Before we take any drastic action, it is important to wait for the legislation to be drafted and then passed. There is no major change for the 2026 or 2027 tax assessments. July 2027 and 2028 is when the changes will start. Here is a quick list of the announcements relevant to taxation and our thoughts.

Capital gains tax reform

From 1 July 2027, the 50% capital gains tax discount (which was introduced back in 1999) will be replaced by cost base indexation for assets held for more than 12 months, with a 30% minimum tax imposed on most net capital gains.

All CGT assets – including pre-1985 CGT assets – held by individuals, trusts and partnerships are affected by these changes. However, transitional arrangements mean the reforms only apply to gains accruing on or after 1 July 2027. Gains on pre-1985 assets accrued before 1 July 2027 will remain CGT exempt.

Investors in new residential properties will be able to choose either the 50% CGT discount, or cost base indexation and the minimum tax.

These changes are significant and CGT across all investments will increase in most circumstances with the exception of 'new' property. Nothing changes until July 2027, what is most important is that investments at that date are valued for future calculations.

Negative gearing curbed

From 1 July 2027, losses related to established residential investment properties purchased from today onwards will only be deductible against rental income or capital gains from residential property. Excess losses will be carried forward for offset against residential property income in future years. This change applies to individuals, partnerships, companies and most trusts. Superannuation funds, including SMSFs, are excluded from the changes.

Investors in established residential properties acquired yesterday and earlier can continue to apply the current negative gearing rules until the property is sold. Properties purchased between announcement and 30 June 2027 may be negatively geared during this period, but not from 1 July 2027.

The date of purchase is different depending on the state but usually the 'Contract" date or "Exchange" Date is the operative date.

A specific carve out is included for investments in eligible new builds, which can continue to be negatively geared before and after 1 July 2027 (i.e. current negative gearing rules remain in place).

Individuals

A new, permanent Working Australians Tax Offset of $250 will apply from 1 July 2027, available to those who derive income from work, such as employees and sole traders.

From 1 July 2026, Australians who have low work-related deductions will be able to claim a fixed $1,000 in tax deductions in their 2027 tax return. Importantly, there will be no substantiation requirements to claim the deduction. Individuals with work-related expenses over $1,000, or who earn only business or investment income, can continue to claim their deductions in the usual way.

While not a new Federal Budget measure, already-legislated changes in personal tax rates will shortly come into effect. From 1 July 2026, the tax rate that applies to taxable income between $18,201 and $45,000 will reduce from 16% to 15%, falling further to 14% from 1 July 2027.

Instant asset write-off now permanent

From 1 July 2026, the instant asset write-off is permanently extended to $20,000 for small businesses with turnover up to $10 million. Assets valued at $20,000 or more can continue to be placed into the small business simplified depreciation pool.

Loss relief for companies

From 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. This change applies to revenue losses only and will be limited by a company’s franking account balance. 

That is you can have a refund up to the total of taxes the company has paid in the two preceding years.

A nice addition, we expect it to operate in the same fashion it did for a few years during COVID.

Small start-up companies will also be able to access ‘loss refundability’. From 1 July 2028, start‑up companies with aggregated annual turnover of less than $10 million that generate a tax loss in their first two years of operation will be able to utilise the loss to generate a refundable tax offset. However, the offset will be limited to the value of fringe benefits tax and withholding tax paid on Australian employee wages in the loss year.

Minimum tax on discretionary trusts

From 1 July 2028, and subject to certain exceptions, 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.

This change does not apply to other types of trusts (e.g. fixed and widely held trusts (including fixed testamentary trusts), complying superannuation funds, special disability trusts, deceased estates and charitable trusts).

Expanded rollover relief will be provided for three years from 1 July 2027 to support small businesses and others that wish to restructure out of discretionary trusts into another entity type, such as a company or a fixed trust.

We stress nothing changes for over two years. This is the biggest change, and it may change the effective use of Family Trusts. Corporate Beneficiaries are now set for a significant increase in tax and unworkable. Once the legislation is released, we will consider options and if a restructure is recommended.

While a Trust had many advantages over a Company in the past, the gap has narrowed significantly, if you looking to make new investments, considering your personal circumstances, our advice would consider buying in your own name or a trust or a company.

Fringe Benefits Tax and EVs

From 1 April 2029, a permanent 25% discount on fringe benefits tax (FBT) will be available for all electric cars valued up to and including the fuel‑efficient luxury car tax threshold.

All electric cars valued up to and including $75,000 that are provided before 1 April 2029 continue to be eligible for a 100% discount on FBT.

Electric cars valued above $75,000 and up to and including the fuel‑efficient luxury car tax threshold that are provided between 1 April 2027 and 1 April 2029 will be eligible for a 25% discount on FBT.

This change is expected, and similar to the phase out of Hybrids last year. The limit reducing to $75,000 is new but that is all. Purchases after next April 2029 will have a significant increase in FBT costs. If buying over $75,000 you will be required to keep a logbook on the vehicle.

Administration

Expansion of the ATO’s pilot of ‘dynamic’ pay as you go (PAYG) instalment calculations, with expanded access to monthly payments. From 1 July 2027, small and medium businesses can opt in to reporting and paying PAYG instalments monthly and to using an ATO-approved calculation embedded in accounting software to calculate and vary their instalments.

Taxpayers with a demonstrated history of non‑compliance will also be required to report and pay PAYG instalments monthly.

The Government has also confirmed that it will work with the states and territories to harmonise payroll tax administrative arrangements.