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Budget Bulletin
Australian Federal Budget 2026-27: Snapshot Summary
Key announcements, tax changes, winners, losers, and strategic business implications — prepared for partners, directors and business advisory clients.
A productivity, savings and tax-reform Budget framed around intergenerational fairness, housing supply, and resilience to the global oil shock.
Budget at a Glance
Tax Changes
The 2026-27 Budget is the most reform-heavy package since the 2000 GST. Property, trust and capital-gains settings have been re-engineered around an intergenerational-fairness narrative. The reforms are heavily transitional — most start dates fall in FY27 or FY28, giving advisers a discrete planning window.
Capital Gains Tax: 50% Discount Replaced by CPI Indexation
The 50% CGT discount is being phased out in favour of a pre-1999 inflation-indexation model — tax is paid only on the real, inflation-adjusted gain.
Negative Gearing: Restricted to New Builds
Investment-property losses will only be deductible against non-investment income where the dwelling is newly constructed. Existing arrangements are grandfathered.
Discretionary Trusts: 30% Minimum Tax at Trustee Level
Trustees will pay 30% on the taxable income of the trust (or higher applicable rate). Beneficiaries receive non-refundable franking-style credits to prevent double taxation.
Personal Income Tax
Legislated bracket relief proceeds. A new $1,000 standard work-deduction and a one-off "earned income offset" deliver direct cost-of-living support.
Small Business & SME Incentives
The $20,000 instant asset write-off becomes a permanent feature of the tax system. A two-year loss carry-back scheme reinstated. R&D cap lifted.
Superannuation
No new headline super tax measure. The Division 296 tax on balances above $3m takes effect from 1 July 2026 as previously legislated. Super funds are expressly excluded from CGT discount reform.
EV FBT Exemption & Fuel Excise
The FBT exemption for novated-leased EVs is being scaled back following cost blow-out from $90m to $1.35bn. Fuel excise concessions extended in response to the oil shock.
GST, ATO Compliance & Integrity
No change to the GST rate or base. Continued investment in tax integrity, with the ATO's Tax Avoidance Taskforce and Top 500 & Next 5000 reviews extended.
Business Winners & Higher-Exposure Areas
Residential construction
Negative gearing now only available for newly built housing, plus $2bn for enabling infrastructure to deliver 65,000 new homes over a decade. Build-to-rent MIT concession retained.
Small business & SMEs
Permanent $20k instant asset write-off ends 11 years of temporary extensions; loss carry-back restored; ~376,000 hours/year compliance saving expected.
Innovation & R&D-heavy firms
R&D expenditure cap lifted toward $250-$300m. Useful for scaled R&D-spenders; smaller firms benefit from existing settings.
Defence & security primes
Defence spending heading to 3% of GDP by 2033 ($53bn over 10 years). Capacity, sovereign-capability and workforce funding flow downstream.
Energy & fuel infrastructure
$10.7bn fuel security & resilience package: $7.5bn fuel and fertiliser facility, $3.2bn strategic reserve, refinery feasibility funding.
Construction & civil contractors
$3.8bn for the Suburban Rail Loop, plus housing-enabling infrastructure investment for water, roads and utilities.
Property investors
Loss of negative gearing on existing stock + transition to CPI indexation for CGT. Re-pricing risk for portfolios reliant on the leverage and CGT-discount combination.
Family-owned enterprises
30% trustee-level minimum tax from FY29. Income-splitting benefits compressed; restructuring costs and adviser load rise. ~350,000 trusts in scope.
NDIS service providers
Eligibility tightening removes ~160,000 participants by 2030; mandatory registration; ~$35bn medium-term savings. Revenue and compliance pressure.
Private health insurers
Age-based rebate loading abolished; ~$3bn save; ~44,000 over-65s expected to drop cover. Adverse selection & lapse risk.
Salary-packaging & auto finance
EV FBT exemption tapers from April 2027. Premium-EV novated-lease volumes likely to compress; demand pulled forward into FY27.
Startup founders & VC
CGT indexation replaces 50% discount on new acquisitions from FY28. Mixed-signal risk: ESOP and founder-exit modelling needs refresh.
Household Impact
COST OF LIVING
$200-$300 earned income offset for wage/salary earners (2026-27 only); legislated tax-bracket reduction adds ~$268 for an average earner.
ENERGY & FUEL
26.3c/L fuel excise reduction extended; $150 quarterly energy rebates continue for eligible households and small businesses through 2026.
HEALTHCARE
PBS scripts capped at $25 from 1 Jan 2026; expanded bulk-billing incentives; women's health additions to PBS; over-65 PHI premiums rise $226-$255.
HOUSING
5% Deposit Scheme uncapped for first home buyers; $2bn enabling infrastructure for 65,000 new homes; $60m youth community housing.
FAMILY SUPPORT
Child Care Subsidy 3-Day Guarantee in effect; ~100,000 additional families eligible; minimum-wage uplift & HELP indexation relief continue.
WELFARE & AGED CARE
Aged-care personal-care subsidies restored; NDIS eligibility tightened; HELP debt thresholds lifted; single-parent payment access broadened.
Re-platform the client tax stack. The trifecta of CGT indexation + negative-gearing restriction + 30% trust minimum is the most material structural shift since 2000. Every high-net-worth and family-business plan should be re-modelled before 30 June 2027.
Use the transition windows deliberately. Three start dates — Budget night (CGT grandfathering), 1 Jul 2027 (CGT & negative gearing), 1 Jul 2028 (trust minimum) — create a sequenced planning runway. Map client decisions to each gate.
Stress-test property portfolios on a non-geared, indexed-CGT basis. Cash-flow break-even and hold-period sensitivities should drive realisation timing decisions.
Initiate trust-structure reviews now. Rollover relief from 1 July 2027 is the planning anchor — fixed-trust and corporate-beneficiary alternatives need scenario costing for each client.
Bring forward capex and innovation spend. Permanent IAWO + reinstated loss carry-back + higher R&D cap create a favourable, time-limited window for FY27 investment.
Re-cut SMSF strategies. Division 296 lands 1 July 2026 with no Budget reprieve. Liquidity, valuation methodology and lump-sum strategies require renewed focus.
Re-base sector forecasts. NDIS providers, private-health insurers and EV-leasing intermediaries face the sharpest revenue-model adjustments.
Immediate Action Checklist
Review tax structures
Trust, company & partnership architectures against the 30% trustee tax (FY29).
Assess trust exposure
Quantify beneficiary impact; model fixed-trust or corporate rollovers from 1 July 2027.
Revisit investment strategy
CGT modelling under indexation; pre-FY28 acquisition decisions.
Update cashflow forecasts
Incorporate IAWO permanence, loss carry-back and income-tax bracket changes.
Re-model property portfolios
Strip out negative-gearing offset for post-FY28 acquisitions of established stock.
Refresh SMSF / Div 296 plans
Valuations, liquidity and pension strategy for balances above $3m.
Capital-allocation review
Time R&D and capex into the FY27 incentive window.
Consult on transitional rules
Identify clients with cross-period exposure (Budget night to 30 Jun 2027 to 30 Jun 2028).
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