Budget Highlights

From a tax perspective, this Budget is possibly the most significant in the last 20 years. What stands out? 

Capital gains tax – from 1 July 2027, the 50% CGT discount will be replaced by cost base indexation for assets held for more than 12 months, with a 30% minimum tax on net capital gains.  

Negative gearing– negative gearing for residential property will be limited to new builds. From 1 July 2027, losses from established residential properties acquired from 7:30PM (AEST) on 12 May 2026 will only be deductible against rental income or the capital gains from residential properties. Excess losses can be carried forward to be offset against residential property income in future years.  

Discretionary trusts - from 1 July 2028, trustees will pay a minimum tax of 30% on the taxable income of discretionary trusts. Beneficiaries, other than corporate beneficiaries, will receive non-refundable credits for the tax payable by the trustee. 

Tax cut– the Working Australians Tax Offset of $250 will be available to taxpayers who derive income from work (eg salaries and wages and a sole trader’s business income), as from the 2027-28 income year.  

Instant asset write-off- the $20,000 threshold for the instant asset write-off for small business will be permanent from 1 July this year. 

Loss carry back– for income years commencing on or after 1 July 2026, companies with aggregated annual global turnover of less than $1 billion will be able to carry back a tax loss and offset it against tax paid up to two years earlier. 

FBT exemption for EVs- the FBT exemption for zero or low emission vehicles will be phased out between 1 April 2027 and 31 March 2029, to be replaced by a 25% discount from 1 April 2029 onwards.  

PAYG instalments- from 1 July 2027, small and medium businesses will be able to opt in to reporting and paying PAYG instalments monthly.