What It Means for Individuals, Investors and Businesses
The Federal Government handed down the 2026–27 Federal Budget on 12 May 2026, with a strong focus on cost-of-living relief, housing affordability, productivity and tax reform.
While a number of measures are still proposals and subject to legislation, several announcements may have significant implications for individuals, business owners, investors and family groups.
Below is a summary of some of the key measures likely to be of interest to our clients.
Personal Income Tax and Cost of Living Measures
Further Personal Tax Relief
The Government has announced additional personal income tax relief measures from 1 July 2026, including a proposed new tax offset for eligible workers commencing from 1 July 2027.
These measures are intended to provide modest relief for middle-income earners and improve workforce participation.
Simplified Employee Deductions
A proposed $1,000 standard deduction for work-related expenses will allow many employees to claim deductions without retaining detailed substantiation records.
The measure is aimed at reducing compliance complexity for taxpayers with relatively straightforward claims.
Continued Cost-of-Living Support
The Budget also includes ongoing funding and support measures relating to:
- Healthcare
- Childcare
- Energy relief
- Household assistance programs
Property and Investment Tax Changes
Proposed Changes to Capital Gains Tax
One of the most significant announcements relates to the proposed reform of Capital Gains Tax (CGT).
The Government has proposed replacing the current 50% CGT discount for assets held longer than 12 months with an inflation indexation model from 1 July 2027.
If legislated, this could materially affect:
- Property investors
- Trusts
- Long-term investment strategies
- Business succession planning
Clients considering future asset sales or restructures should seek advice early.
Negative Gearing Reforms
The Government has also proposed limiting negative gearing concessions for certain future investment property acquisitions, with a stronger focus on encouraging investment into new housing supply.
The detail and practical application of these rules will be closely watched by the market over coming months.
Trust Taxation Measures
A proposed minimum 30% tax rate on discretionary trust distributions has also been announced for future years.
If implemented, these measures may affect:
- Family group tax planning
- Distribution strategies
- Existing investment and asset protection structures
Small Business Measures
Permanent Instant Asset Write-Off
The Budget proposes making the $20,000 instant asset write-off permanently available for eligible small businesses with turnover under $10 million.
This may continue to provide planning opportunities for equipment and technology purchases.
Company Loss Carry-Back Rules
Eligible companies may continue to access loss carry-back provisions, allowing current year tax losses to be offset against profits from prior years in certain circumstances.
Support for Start-Ups and Innovation
Additional measures have also been announced to support start-up businesses and innovation, including proposed refundable tax loss arrangements for qualifying new businesses.
Productivity and Compliance Reform
The Government has flagged broader productivity and red tape reduction initiatives aimed at simplifying regulatory and compliance obligations for business.
Economic Outlook
The Government forecasts continued budget deficits over the forward estimates, although inflation is expected to continue moderating.
The broader economic strategy remains focused on:
- Inflation management
- Housing supply
- Workforce participation
- Productivity growth
- Long-term fiscal sustainability
What Should Clients Be Doing?
While many of the announced measures are not yet law, the Budget contains several proposals that may significantly impact:
- Property investment decisions
- Trust structures
- Tax planning strategies
- Business structuring
- Succession planning
Given the potential long-term implications of some proposed reforms, we recommend clients seek professional advice before making financial or investment decisions based on the Budget announcements.
If you would like to discuss how the Federal Budget may affect your circumstances, please contact our office on 3210 5500.
