Key tax changes and what they may mean for you

On 12 May 2026, the Federal Government delivered its fifth Budget. It announced a number of significant proposed tax changes, including changes to negative gearing, capital gains tax, discretionary trusts, instant asset write-off rules, loss carry-back, work-related deductions and individual tax offsets. These measures may affect individuals, investors, small businesses and family groups. However, many of the measures are still proposed and may change before they become law.

I. CGT Discount Replaced

From 1 July 2027, the 50% CGT discount is proposed to be replaced with cost base indexation plus a minimum 30% tax on real capital gains. In general:

• If you buy and sell an asset before 1 July 2027, the current 50% CGT discount should continue to apply.
• If you buy and sell an asset after 30 June 2027, the new rules are expected to apply.
• If you already own an asset before 1 July 2027 and sell it after that date, the gain may need to be split between the pre- and post-1 July 2027 periods.

These proposed changes are not limited to real property and may also apply to other CGT assets, such as shares.

II. Negative Gearing Limited to New Builds

From 1 July 2027, losses from established residential properties acquired after 7:30pm AEST on 12 May 2026 are proposed to be deductible only against rental income or residential property capital gains. Properties already held, or under contract before that time, are expected to be grandfathered.

III. 30% Minimum Tax on Discretionary Trusts

From 1 July 2028, a 30% minimum tax is proposed to apply to taxable income of discretionary trusts, payable by the trustee. Some trusts are expected to be excluded, including unit trusts, widely-held trusts, complying superannuation funds, special disability trusts, deceased estates and charitable trusts. Further legislative detail will be required before the full impact can be confirmed.

IV. $20,000 Instant Asset Write-Off Made Permanent

The $20,000 instant asset write-off is proposed to be made permanent for small businesses with aggregated turnover under $10 million. This will apply to eligible assets first used or installed ready for use from 1 July 2026.

V. Loss Carry-Back Reinstated

Companies with global turnover under $1 billion are proposed to be able to carry losses back two years from 1 July 2026. Key points include:

• Only companies are eligible.
• Revenue losses only — capital losses do not qualify.
• The benefit is delivered as a refundable tax offset.
• The offset is capped by the company’s franking account balance.

VI. $1,000 Instant Tax Deduction for Individuals

From the 2026–27 income year, individuals are proposed to be able to claim a flat $1,000 deduction for work-related expenses without itemising. Charitable donations and professional memberships may still be claimable separately.

VII. Working Australians Tax Offset

From the 2027–28 income year, a new permanent $250 tax offset is proposed for income from work. This offset is expected to apply automatically and will be non-refundable.

VIII. Superannuation

No new superannuation changes were announced in this Budget. However, already legislated changes, including Division 296 tax and Payday Super, should still be monitored. Superannuation funds, including SMSFs, are expected to be excluded from the new CGT regime and negative gearing restrictions.