The 2026–27 Federal Budget included several proposed tax changes that may affect property investors, business owners and families using trusts.
The main areas to watch are negative gearing, capital gains tax and discretionary trusts.
These changes are not yet law, and some details may still change. For now, it is worth understanding what may be coming and reviewing whether the proposals could affect your current structure or future plans.
Negative gearing
From 1 July 2027, the Government is proposing to tighten negative gearing rules for established residential properties purchased after 7:30pm AEST on 12 May 2026.
Under the proposed rules, rental losses would generally only be able to reduce rental income or capital gains from other residential properties. Unused losses would be carried forward and used in future years.
Existing properties are expected to be protected. If you already owned an established property before Budget night, or had exchanged contracts before that time, the current rules should continue to apply until the property is sold.
New builds are also expected to keep the current negative gearing treatment, although further detail is still needed on what qualifies as a new build.
Capital gains tax
From 1 July 2027, the Government is proposing to replace the current 50% capital gains tax discount for individuals and trusts.
The proposed replacement would use an inflation adjustment and a 30% minimum tax on capital gains.
This could affect property, shares, business assets and other investments.
For assets already owned before 1 July 2027, gains built up before that date are expected to keep the current treatment. This means asset values at 1 July 2027 may become important for future tax calculations.
Discretionary trusts
From 1 July 2028, the Government is proposing a 30% minimum tax rate on income from discretionary trusts.
This could affect family trusts and business structures that distribute income to family members or related companies.
Some trusts are expected to be excluded, including certain fixed trusts, superannuation funds, deceased estates, charitable trusts and special disability trusts.
For some business owners and families, this may lead to a higher overall tax bill. It may also be a reason to review whether the current structure is still appropriate.
Other Budget measures
The Budget also included:
• a proposed $250 Working Australians Tax Offset from 2027–28
• a proposed $1,000 standard deduction for work-related expenses from 2026–27
• a permanent $20,000 instant asset write-off for small businesses
What should you do now?
There is no need to rush into major decisions while the rules are still being finalised.
The best step is to review your current position, especially if you own investment property, use a discretionary trust, or are planning to buy or sell major assets.
If you are unsure how the proposed changes may affect you, please do not hesitate to contact our office to speak to one of our team.
