2026 Federal Budget Announcements

As seen in Woopi News June 2026

It is important to remember that the Budget Announcements are not yet legislated, the finer details are still being ironed out and the devil will be in the details.

Changes to Negative Gearing Residential Rental Properties

Residential investment properties purchased prior to 7:30pm AEST 12 May 2026 are exempt from the negative gearing changes and can still claim losses against other income such as salary and wages.

Residential investment properties purchased after 7:30pm AEST 12 May 2026 cannot offset rental investment losses against other income after 1 July 2027. The losses cannot only be offset against other income from residential properties either by offsetting against future residential property income or future capital gains. However, the losses can be offset against other income until the new rules come into place on 1 July 2027.

Residential investment properties that are new builds, can continue to be negatively geared and the losses used to offset other income. New builds must add to the existing supply. This includes dwellings constructed on vacant land and where existing properties are demolished and replaced with a greater number of dwellings.

Changes to Capital Gains Tax (CGT)

The current CGT system allows for a CGT discount of 50% for assets that have been held for more than 12 months. The gross gain is calculated, then discounted by 50% and the net discounted gain is then taxed at your marginal tax rate.

From 1 July 2027 the calculation is split into two components;

1. the discount method will be applied to growth up until 30 June 2027 after which the discount method will no longer be available.
2. the gain from growth after 1 July 2027 will be calculated using cost base indexation which increases the cost of the asset by an indexation based on the Consumer Price Index (CPI).

The net gain will be taxed at a minimum of 30%, meaning that it is no longer beneficial to delay selling CGT assets to a year where you have less other income such as after you retire unless you are the recipient of means tested income support payment such as the Age Pension or JobSeeker, who will be exempt from the minimum rate of 30% tax on capital gains if the receive the payment in the year that the capital gain occurs.

Minimum Tax on Discretionary Trusts

From the 1 July 2028 a minimum tax of 30% will apply to discretionary trusts which will be paid by the trust (with an exemption for Primary Producers). Beneficiaries of trust income still need to declare the trust distribution in their tax return where non-corporate beneficiaries will receive a non-refundable tax offset equal to their proportion of the tax paid by the trust.

A non- refundable tax offset reduces the amount of tax payable, but there is no refund if the amount of the offset is higher than the tax liability. This therefore removes the benefit of distributing to beneficiaries in a lower tax bracket.

Corporate beneficiaries do not receive the non-refundable tax offset. Meaning there is no benefit to distributing to bucket companies as this could result in an effective tax rate of 51% overall.

Rollover relief will be available to provide relief from tax consequences, including capital gains for small businesses and others that wish to restructure out of a discretionary trust.

Personal Income Tax Changes

• Tax Rate changes for the income bracket between $18,201 – $45,000:
  • 1 July 2026 the 16% tax rate reduces to 15%
  • 1 July 2027 the 15% tax rate reduces to 14%
• Instant tax deduction comes into effect for the 2026/27 financial year. Workers can claim a $1,000 deduction for work related expenses. Deductions can be claimed union fees and professional associations on top of the $1,000 instant deduction, along with non-work-related deductions such as charitable donations and tax agents’ fees.
• Working Australians Tax Offset of $250 begins 1 July 2027 and will apply to the 2027/28 financial year.

Business Tax Changes

• Instant asset write-off for assets under $20,000 has been made permanent for small businesses
• Businesses have the option to pay PAYG Instalments monthly from 01 July 2027 rather than the current quarterly cycle.