2026 Budget Tax Shake-Up
The 2026 Federal Budget introduced a series of proposed tax reforms that could significantly reshape investment planning, business structuring and wealth management strategies over the coming years.
While many measures are not expected to commence until 2027 or later, the announcements signal a broader shift in the Government’s approach to discretionary trusts, capital gains tax and property investment taxation.
One of the most significant proposals is the introduction of a 30% minimum tax on discretionary trusts from 1 July 2028. If implemented, this could materially impact income distribution strategies for family groups, investment entities and privately owned businesses operating through trust structures.
The Budget also proposes replacing the current 50% capital gains tax discount with a cost base indexation model and a 30% minimum tax rate on capital gains from 1 July 2027. Transitional rules are expected for existing assets, potentially creating increased valuation and record-keeping requirements for investors and business owners.
Further reforms to negative gearing may also influence future property investment decisions. From 1 July 2027, negative gearing for residential properties is proposed to be limited to new builds only, with losses on established properties quarantined against future residential investment income and gains.
For advisers, accountants and legal professionals, the next two years may become a critical planning period for clients with:
• Discretionary trust structures
• Investment property portfolios
• Planned business or asset sales
• Succession planning considerations
• Long-term capital gains exposure
The Budget also included several positive measures supporting business investment, including a proposed permanent $20,000 instant asset write-off and a two-year loss carry-back arrangement for companies with turnover up to $1 billion.
Although many measures remain subject to legislation and further Treasury guidance, early strategic planning may provide clients with greater flexibility as these proposed reforms evolve.