes aimed at ‘redistributing intergenerational equity’ which targets the Baby Boomer generation at its core, top tier private health rebates will also be removed, increasing the cost of out of pocket expenses further.

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THE BOTTOM LINE

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The Budget represents a structural shift away from property-led wealth creation toward more diversified and productive investment.

The tax system is becoming less flexible outside super, increasing the importance of portfolio structure and tax planning.

Cost-of-living relief is targeted and measured, meaning it will help (however, won’t materially change), long-term financial trajectories.

For many Australians, the biggest implication is not a single policy. Rather, it is the combined effect of multiple changes reshaping after-tax returns.

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^{This article is general in nature and has not been tailored to individual circumstances. Before acting on this information, you should assess your own circumstances or seek personal advice from a licensed financial adviser. This article is current as at the date of issue but may be subject to change or be superseded by future publications. While it is believed that the information is accurate and reliable, the accuracy of that information is not guaranteed in any way. Past performance is not a reliable indicator of future performance, and it should not be relied on for any investment decision. Whilst care has been taken in preparing the content, no liability is accepted by the Licensee nor any of its agents, employees or related bodies corporate for any errors or omissions in this publication, and/or losses or liabilities arising from any reliance on this information.}