Treasurer Jim Chalmers has delivered the Albanese government’s fifth Federal Budget, describing it as the most important and ambitious Budget in decades. For property investors, family trust beneficiaries, and business owners, the announcements represent some of the most significant structural tax changes in a generation. Below is a summary of the key changes and who they affect.
For Individuals
The Budget introduced several measures providing modest relief for working Australians.
$1,000 instant tax deduction (from 2026–27)
Workers can now claim up to $1,000 of work-related expenses without keeping receipts. The deduction is automatic — the ATO applies it at lodgement. The average benefit is around $205. Workers who incur more than $1,000 in expenses can still claim the higher amount the traditional way with receipts.
Working Australians Tax Offset (from 2027–28)
A new permanent offset of up to $250 per year for every working Australian, including employees and sole traders. This raises the effective tax-free threshold to nearly $20,000. For lower-income earners who also qualify for the Low Income Tax Offset (LITO), the combined threshold rises to up to $24,985.
Second marginal rate drops to 15% (from 1 July 2026)
The tax rate on income between $18,201 and $45,000 drops from 16% to 15%. Every earner above $45,000 saves an additional $268 per year automatically.
For Property Investors
This is the most significant change in the Budget. The Government has fundamentally restructured the tax treatment of residential property investment. The key cut-off was 7:30 PM AEST on 12 May 2026.
Existing investment properties
Properties already owned are grandfathered under existing rules for now. There is no immediate change to negative gearing arrangements or the CGT discount for properties already held.
Established properties purchased after 7:30 PM on 12 May 2026
Properties contracted between 7:30 PM on 12 May 2026 and 30 June 2027 sit in a transitional period. Negative gearing against all income is available until 30 June 2027, after which losses become quarantined to rental income only. Properties purchased from 1 July 2027 onward are not eligible for transitional relief.
New builds
New builds retain full negative gearing and a choice of CGT treatment. The Government is directing tax support exclusively toward new supply, not existing housing stock.
CGT discount replaced (from 1 July 2027)
The 50% CGT discount is being replaced with cost-based indexation and a 30% minimum tax on real capital gains for assets held more than 12 months. Gains accrued before 1 July 2027 are protected under transitional rules. Gains accruing from 1 July 2027 onwards are subject to the new regime.
Pre-CGT assets lose their exempt status (from 1 July 2027)
Assets acquired before 20 September 1985, which have historically been fully exempt from CGT, will no longer be exempt for gains accruing from 1 July 2027 onwards. The pre-2027 gain remains exempt, but gains arising on or after 1 July 2027 will be subject to the new cost-base indexation and 30% minimum tax rules.
For Small Business
The Budget delivered mixed results for small businesses. There are some meaningful concessions, alongside new obligations that will add complexity from 1 July 2026.
$20,000 Instant Asset Write-Off, now permanent
Small businesses with a turnover under $10 million can permanently write off any eligible asset costing less than $20,000 in the year of purchase. This removes the annual uncertainty that has surrounded this measure for years.
Loss carry-back extended (from 2026–27)
Companies can carry a current-year tax loss back against tax paid in the prior two income years to claim a cash refund. This measure applies to companies with aggregated turnover up to $1 billion.
Loss refundability for start-up companies (from 1 July 2028)
New small companies with a turnover under $10 million in their first two years of operation can convert tax losses into a refundable tax offset. The offset is capped at the amount of FBT and PAYG withholding on wages paid to Australian employees in the loss year.
For Trust Structures
A significant change is coming for those operating through discretionary family trusts, though the implementation date gives time to plan.
30% minimum tax on trust distributions (from 1 July 2028)
Where a discretionary trust distributes income to beneficiaries, those distributions will be subject to a minimum effective tax rate of 30%. The trustee pays the tax, with non-refundable credits flowing to beneficiaries. Fixed and widely-held trusts, superannuation funds, charitable trusts, deceased estates, and primary production income are out of scope.
Rollover relief available
Businesses wanting to restructure away from a discretionary trust structure can do so without triggering CGT, provided the restructuring occurs within a three-year rollover window that opens on 1 July 2027.
For Superannuation
Transfer Balance Cap rises to $2.1M (from 1 July 2026)
The cap on the amount that can be transferred into a tax-exempt retirement pension rises from $2.0 million to $2.1 million, continuing indexation in $100,000 increments
SG rate confirmed at 12%
The Superannuation Guarantee reached its legislated ceiling of 12% on 1 July 2025 and has remained there since. No further increases are planned.
Key Dates
- 12 May 2026: CGT and negative gearing cut-off for established property purchases. Contracts signed before 7:30 PM AEST on 12 May 2026 will remain subject to the old rules.
- 30 Jun 2026: Final day for quarterly superannuation under old rules. SBSCH portal closes—download transaction history before this date.
- 1 Jul 2026: The second marginal rate drops to 15%. Transfer Balance Cap rises to $2.1M. A $1,000 instant deduction applies to 2026–27 tax returns.
- 1 Jul 2027: Negative gearing is restricted to new builds. CGT indexation replaces the 50% discount. The Working Australians Tax Offset ($250) begins. The trust restructure rollover window opens.
- 1 Jul 2028: A 30% minimum tax on discretionary trust distributions takes effect. Refundability of losses for eligible start-up companies begins.
Next Steps
Optima Partners will continue to monitor the legislative progress of these Budget measures and will provide further guidance to clients as details are confirmed.
If any of the changes mentioned above may affect your circumstances, we recommend speaking with your adviser before making any decisions.
