The 2026–27 Federal Budget: What’s New, What’s Protected, and What It Means for You
The 2026–27 Federal Budget is one of the most significant overhauls of Australia’s tax system in nearly three decades. It introduces major changes to capital gains tax, negative gearing, trust distributions, superannuation, electric vehicles, and business incentives — and almost every household, taxpayer, investor or business owner will feel the impact in some way.
Our role is to provide clear, steady guidance so you understand what matters, what doesn’t, and what steps to take next.
Below is your guided breakdown of the key measures — with a focus on start dates, grandfathering rules, and how these changes might affect your future planning.
Guidance 1: Capital Gains Tax — A Major Shift From 1 July 2027
The Budget replaces the long‑standing 50% CGT discount with cost‑base indexation for gains arising on or after 1 July 2027, along with a new 30% minimum tax on net capital gains.
This is confirmed in the briefing:
“The 50% CGT discount will continue to apply to all gains arising before 1 July 2027.”
These rules apply to all CGT assets, including shares, managed funds, investment properties, business assets, and goodwill — meaning the change affects ayone holding assets that have grown in value.
What’s protected
Any gain that arises before 1 July 2027 for existing assets still receives the 50% discount — even if you sell the asset years later.
The ATO will split the gain into pre‑ and post‑1 July 2027 portions.
New residential builds get a choice between the 50% discount or indexation, whichever is better (applied to gains arising after 1 July 2027).
Income support and Age Pension recipients are exempt from the minimum tax.
SMSFs are unaffected — there is no change to the way super funds calculate capital gains tax, and the existing one‑third CGT discount and retirement‑phase exemptions remain unchanged.
What’s not protected
Existing assets are NOT grandfathered. Gains that accrue after 1 July 2027 fall under the new rules, even if you bought the asset decades ago.
Our guidance
If you’re planning to sell an asset in the next few years, timing matters. But the right decision depends on:
your tax rate
how long you’ve held the asset
how long you plan to keep it
whether the asset is still appropriate for your goals
We’ll model this with you at your review.
Guidance 2: Negative Gearing — Existing Properties Fully Protected
The Budget confirms a major change — but also generous grandfathering. The ability to use rental property losses to reduce your taxable income — is set to change for future purchases, with new restrictions applying to established properties bought after Budget night while all existing investments remain fully protected.
From the briefing:
“Existing investment properties are fully protected… your ability to offset those losses… will continue unchanged for as long as you hold that property.”
What’s protected
All existing investment properties keep full negative gearing forever, as long as you continue to own them.
Contracts signed before 7:30pm AEST on 12 May 2026 are also protected, even if settlement occurs later.
If you live in a property as your main residence, then later move out and rent it, you can continue to treat it as your main residence for up to 6 years under the six‑year rule.
During that period, you can still claim full negative gearing deductions on the property.
Negative gearing on non‑property investments (such as shares and managed funds) remains unchanged — the Budget changes apply only to established residential properties purchased after Budget night.
What changes
For established residential properties purchased after Budget night:
From 1 July 2027, losses can only be offset against rental income or residential property capital gains.
They can no longer reduce salary or business income.
These quarantining rules apply only to established residential properties purchased after Budget night.
New builds
Newly constructed properties retain full negative gearing against all income sources.
Our guidance
If you’re considering buying another investment property, the economics have changed — especially when combined with the new CGT rules. We’ll help you compare:
new build vs established
cashflow impact
long‑term after‑tax return
what structure to hold the property in
alternative investments
Guidance 3: Trusts — A New 30% Minimum Tax From 1 July 2028
The Budget introduces a 30% minimum tax on discretionary trust income from 1 July 2028.
From the briefing:
“Beneficiaries… will receive non‑refundable credits… If the credit exceeds a beneficiary’s actual tax liability, the excess is permanently lost.”
What this means
Low‑income beneficiaries will no longer be able to receive trust distributions taxed at low marginal rates.
Excess credits are lost, not refunded.
Corporate beneficiary rules are still unclear — draft legislation is expected later in 2026.
Testamentary Trusts (established by Estate upon death)
It’s important to note that testamentary trusts already in existence at the time of the announcement are excluded from the new 30% minimum tax.
While there has been speculation about this measure operating as a ‘death tax’, the Budget does not tax inheritances or estates, and the exclusion for existing testamentary trusts is clear.
However, the treatment of testamentary trusts created in the future is not yet defined, and we will provide guidance once draft legislation is released.
The Budget does not introduce a tax on inheritances or estates - although some commentators are using the term “death tax”. This may be because:
Testamentary trusts are created on death, and
If future testamentary trusts were not excluded, income distributed to children could be taxed at 30%
But this is speculation, not fact. The Budget briefing itself warns against drawing conclusions before legislation is released.
Our guidance
If you operate a business or investment structure through a discretionary trust, early planning is essential. A three‑year rollover window from 1 July 2027 allows restructuring without triggering CGT.
Guidance 4: Business Measures — Targeted, Not Structural
The Budget includes several business‑focused measures, but they are targeted, not broad tax increases.
Key changes include:
Loss carry‑back for companies from 1 July 2026
Permanent $20,000 instant asset write‑off from 1 July 2026
R&D incentive reforms from 1 July 2028
Expanded venture capital incentives from 1 July 2027
These are opportunities for most business owners.
Our guidance
The bigger structural questions for business owners come from:
the CGT changes (especially goodwill)
the trust minimum tax
the rollover window for restructuring
We’ll work with you and your accounting professionals to help you assess whether your current structure still makes sense.
Guidance 5: Superannuation remains a key strategy
No major new super changes were announced in this Budget
Previously legislated changes still apply, including higher tax on balances above $3 million
Our guidance
Superannuation continues to be a tax‑effective environment for long-term wealth and retirement planning.
Guidance 6: Minimal tax relief
There are a number of modest changes designed to increase take-home pay and simplify tax at the individual taxpayer level:
The lowest tax rate will reduce to 15% from 1 July 2026 and 14% from 1 July 2027
A new $250 annual tax offset will apply from 2027–28 for working Australians
A $1,000 instant tax deduction will simplify claiming work-related expenses
Our guidance
These changes won’t dramatically alter most people’s tax position, but they do create a small lift in take‑home pay and simplify some day‑to‑day tax administration. The key is to treat these measures as helpful improvements rather than strategy‑drivers.
Your broader financial plan — your investment structure, retirement planning, and long‑term tax position — will continue to have a far greater impact on your outcomes than these modest adjustments.
We’ll factor these updates into your planning automatically, so there’s nothing you need to do at this stage.
Your Next Guided Step
The Budget changes are significant — but many are forward‑looking, and many existing arrangements are protected. These changes reinforce the importance of:
Staying well diversified
Focusing on after-tax outcomes, not just tax minimisation
Using superannuation as a core strategy
Your next step is simple: bring your questions to your review meeting.
We’ll walk through:
what applies to you
what doesn’t
what opportunities exist
and what steps will keep you on track
At Integrity Advice Partners, our focus is helping you take the right steps, with the right guidance, at the right time.