2026-27 Federal Budget

by | May 13, 2026 | Business, Individual, Self Managed Super Fund

The 2026-27 Federal Budget has been released. We answer the question, “What is in it for me?”

The Answer is disappointingly, More Tax to Pay. This is a Seismic shift in Tax policy to raise money from individuals and business for the Government to fund their specific projects such as net zero targets and subsidizing electric vehicles onto our roads. “This is not tax reform – it’s a revenue measure that shifts more of the burden onto middle Australia,” says CPA Australia Tax Lead Jenny Wong. Additionally, CPA Australia are calling the budget a “tax grab” that punishes aspiration and deters investment. There are major fundamental new tax changes with many questions raised and a lot of new “Red Tape” created. We also note that the Prime Minister is on record before the last election where he promised he would not change the CGT Discount or Negative Gearing, yet here it is.

The benefits of Structuring and Tax Minimisation have just been dealt a heavy blow. Two of our top Tax Planning options have been directly targeted by the Government, now we need to change and adapt to the new environment in working out new Tax Planning Options to benefit you.

The Major Changes include:

Individuals

  • The 50% Discount for Capital Gains held longer than 12 months will be scrapped on all assets from 1 July 2027 and replaced with cost base indexation. Cost Base indexation is what we had back before 1999. Taking us back over 2 decades to rules that create higher Capital Gains. Exemptions include New Residential Property purchases (which has yet to be defined) and Centrelink support payment recipients such as Age Pension recipients.
  • All Capital Gains to be taxed at a Minimum 30% from 1 July 2027 for all Individuals, Trusts and Partnerships.
  • Pre-CGT assets purchased before September 1985 will have Capital Gains Tax applying from 1 July 2027 with cost base indexation and the Minimum 30% tax rate.
  • Negative gearing will be removed for Residential Properties purchased after 1 July 2027 except for eligible New Residential Property only. Existing rental properties will continue under the current rules until sale under grandfathering rules. The purchase of any Existing Residential Property from 12 May 2026 to 30 June 2027 will be eligible for negative gearing until 1 July 2027 where afterward any rental loss will be carried forward to offset future rental income or to apply against the Capital Gain on Sale.
  • The Government will introduce a Minimum 30% tax on Discretionary Trusts. From 1 July 2028, Trustees of a Discretionary Trust will pay a Minimum tax of 30% on their taxable income with a Non Refundable offset for Individuals and No Offset for Companies. Income distributed to Bucket companies could now be paying 55% to 60% of tax on the income being higher than the individual marginal tax rate of 47% including medicare levy.
  • Confirming, the 50% Discount for Capital Gains will be removed for all asset classes including property, shares, bullion, crypto and more from 1 July 2027 except for new residential property and Aged Pension recipients.
  • Confirming, the 50% Discount for Capital Gains will no longer be available for Individuals, Trusts and Partnerships. Companies were not eligible for it with their lower tax rate and Super Funds will still keep their 33.3% CGT discount.
  • New tax rates from 1 July 2026 of:
    • $0 to $18,200 – 0%
    • $18,201 to $45,000 – 15% (Down 1%)(Then 14% on 1 July 2027)
    • $45,001 to $135,000 – 30%
    • $135,001 to $190,000 – 37%
    • $190,000+ 45%
    • Plus 2% base medicare levy on the above rates
  • Introduction of a $250 working Australians Tax Offset from the 2028 Financial Year.
  • Increasing the standard deduction for work-related expenses without substantiation to $1,000 from the 2027 Financial Year. You can still claim more than $1,000 of deductions but the usual substantiation rules will apply. Donations, union fees and professional association membership fees can be claimed on top of the $1,000 standard deduction. The current amount is $300.
  • Giving the voluntary option of Monthly PAYG Instalments and looking to force taxpayers with history of non-compliance onto Monthly PAYG Instalment reporting instead of Quarterly reporting.
  • The Private Health Insurance rebate for people aged over 65 will be reduced from 32.158% or 28.139% back to 24.118%.

Business

  • The Instant Asset Write Off of capital assets up to the limit of $20,000 for small businesses with a turnover of under $10 million will be made permanent.
  • The Government will introduce a Minimum 30% tax on Discretionary Trusts. From 1 July 2028, Trustees of a Discretionary Trust will pay a Minimum tax of 30% on their taxable income with a Non Refundable offset for Individuals and No Offset for Companies. Income distributed to Bucket companies could now be paying 55% to 60% of tax on the income being higher than the individual marginal tax rate of 47% inc medicare levy.
  • Reintroduction of the loss carry back rules for companies where they can carry a tax loss back to the two prior tax years and offset it against tax paid. This is limited to a company’s franking account balance.
  • Introduce a loss refundability scheme for small start-up companies from 1 July 2028 with turnover of less than $10 million that generate a tax loss in their first two years of operation. These companies will be able to utilise the loss to generate a refundable tax offset limited to the value of Fringe Benefits Tax and Withholding Tax on wages on Australian employees in the loss year.
  • All electric vehicles up to $75,000 that are provided before 1 April 2029 will continue to be exempt for Fringe Benefits Tax. Electric Vehicles costing more than $75,000 will be eligible for a 25% reduction of Fringe Benefits Tax.
  • Pay Day Super commences 1 July 2026 with Employers required to pay super for employees on the same day wages are paid. For the month of July 2026, this would require super for the quarter from 1 April 2026 to 30 June 2026 to be paid by 28 July 2026 while super is also to be paid from 1 July 2026 on each pay day going forward.

Superannuation

  • Super Funds exempt from the 30% Minimum tax on Capital Gains and they keep their 33.33% CGT Discount.

The Federal Government is estimating a $28.3 billion deficit for this 2026 Financial Year, a $31.5 billion deficit for the 2027 Financial Year, a $31 billion deficit for the 2028 Financial Year and a $34 billion deficit for the 2029 Financial Year. The forecast is for budget deficits for the next 10 years with the first year of a surplus possibly expected in 2036.

Government Gross Debt is expected to be $982 Billion in this 2026 FY increasing to $1.051 Trillion in the 2027 FY being 34% of GDP and peak at 35.8% of GDP in the 2029 FY with $1.193 Trillion of Gross Debt.

As these are only the main points, please click here for the NTAA Budget Summary and click here for the CPA Australia Budget Summary.

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