The 2026 Federal Budget shook things up. No sudden moves.
By Nicola Beswick, Founder & Certified Financial Planner®
Three of the biggest rules in Australian tax got rewritten in the 2026 Federal Budget: negative gearing, capital gains tax and family trusts.
I won't sugarcoat it. These are big shifts. But here's the most important thing I can tell you: don't panic, and don't do anything rash.
None of this is law yet. They're proposals. They've still got to get through both houses of parliament, and there'll be plenty of consultation, amendments and political to-and-fro before any of it sticks.
Which means you've got time. Time to sit down and look at your own situation properly, asset by asset, and work out what actually affects you, and what doesn't. And where there is a downside, there's usually a way to soften it.
Don’t panic. Don’t do anything rash. You’ve got time to look at your situation properly, and work out what actually affects you.
The Federal Budget Big Announcements
Negative gearing for residential properties
From 1 July 2027, losses from established residential investment properties bought after 12 May 2026 (7:30pm AEST) can only be deducted against rental income or capital gains from residential property. They won't offset your salary or other income anymore.
Here's how the grandfathering works:
Already own the property as at 12 May 2026? No change. You can keep negatively gearing it forever.
Bought it between 13 May 2026 and 30 June 2027? You can negatively gear during that window, but not from 1 July 2027.
Buying from 1 July 2027 onwards? No negative gearing on established homes.
Buying a brand new build? Fully exempt. Negative gearing will continue to apply both before and after July 2027.
SMSF-held properties and properties in widely-held trusts are also exempt.
Capital gains tax: what’s actually changing
From 1 July 2027, the 50% CGT discount will no longer apply. It's being replaced with cost base indexation (your purchase price is adjusted for inflation) and a 30% minimum tax rate on gains.
The new capital gains tax rules apply to almost everything you hold outside super: shares, managed funds, ETFs, investment properties, even assets you’ve held since before capital gains tax existed.
The good news: any gain you’ve built up before 1 July 2027 still gets the 50% discount. You’ll just need a valuation at that date to split the before and after. New builds get to choose whichever method suits. And if you’re on the Age Pension, the new 30% minimum tax doesn’t apply to you at all.
Two things this doesn’t touch: your super (those rules are separate and aren’t changing here) and your family home (still capital-gains-tax-free when you sell).
If you’re holding shares with a big gain that you were planning to sell in the next few years, it’s worth looking at the timing of the sale and the CGT impact.
Current rules
New rules
If you’ve got a family trust
From 1 July 2028, a minimum 30% tax will apply to income kept in a discretionary trust.
If your trust exists for asset protection, that benefit hasn’t changed. But if it was set up mainly to split income to lower-earning family members, the advantage there is being capped. That’s worth reconsidering with both your adviser and your accountant.
There’s also a three-year window from 1 July 2027 to restructure out of a trust without triggering capital gains tax, so there’s room to move thoughtfully.
Tax reforms for employees
The $1,000 instant tax deduction. If your work-related expenses are under $1,000 a year, you can claim a flat $1,000 from the 2026-27 income year without keeping receipts or itemising. If your expenses are higher, claim them the usual way. Donations, union fees and professional memberships sit on top.
Effective tax-free threshold lifts. Between the personal tax rate cuts and the new $250 Working Australians Tax Offset, the threshold rises to around $19,985 for workers.
Electric vehicle FBT changes. If you're salary-packaging an EV under $75,000, the 100% FBT discount stays in place until 1 April 2029. After that, it transitions to a permanent 25% discount across all EVs valued up to the fuel-efficient luxury car tax threshold.
Tax reforms for business owners
The $20,000 instant asset write-off becomes permanent from 1 July 2026 for businesses with turnover up to $10 million. Buy a piece of gear under $20k, deduct it in the same year. No more wondering whether the threshold gets extended.
Loss carry-back returns. Companies with global turnover under $1 billion will be able to carry revenue losses back and offset them against tax paid up to two years earlier, from 1 July 2026. Handy if you're in a growth-then-contract cycle, or investing heavily in a year that wipes out profit.
Start-up loss refundability. Start-ups under $10 million turnover can turn early-year tax losses into a refundable offset (limited to FBT and withholding tax paid on Australian wages) from 1 July 2028.
Other Budget announcements
Division 296 super tax is still coming. This isn't new in the Budget (it became law in March 2026) but worth a reminder. From the 2026-27 income year, super balances above $3 million attract an extra 15% tax on earnings (up to a total 30%). Balances above $10 million attract a further 10% (up to 40%). The thresholds are indexed.
Private Health Insurance Rebate uplift removed. From 1 April 2027, the age-based uplift goes. The savings are being redirected into the aged care system, including more residential beds and better home care affordability.
Fuel excise cut. Already in effect. Petrol and diesel excise was halved on 1 April 2026 (a 32 cent-per-litre reduction) for three months. The heavy vehicle road user charge went to zero for the same period.
Cheaper medicines. $5.9 billion over five years for new and amended PBS listings.
Foreign buyer ban extended for established homes until 30 June 2029.
Tax fraud protection. $86.3 million to modernise fraud detection in the tax and super systems, plus expanded ATO powers to chase fraud committed by tax intermediaries.
Digital ID system. $654 million over four years to maintain and expand Australia's Digital ID infrastructure.
The key dates
What to actually do right now
Hold your nerve. The person who panic-sells everything on Budget night is the cautionary tale, not the hero. No knee-jerk moves.
Come back to your plan. A good plan already left room for changes like these. Got one? Lean on it. Don't have one? This is a pretty good nudge to build one.
Wait for the fine print before any big move. This isn't law yet, and some of it will shift again before it is.
If you would like to better understand your current position and what is possible for your future, seeking personalised advice can be a valuable first step. A clear plan can make all the difference.
FAQs
-
Good news: no. If you owned it before 7:30pm on Budget night (12 May 2026), you're fully grandfathered. You can keep negatively gearing it for as long as you hold it. The change only bites on established residential properties bought after that date.
-
If you owned it before 7:30pm on Budget night, nothing's changed for you. You're grandfathered, full stop. If you're genuinely weighing up whether to hold or sell from here, it comes back to the same real questions it always did: Is this actually a good investment property? What are its growth prospects from here? And what do the numbers say about selling versus holding? The tax change is one input, not the whole decision.
-
Both. And then some. The new capital gains rules cover almost everything: shares, managed funds, ETFs, investment properties, and business assets held by individuals, trusts and partnerships. The two big things left out? Your super (including an SMSF) and your family home, which stays capital-gains-tax-free when you sell.
-
It's less clear-cut than it used to be. For years, shares and property delivered pretty similar long-term returns, so the choice mostly came down to you: your preferences, your circumstances. The new rules tip the scales a little. Established residential property looks a bit less attractive as an investment than it did last week. So if you were about to buy one, it's worth pulling the plan back out and checking it still stacks up.
-
Not on the tax break alone, no. Yes, new builds keep the negative gearing and capital gains perks. That's exactly why the new rules might nudge you towards one. But they carry their own risks: off-the-plan sunset clauses and build delays can really catch you out. Go in with your eyes wide open. A tax break should never be the only reason you buy.
-
For a lot of people, yes. With investments outside super now facing a higher tax floor, super starts to look relatively better by comparison. Even balances above $3 million can hold their own once you run the numbers. And that's the key word: model it. It all comes back to your numbers, not a rule of thumb.
-
First thing: this one spans both your accountant and your adviser, so loop in both. Together you'll work through why the trust exists in the first place, whether the old income-splitting benefit is still worth it now that a 30% minimum tax hits retained income from 1 July 2028, and whether it's worth restructuring. The good news is there's a three-year window from 1 July 2027 to restructure without triggering capital gains tax. So there's time to do this properly, not in a panic.
White Rabbit Advisory Pty Ltd is a registered tax (financial) adviser and any reference to tax advice contained in this document is incidental to the general financial advice it may contain. You should seek specialist advice from a tax professional to confirm the impact of this advice on your overall tax position. You should obtain financial advice relevant to your circumstances before making financial decisions. Whilst every care has been taken in the preparation of this information, it may not remain current after the date of publication and White Rabbit Advisory Pty Ltd and its related bodies make no representation as to its accuracy or completeness.
Published: June 2026 © Copyright 2026
White Rabbit Advisory Pty Ltd (ABN 54 676 177 138) is a Corporate Authorised Representative (No. 1314020) of Personal Financial Services Ltd (ABN 26 098 725 145). Australian Financial Services Licence (No 234459).