13/05/2026
Ledgersmith
Budget 26-27
Treasurer Jim Chalmers called this the most ambitious Budget in decades. It rewrites 25 years of CGT rules, restricts negative gearing on established property, hits discretionary trusts, cuts income tax five times, and introduces sweeping business support.
Keep in mind none of this has been legislated yet. Government will need to introduce and pass these bills. We will keep you updated as legislation progresses.
Read what applies to your situation and reach out to us. No question is too small, and some of these changes will need a conversation sooner rather than later.
CAPITAL GAINS TAX
⊛ 50% CGT discount replaced with inflation indexation, from 1 July 2027
The flat 50% discount is gone for individuals, trusts, and partnerships. Instead, the cost base is adjusted for inflation each year so you only pay tax on your real gain. A 30% minimum tax rate on real gains also applies. This is a return to the pre 1999 system.
⊛ New builds: your choice
If you invest in a new residential build, you can choose the old 50% discount or the new indexation rules when you sell.
⊛ Existing investments and main residence: no change
Gains accrued before 1 July 2027 still attract the 50% discount. The family home exemption is unchanged. Small business CGT concessions are unchanged. Super funds are unaffected.
⊛ Pre-1985 assets: a 40-year exemption ends from 1 July 2027
Assets acquired before 19 September 1985 have always been fully exempt from CGT. From 1 July 2027, any new gain on those assets becomes taxable. This covers shares, property, goodwill, and partnership interests. If this applies to you, contact us well before June 2027.
NEGATIVE GEARING
⊛ Negative gearing restricted to new builds only, from 1 July 2027
From 1 July 2027, you can only deduct residential property losses against other income (like wages) if the property is a new build. Established properties purchased after 7:30pm on 12 May 2026 can only offset losses against rental income or future property capital gains. Excess losses carry forward.
⊛ Existing investors: nothing changes until you sell
Every property held before Budget night, including those under contract but not yet settled, is grandfathered under current rules until disposal.
⊛ Not all "new" properties qualify
Knock-down rebuilds, granny flats, and properties occupied for 12+ months before resale do not qualify as new builds for this purpose.
YOUR TAX
⊛ 16% tax rate drops to 15% (then 14%)
The tax rate on income between $18,201 and $45,000 falls from 16% to 15% on 1 July 2026, then to 14% on 1 July 2027. Every taxpayer gets a cut of up to $268 this year and up to $536 from next year.
⊛ $1,000 instant work expense deduction, from 2027 tax return
Claim up to $1,000 in work-related deductions without receipts. 6.2 million workers save an average of $205. No receipts required, no hassle.
⊛ Working Australians Tax Offset (WATO), from 2028 tax return
A permanent new $250 annual offset for 13 million workers, applied automatically at tax time. Increases the effective tax-free threshold to $19,985, or $24,985 for those also eligible for the Low Income Tax Offset.
DISCRETIONARY TRUSTS
⊛ 30% minimum tax on discretionary trust income, from 1 July 2028
Trustees will pay a minimum 30% tax on all taxable income distributed from discretionary trusts, regardless of the marginal rate of beneficiaries. Non-corporate beneficiaries receive a non-refundable credit. Does not apply to fixed trusts, super funds, charitable trusts, deceased estates, or primary production income.
⊛ Three-year restructuring window opens 1 July 2027
Rollover relief is available from 1 July 2027 to 30 June 2030 for those who want to restructure out of a discretionary trust into a company or fixed trust without triggering immediate tax consequences.
If you use a family trust for investment income or capital gains, the combination of the new CGT rules and the 30% trust minimum tax is significant. Talk to us before July 2027.
SUPERANNUATION
⊛ Division 296: extra 15% tax on balances above $3 million, from 1 July 2026
Already legislated. If your total super balance exceeds $3 million, earnings on the portion above that threshold face an additional 15% tax (30% combined). Above $10 million, the combined rate is 40%. Applies to realised earnings only. Around 80,000 Australians are affected.
⊛ Payday Super: employers must pay super every payday, from 1 July 2026
Already legislated. Super contributions must land in employees' funds within seven business days of each payday. Quarterly payments are over. SMSF trustees need to ensure lodgements are current and banking is NPP-enabled or contributions cannot be processed.
⊛ Small Business Super Clearing House closes 1 July 2026
The ATO's SBSCH closes permanently. Employers using it must switch to an alternative clearing house before then.
BUSINESS
⊛ Loss carry-back returns, from 1 July 2026
Companies with turnover up to $1 billion will be able to offset current losses against tax paid in the previous two years. Up to 85,000 companies benefit annually.
⊛ $20,000 instant asset write-off is permanent, from 1 July 2026
Small businesses with turnover under $10 million can immediately deduct eligible assets under $20,000. Made permanent from 1 July 2026.
⊛ ACCC fines doubled
Maximum penalty for serious competition and consumer law breaches rises from $50 million to $100 million, with extra ACCC resourcing on enforcement and fuel price monitoring.
⊛ Monthly PAYG instalments available, from 1 July 2027
Businesses can opt in to monthly PAYG payments via tax software, aligning instalments with actual activity rather than quarterly estimates.
⊛ Venture capital tax incentives expanded, from 1 July 2027
Asset caps, unchanged for over 20 years, updated to align with modern valuations, opening more VC investment including from super funds.
⊛ Start-up loss refundability, from 1 July 2028
New companies in their first two years can receive a refundable tax offset, capped at FBT and PAYG withholding from employee wages.
⊛ R&D Tax Incentive reformed, from 2028-29
Better targeting and simplification to support high-impact innovation.
TRADIES AND CONSTRUCTION
⊛ Free access to mandatory Australian standards
Construction, plumbing, and electrical standards will be free to access. Saves small firms up to $1,600 per year in access fees.
⊛ National licensing for tradies
Nationally harmonised licensing for electrical and engineering occupations being progressed, removing state-by-state barriers to working across borders.
⊛ $85.2 million for migrant skills recognition
Accelerated assessments for overseas-trained tradies, potentially cutting time to workforce entry by up to six months.
ALSO DECIDED
⊛ Fuel security: $14.8 billion fuel resilience package including a $3.2 billion Fuel Security Reserve and minimum 50-day stockholding obligations for diesel and jet fuel.
⊛ Healthcare: $25 billion additional public hospital investment. Medicare Urgent Care Clinics made permanent with $1.8 billion over four years. $5.9 billion in new PBS medicines.
⊛ Housing: $2 billion Local Infrastructure Fund for housing-enabling roads, water, and sewerage. Foreign buyer ban on established homes extended to 30 June 2029.
⊛ NDIS: Tighter eligibility assessments, stronger cost controls, and $820 million to combat fraud and expand mandatory provider registration.
⊛ Digital ID: $654.3 million to expand secure identity verification.
⊛ Environmental approvals: $500 million+ to streamline EPBC approvals using AI for housing and critical minerals projects.
This is a general overview only and not financial or tax advice. To understand what these changes mean for your situation, reply to this email or call us on (02) 9542 4655 . We are ready to help you plan.
