Treasurer Jim Chalmers has delivered the 2026–27 Federal Budget against a backdrop of higher inflation (driven partly by the Middle East conflict), rising fuel prices, and subdued productivity growth.
It includes some of the most significant tax reforms in decades, with big changes to Capital Gains Tax (CGT), negative gearing and discretionary trusts, plus targeted cost-of-living relief for individuals and small businesses.
Budget snapshot
Measure
2026-27 (in $ billions)
Underlying cash deficit
$(31.5)
Gross debt
$1,051
Individual income tax (projected revenue)
$390.9
Company and resource rent taxes
$159.0
Health spending
$136.9
Social security and welfare
$308.7
Major tax reforms + key dates
Capital Gains Tax (CGT) – from 1 July 2027
50% CGT discount is replaced by cost base indexation (CPI) for assets held > 12 months
30% minimum tax applies to net capital gains – affects individuals, trusts and partnerships
Pre-1985 (pre-CGT) assets will also be subject to CGT on gains from 1 July 2027
Investors in new residential builds may choose the old 50% discount or new indexation method
Transitional relief: gains before 1 July 2027 stay under current rules
Negative gearing (residential property) – from 1 July 2027
Losses on established residential properties purchased after 7:30 pm AEST 12 May 2026 can only be used against rental income or gains from other residential properties
Properties owned at time of announcement won’t be affected by new rules until sold
New residential builds remain fully eligible for negative gearing
Discretionary trust minimum tax – from 1 July 2028
Trustees pay a minimum 30% tax on all taxable income of discretionary trusts
Beneficiaries receive non-refundable tax credits for tax paid at trustee level
Excluded: fixed trusts, superannuation funds, deceased estates, charitable trusts, primary production income
Roll-over relief available for 3 years from 1 July 2027 for restructuring into a company or fixed trust
Individuals
Measure
Detail / start date
Personal income tax cuts
16% rate → 15% from 1 Jul 2026; 15% → 14% from 1 Jul 2027 (taxable income $18,201–$45,000). Up to $536/year saving from 2027-28
Working Australians Tax Offset (WATO)
$250 annual offset on work income (wages, sole trader income). Effective tax-free threshold ~$19,985. From 1 Jul 2027
$1,000 instant tax deduction
Standard deduction for work-related expenses – no receipts needed below $1,000. From 2026–27 income year
Age-based uplift removed from 1 Apr 2027. Savings reinvested in aged care
Business + corporate
Measure
Detail / start date
Instant Asset Write-Off (IAWO)
Permanently extended at $20,000 for small businesses (turnover < $10M) from 1 Jul 2026
Loss Carry-Back
Companies with global turnover < $1B can carry back revenue losses against tax paid up to 2 years earlier. From 1 Jul 2026
Start-up loss relief (refund benefit)
Eligible start-ups (turnover < $10M, first 2 years) can claim a refundable offset on losses. From 1 Jul 2028
R&D tax incentive reforms
Higher offsets, lower eligibility threshold (2% → 1.5%), refundable offset threshold rises to $50M turnover. From 1 Jul 2028
Venture capital incentives
VCLP investee cap: $250M → $480M | ESVCLP cap: $50M → $80M | Max fund size: $200M → $270M. From 1 Jul 2027
PAYG instalments
SMEs may opt in to monthly PAYG reporting and tax payments (instead of quarterly). From 1 Jul 2027
Other key measures
Measure
Detail / start date
Fuel excise reduction
32 cents/litre reduction for petrol and diesel for 3 months from 1 Apr 2026
Electric vehicle FBT
Full FBT exemption (EVs ≤ $75k) maintained until 1 Apr 2029; permanent 25% discount (15% statutory rate) from 1 Apr 2029
Foreign buyer ban extended
Ban on foreign purchase of established dwellings extended to 30 Jun 2029
Payday Super
Superannuation must be paid at same time as salary and wages. From 1 Jul 2026 (already law)
Fraud protection (ATO)
$86.3M over 4 years for Phase 2 Counter Fraud Strategy; expanded ATO powers over tax agents. From 1 Jul 2026
Division 296 super tax
Already law: additional 15% tax on super earnings for balances > $3M. From 2026–27 income year
This summary is for general information only and isn’t tax or financial advice. Some measures are still proposals and subject to legislation. Get in touch with our team through what it could mean for you.
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