Australian Federal Budget 2026-27 tax reforms

The 2026-27 Australian Federal Budget, delivered on May 12, 2026, proposes significant structural changes to the taxation of property, capital gains, and trusts Verified Answer #1Verified Answer #2. These measures are currently proposals and carry material legislative risk, as their passage may require negotiations with the Senate crossbench or the Greens Verified Answer #1Verified Answer #2.

Capital Gains Tax Reforms

Starting July 1, 2027, the government proposes to abolish the 50% Capital Gains Tax (CGT) discount for individuals, trusts, and partnerships Verified Answer #1Verified Answer #2. This discount will be replaced by a cost-base indexation model and a minimum 30% tax on net capital gains Verified Answer #1Verified Answer #2. To assist with these changes, a three-year CGT rollover relief window is scheduled to begin on July 1, 2027, allowing investors to restructure assets Verified Answer #1.

Property and Negative Gearing

The budget introduces a quarantine on negative gearing for established residential properties acquired after 7:30 pm AEST on May 12, 2026 Verified Answer #1Verified Answer #2. Effective July 1, 2027, losses from these established properties can only be offset against rental income or capital gains from residential property, rather than high wage income Verified Answer #1Verified Answer #2. Newly constructed properties are fully exempt from these restrictions Verified Answer #1Verified Answer #2.

Trust and Corporate Taxation

Discretionary trusts will face a new minimum tax of 30% on their income starting July 1, 2028 Verified Answer #2. Additionally, the budget targets corporate beneficiaries with double-taxation penalties Verified Answer #1. Because the CGT discount is being removed, investment companies may become a preferred vehicle for growth assets, as they cap taxation on retained earnings at 30%, or 25% for base rate entities Verified Answer #1.

Impact on Superannuation

Superannuation is expected to remain a tax-efficient vehicle for growth assets, as the budget proposals are not anticipated to alter the existing CGT discount for superannuation funds Verified Answer #2. High-income earners may prioritize maximizing both concessional and non-concessional contribution caps to shelter capital growth from the new 30% minimum tax Verified Answer #2.