The 2026–27 Federal Budget delivers a combination of cost-of-living support measures and significant tax reforms, with implications for individuals, investors, and businesses. From new tax offsets to significant changes to Capital Gains Tax (CGT), negative gearing, and trust structures, we’ve summarized the key measures and what they could mean for you.
Key measures include:
Tax relief for Individuals
• A new $250 Working Australians Tax Offset will be introduced in the 2028 financial year, providing a permanent offset for income derived from work, such as salary and wages and business income for sole traders.
• Aimed at easing cost-of-living pressures, a simplified $1,000 instant deduction for work-related expenses will be introduced from the 2027 financial year. Individuals who incur work-related expenses greater than $1,000 can continue to claim deductions as usual.
Major tax reform targeting property and investment
• Negative gearing will be limited to new builds from 1 July 2027. Properties held before 7:30 pm AEST on 12 May 2026 will be exempt from the negative gearing changes, whereas existing arrangements prior to this date will remain unchanged.
• Capital Gains Tax (CGT) will shift from the current 50% discount for assets owned for more than 12 months to a discount based on indexation, applying a minimum 30% tax rate on gains — one of the most significant reforms in decades.
New minimum tax on discretionary trusts
• A 30% minimum tax will apply to discretionary trusts from 1 July 2028. Beneficiaries, other than corporate beneficiaries, will receive non-refundable credits for the tax payable by the trustee. Corporate beneficiaries will be assessed based on trust income without being able to claim credits for tax payable by the trustee.
Loss carry-back and refundability for companies
• Commencing 1 July 2026, companies with a 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 is limited to a company’s franking account balance and applies to revenue losses only.
• Start-up companies with an 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. This offset is limited to the value of fringe benefits tax (FBT) and withholding tax on wages paid in respect of Australian employees in the loss year.
FBT Electric Car Discount
• A 25% FBT discount will be introduced under the statutory formula method for electric vehicles. This will apply to eligible electric vehicles over $75,000 from 1 April 2027 and to all eligible electric vehicles from 1 April 2029.
Questions about how the 2026/27 budgets could affect you or your business?
As always, we remain proactive in light of these changes to ensure we continue providing quality advice and service tailored to your circumstances, while maintaining the high standard of support you expect from us.
Should you have any questions regarding the above changes please do not hesitate to contact our office.
– The Team at Waterford Accountants