2026/27 Federal Budget Breakdown

After weeks of speculation and leaks, last night we finally saw the Federal Budget in full.

The Government has made its intentions clear – to reduce tax benefits for investors and some business operators, while attempting to reshape the property market in favour of owner-occupiers.

There is a significant amount to work through. At a high level, key proposed measures include:

1. Instant asset write-off

From 1 July 2026, eligible small businesses with turnover under $10 million can continue to immediately deduct the full cost of eligible depreciating assets priced under $20,000.

2. Loss carry-back rules

From 1 July 2026, companies can continue to offset current year tax losses against prior year taxable profits.

3. Capital gains tax discount changes

From 1 July 2027, the Government proposes to transitionally abolish the 50% capital gains tax (CGT) discount in favour of the former CPI indexation methodology.

4. Minimum tax on capital gains

From 1 July 2027, a 30% minimum tax rate is proposed to apply to capital gains, including on previously exempt pre-1985 assets.

5. Negative gearing restrictions

From 1 July 2027, negative gearing deductions against other income are proposed to be restricted, unless the property is a new build or was held prior to Budget night.

6. Discretionary trust income

From 1 July 2028, a proposed minimum 30% tax may apply to income derived through discretionary trusts.

What does this mean?

It is important to note that these measures are budget announcements only and have not yet been legislated.

There will likely be considerable consultation and debate in the coming months before the final detail and scope of these measures are confirmed.

Our advice

We will continue to keep you informed as matters progress.

In the meantime, please do not hesitate to contact us if you have any questions about how these proposed changes may affect you or your business.