2026-2027 FEDERAL BUDGET ANNOUNCEMENTS
Please note these are Budget announcements only at this stage and remain subject to legislation.
Key proposed measures
Property investors
From 1 July 2027, negative gearing on residential property is proposed to be limited to new residential builds. For established residential properties purchased after 7:30pm AEST on 12 May 2026, rental losses will generally be quarantined and only offset against other residential property income or future gains. Existing properties held before Budget night are expected to be protected.
The CGT 50% discount is proposed to be replaced with an inflation-adjusted indexation method for gains accruing from 1 July 2027. A minimum tax rate of 30% is also proposed to apply to realised capital gains. Importantly, gains accrued before 1 July 2027 should not be impacted, including for pre-CGT assets.
Investors in qualifying new residential builds are expected to retain access to the 50% CGT discount.
Discretionary trusts
From 1 July 2028, a 30% minimum tax rate is proposed for discretionary trusts. The tax would generally be paid by the trustee, with non-refundable credits available to most beneficiaries. Some trusts are expected to be excluded, including certain farming, testamentary, deceased estate, disability, fixed and charitable trusts.
A three-year restructure window is also proposed, allowing eligible small businesses to restructure from discretionary trusts into companies or fixed trusts with rollover relief.
Small business measures
The $20,000 instant asset write-off is proposed to become permanent from 1 July 2026 for small businesses with aggregated turnover below $10 million.
The company loss carry back rules are proposed to be permanently reintroduced from 1 July 2026 for companies with turnover up to $1 billion, allowing eligible companies to offset current losses against tax paid in the previous two years.
From 1 July 2028, eligible small start-up companies may be able to convert tax losses into a refundable tax offset, capped by PAYG withholding and FBT paid.
Electric vehicles
The current full FBT exemption for eligible electric vehicles is proposed to continue until 31 March 2027.
From 1 April 2027 to 31 March 2029, the full exemption is expected to continue only for eligible EVs costing $75,000 or less. EVs above $75,000 but below the fuel-efficient luxury car tax threshold are expected to receive a 25% FBT discount.
From 1 April 2029, the full exemption is proposed to be replaced by a permanent 25% FBT discount for eligible EVs below the fuel-efficient luxury car tax threshold.
Existing qualifying EV lease arrangements are expected to be protected.
Individuals
A new $250 Working Australians Tax Offset is proposed to commence from the 2027–28 income year.
A new $1,000 instant deduction for work-related expenses is proposed from the 2026–27 income year. This is not a $1,000 refund; it is a deduction that reduces taxable income. Taxpayers with work-related expenses above $1,000 should still be able to claim the actual amount, provided they keep appropriate records.
Article posted 14/05/2026