Budget Update 2026

The Government has proposed significant tax reforms that could reshape investing, property ownership, trusts and electric vehicle benefits over the coming years.

Here are the key changes:

Capital Gains Tax (CGT) Changes — From 1 July 2027
• The current 50% CGT discount will be replaced with cost base indexation for assets held over 12 months
• A new 30% minimum tax on net capital gains will apply
• Existing investments receive transitional protection — gains accrued before 1 July 2027 can still access the 50% discount
• Pre-CGT gains accrued before 1 July 2027 remain exempt
• Investors in new residential property can choose between:
50% CGT discount OR
Indexation + 30% minimum tax
• Age Pension and income support recipients exempt from the minimum tax

Negative Gearing Reforms — From 1 July 2027
• Losses from established residential properties will only offset:
– rental income, or
– future residential property capital gains
• Excess losses carried forward for future use
• Applies to established properties acquired after 7:30pm AEST on 12 May 2026
• Existing property owners are grandfathered until disposal
• New builds remain exempt

Discretionary Trust Tax Changes — From 1 July 2028
• New minimum 30% tax on discretionary trust income
• Trustees pay the tax, with beneficiaries receiving non-refundable credits
• Corporate beneficiaries lose access to trustee tax credits
• Fixed trusts, super funds, deceased estates, and some primary production income excluded
• Expanded rollover relief available for restructuring out of discretionary trusts

New Working Australians Tax Offset
• From the 2028 income year, eligible workers will receive a permanent $250 tax offset
• Applies to salary/wage earners and sole traders

$20,000 Instant Asset Write-Off Made Permanent
• Effective 1 July 2026
• Available for small businesses with turnover under $10 million

Electric Vehicle FBT Changes — From 1 April 2029
• Current EV FBT exemption phases down over time
• Some EVs under $75k retain full exemption if provided before 1 April 2029
• New 25% FBT discount introduced for eligible EVs

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