2026-27 Federal Budget: What you need to know

Treasurer Jim Chalmers handed down Australia’s most ambitious tax reform in decades on 12th
May 2026 with changes to CGT, negative gearing and trust distributions which will affect how you
invest and structure your affairs.

This edition covers only what matters for our clients’ tax positions for individuals,
companies, trusts and partnerships. Several changes have generous grandfathering, but
the window to plan ahead is limited. Please reach out to discuss your specific situation.

CGT discount – replaced with cost base indexation

The 50% CGT discount is gone for individuals, trusts and partnerships. Instead, only the
inflation adjusted (real) gain is taxed, with a 30% minimum rate applying. Gains on assets
held before 1 July 2027 are fully protected so this only affects future gains.

Individuals, Trusts & Partnerships: 30% minimum on real gains; 50% discount no longer available
New build investorts: Can choose 50% discount OR Indexation – whichever is more beneficial
Grandfathered: Gains accrued before 1 July 2027 – no change
Not affected: Main residence exemption and SMSF CGT

Negative Gearing – new builds only

From 1 July 2027, only investors in new builds can offset property losses against wages
and other income. If you buy an established property after budget night, losses can only be
deducted against your rental income not your salary.

Properties held at budget night: Fully grandfathered so nothing changes
New builds (any date): Full negative gearing retained against all income
Established (post budget night): Losses deductible against rental income only; unused losses
carry forward

Discretionary trusts — 30% minimum tax

From 1 July 2028, Trustees of discretionary (family) trusts will be required to pay a minimum 30% tax on all distributions, regardless of the beneficiary’s personal tax rate. This ends the tax advantage
of splitting trust income across family members on lower rates.

Who pays: The trustee — at 30% minimum on every distribution
Exempt: Fixed trusts, charitable trusts, special disability trusts, deceased estates
Primary production: Farming income carved out — agricultural trusts unaffected
Restructure window: 3 year rollover relief from 1 July 2027 for small business restructures

Companies & small business — write off, loss carry back & start ups

From 1 July 2026 The $20,000 instant asset write-off is now permanent for businesses under $10M turnover. Companies up to $1B turnover can carry a current year tax loss back against tax paid in
either of the prior two years to generate a cash refund which will benefit up to 85,000
businesses.

Instant write-off: Permanent — assets under $20,000, turnover < $10M, from 1 July 2026
Loss carry-back: Offset losses against tax paid in prior 2 years — up to $1B turnover
$1,000 work deduction: Individuals can claim up to $1,000 in work expenses without receipts
from 2026–27

Key dates to act on

Now – 30 June 2027: Review trust distributions; consider realising gains under current rules;
assess new property purchases carefully
1 July 2027: CGT indexation and negative gearing restrictions commence; trust restructure rollover window opens
1 July 2028: Trust 30% minimum tax starts; start-up loss refundability and enhanced R&D incentive commence

What you should do next?

These reforms are significant, but the window to act is open. Whether you run a trust, hold investment properties, operate a company, or are simply trying to understand what this means for your personal tax – we’re here to help you work through it.

Get in touch with the team at Account For It and let’s talk through your situation.