Blog · Tax news

Federal Budget 2026–27: what changed and what it means for you

By Blake Land, Director · 10 October 2026

The 2026–27 Federal Budget, handed down on 12 May 2026, changes capital gains tax, negative gearing and family trusts, and adds some relief for small business.

Five months on, some measures are law (passed with Royal Assent), some are draft legislation (released by Treasury for consultation) and some are announced only. Below we set out each measure by audience, with its start date and status as at 9 October 2026.

Budget 2026-27 at a glance

Small business: instant asset write-off and loss carry-back

$20,000 instant asset write-off is now permanent

Small businesses with aggregated turnover under $10 million can immediately deduct eligible assets costing less than $20,000 each. The asset must be first used or installed ready for use in the income year. The limit applies per asset, so you can write off several assets.

Assets costing $20,000 or more still go into the small business pool. This took effect from 1 July 2026 and is now law (Treasury Laws Amendment (Tax Reform No. 2) Act 2026, Royal Assent 26 August 2026). It ends the yearly uncertainty about whether the threshold would drop back to $1,000.

Loss carry-back returns for companies

Companies with aggregated turnover under $1 billion can carry back a tax loss and offset it against tax paid in either or both of the two previous years. The refund is limited to revenue losses and to the company's franking account balance. It applies to income years starting on or after 1 July 2026 and is now law. Sole traders and trusts can't use it.

Other business measures still to come

• Start-up loss refunds: new companies with turnover under $10 million could get a refund of tax losses in their first two years. The refund is capped at the PAYG withholding and FBT paid in the loss year. It starts from 1 July 2028 and is announced only.
• Dynamic PAYG instalments: from 1 July 2027, businesses could opt in to monthly instalments calculated in their accounting software. Taxpayers with a history of non-compliance would have to pay monthly. Announced only.
• Electric car FBT: the full FBT exemption continues until 31 March 2027. After that, the exemption narrows and becomes a 25% discount for most electric cars from 1 April 2029. Existing arrangements are expected to keep their treatment. Treasury has released draft legislation.

Property investors: negative gearing changes and capital gains tax changes 2027

These are the changes most Sunshine Coast investors have been asking us about. Both are now law under the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, which received Royal Assent on 26 June 2026. Both start on 1 July 2027.

Negative gearing changes

• Properties held at 7:30pm AEST on 12 May 2026 (including signed contracts not yet settled) can keep being negatively geared until sold.
• Established properties bought after that time and before 30 June 2027 can be negatively geared only until 30 June 2027.
• Established properties bought from 1 July 2027 can't be negatively geared. Rental losses can only be used against residential property income, including capital gains. Unused losses carry forward.
• New builds can still be negatively geared. A new build has to add to housing supply, such as a dwelling on vacant land or a knock-down that replaces one home with more homes.

The rules apply to individuals, partnerships, companies and most trusts. Super funds, including SMSFs, and widely held trusts are excluded. Commercial property and shares aren't affected.

Capital gains tax changes 2027

For individuals, trusts and partnerships, the 50% CGT discount is replaced by:

• cost base indexation using CPI, similar to the pre-1999 rules
• a 30% minimum tax on real capital gains, which only affects people whose gains would otherwise be taxed below 30%. People who receive a means-tested income support payment, such as the Age Pension, in the year of the sale are exempt.

Gains up to 1 July 2027 keep the old rules. If you own an asset before 1 July 2027 and sell it later, the 50% discount still applies to the growth up to 1 July 2027. The new rules apply only to growth after that date. You'll work out the 1 July 2027 value with a valuation or an ATO apportionment formula.

The main residence exemption and the four small business CGT concessions are unchanged. New build investors can choose either the 50% discount or indexation when they sell.

Tranche 2 is still in draft

The Treasury Laws Amendment (Tax Reform No. 3) Bill 2026 covers details such as the new build definition, apportionment, inheritances and relationship breakdowns. Consultation closed on 21 August 2026, and it's still draft legislation.

For more on how rental property is taxed now, see our guide to rental property tax deductions and CGT.

Trusts and family groups: 30% minimum tax on discretionary trusts

From 1 July 2028, the government proposes that trustees of discretionary trusts pay a minimum 30% tax on the trust's taxable income. Individual beneficiaries would get a non-refundable credit for that tax. Corporate beneficiaries ("bucket companies") would not.

Distributions to beneficiaries already on 30% or more would cost no extra tax overall. Distributions to family members on low rates would. Key points:

• Exclusions include fixed and widely held trusts, super funds, special disability trusts, deceased estates and charitable trusts. Some income is also excluded, such as primary production income and income from testamentary trusts that existed at announcement.
• Wages paid to family members who work in the business don't attract the minimum tax.
• Restructure rollover: for three years from 1 July 2027, you could move assets out of a discretionary trust into a company or fixed trust without income tax or CGT consequences.

Status: draft legislation. Treasury released the exposure draft on 3 September 2026 and consultation closed on 18 September. Industry reports say the draft also adds an election that may let some existing trusts sit outside the minimum tax. The detail could still change.

Our plain-English guide, family trusts explained, covers how trusts work today.

Individuals: tax cuts and offsets

• $1,000 standard deduction: from the 2026–27 return, employees can claim a standard deduction of up to $1,000 for work-related expenses without receipts. You can still claim actual expenses if they're higher. Now law.
• Working Australians tax offset: a non-refundable offset of up to $250 a year for residents with labour income, sole traders included, from 2027–28. Now law.
• Tax cuts already legislated: the 16% tax rate fell to 15% on 1 July 2026 and falls to 14% on 1 July 2027. These were announced in the 2025–26 Budget and are now law.

Super: few new measures, but one big SMSF change

The Budget had few new super measures, but the Senate deal that passed Tax Reform No. 1 changed SMSF borrowing.

• SMSF borrowing restricted: from 10 August 2026, an SMSF can only use a limited recourse borrowing arrangement (LRBA) to buy real property if it's business real property. Existing LRBAs, refinancing of existing LRBAs, and binding contracts exchanged before 10 August 2026 aren't affected. Now law.
• CGT and negative gearing: the changes apply to individuals, trusts and partnerships. Complying super funds, including SMSFs, are outside them.
• Already in place from 1 July 2026: Payday Super and the extra tax on earnings for super balances above $3 million (Division 296). Both were legislated before this Budget.

Thinking about property in your fund? Talk to our SMSF accountants.

What to do now

1. Keep records of when you bought each investment property. The date and time of your contract decides which negative gearing rules apply.
2. Plan for the 1 July 2027 valuation. If you hold property, shares or other assets with large gains, think about how you'll show their value at that date.
3. Review your family trust distributions. Model what a 30% minimum tax from 2028–29 would mean, and whether a company or fixed trust would suit you better. Don't restructure until the law is final.
4. Check SMSF property plans. New residential property purchases in an SMSF can't be funded with an LRBA.
5. Companies with a loss this year: ask us whether carrying the loss back would get you a refund in your 2026–27 return.

How we help

We're a registered tax agent on the Sunshine Coast, and we follow these changes as they move through Parliament. We can model how the CGT, negative gearing and trust changes affect you, review your structure through our business structure service, and advise SMSF trustees on property and borrowing.

Frequently asked questions

General information only. It doesn't consider your personal circumstances, so get advice before acting.