2026 Federal Budget: What it Means for You
The Big Picture
The 2026 Federal Budget introduces some of the most significant tax reforms in decades, particularly around:
Capital Gains Tax (CGT)
Negative gearing
Discretionary trusts
These changes are designed to rebalance the system away from investment structures and toward income earners and housing supply.
At the same time, there are modest cost-of-living measures including tax offsets and simplification of deductions.
Most of the measures outlined below are proposals only and require legislation to be passed before they are implemented.
We will continue to monitor developments and provide updates as more detail becomes available.
Key Changes at a Glance
Immediate / near-term changes
$1,000 instant tax deduction (from 1 July 2026)
Permanent $20,000 instant asset write-off for small businesses
Loss carry-back for companies (from 1 July 2026)
Personal tax cuts continuing from 1 July 2026
Medium-term structural changes
Negative gearing changes (from 1 July 2027)
Capital gains tax reform (from 1 July 2027)
Trust taxation changes (from 1 July 2028)
Property & Investment Changes
Capital Gains Tax (CGT) Reform - Effective: 1 July 2027
The existing 50% CGT discount will be replaced.
New system:
Gains indexed for inflation
Minimum 30% tax on net capital gains
Key points:
Applies to property, shares and business assets
Existing investments are partially protected:
Current rules apply to gains before 1 July 2027
Age Pension recipients exempt from the 30% minimum tax in certain cases
What this means:
Reduces benefit of deferring gains to low-income years
Makes tax outcomes more consistent regardless of income level
Negative Gearing Changes - Effective 1 July 2027
Negative gearing will be limited to new residential builds.
How it works:
No change to properties owned before Budget night (12 May 2026)
Newly built residential properties are still allowed
Changes apply to established properties purchased after Budget night
From 1 July 2027:
Losses from those properties:
cannot be offset against salary or other income
must be carried forward and used against future property income or gains
Important detail:
Applies only to residential property
Commercial property and shares unaffected
Trusts & Business Structures
Discretionary Trust Changes - Effective: 1 July 2028
What changes:
Trustees pay tax at a minimum rate of 30%
Beneficiaries receive non-refundable credits
Impact:
Reduces benefits of income distribution to lower-tax-rate family members
Opportunity for a 3-year restructuring window from 1 July 2027
Personal Tax & Cost of Living
$1,000 Instant Tax Deduction - Effective: 1 July 2026
Key points:
Optional — you can still claim actual expenses
Applies only to work-related income
Working Australians Tax Offset (WATO) - Effective: 1 July 2027
Up to $250 annual tax offset
Applies to income from wages, salary and sole trader income
Outcome:
Increases effective tax-free threshold to ~$19,985
Business & Small Business
Instant Asset Write-Off (Permanent)
Businesses with turnover < $10m can deduct assets under $20,000 immediately
Applies per asset (multiple purchases allowed)
Loss Carry-Back
Companies can
Offset current year losses
Against tax paid in previous 2 years
Startup Support (from 2028)
Tax losses can generate refundable tax offsets
Limited to wages-related taxes
Super, Health & Aged Care
Superannuation
No major new changes in this Budget
System largely left unchanged
Aged Care
Additional funding for:
Residential aged care
Home care support
Personal care services moving toward: o No out-of-pocket costs in some cases
Health & Cost of Living
PBS prescription costs capped at $25 per script
Changes to:
Private health insurance rebates
Pension supplement rules
Economic Outlook
Inflation expected to reach ~5% in the near term
Ongoing pressure on:
Interest rates
Cost of living
Government savings driven largely by:
NDIS reforms
Tax system changes
What This Means for You
For most clients, nothing needs to change immediately.
However, over the next few years, these changes may impact:
Your investment strategy
How assets are structured (trust vs individual vs company)
Timing of asset sales
Property investment decisions
Next Steps
At Progressive Financial Planners, we are:
Reviewing all changes in detail
Assessing how they impact client strategies
Preparing specific recommendations where relevant
If you’d like clarity on how these changes apply to your situation or interested to learn more, please reach out, we’re here to help.
