Financial Planning
Federal Budget Explained
Significant reforms to capital gains tax, negative gearing and trust taxation have been announced. We're here to help you understand what has changed, what it means for your position, and what steps are worth taking.
Cutting through the noise
The Federal Budget announced on 12 May 2026 is one of the most consequential in recent years for Australian investors, property owners, business families and anyone with a complex financial structure. The changes to capital gains tax, negative gearing and trust taxation are significant, but the detail matters more than the headlines. Considered planning now will lead to better outcomes than reactive decisions later.
Where the legislation stands
LAST UPDATED: 24 June 2026
The CGT and negative gearing reforms are contained in the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 and the related Income Tax Rates Amendment (Tax Reform No. 1) Bill 2026. The Bills passed the House of Representatives and are now before the Senate, where the Government has secured Greens support to pass the package. The Government is seeking passage before the Senate’s winter recess. The legislation has not yet passed, and the reforms remain announced measures until it does.
Several amendments have been flagged as part of securing that support. These include writing the definition of a ‘new build’ directly into the legislation rather than leaving it to ministerial instrument, narrowing other ministerial discretions, a proposed CGT carve-out for startups and innovative businesses (released for consultation), and lifting the small business active asset reduction turnover threshold from $2 million to $10 million. A proposed ban on self-managed super funds borrowing to invest in property has also been flagged. These remain proposals until legislated.
The discretionary trust reform has not yet been introduced to Parliament and will be legislated separately, with an effective date of 1 July 2028. The Government has confirmed discretionary testamentary trusts are intended to be exempt from the proposed minimum tax.
We will update this page as the legislation progresses.
What changed in the 2026 Federal Budget?
The Government has announced a package of structural tax reforms that will reshape how wealth is taxed in Australia. The three headline measures are:
Capital gains tax (CGT)
The 50% CGT discount for assets held longer than 12 months will be replaced with cost base indexation and a 30% minimum tax on net capital gains from 1 July 2027. The change applies to all asset classes, including property, shares and managed funds.
Negative gearing
For residential investment properties purchased after Budget night, losses will no longer be deductible against other income such as salary from 1 July 2027. Existing properties are fully grandfathered. New builds are exempt.
Trust taxation
From 1 July 2028, a 30% minimum tax will apply to all discretionary trust distributions. A three-year rollover window opens 1 July 2027 for those considering restructuring.
At a Glance
Three quick orientations: who's affected and when.
Who will it affect?
Anyone who owns investment assets outside superannuation, including shares, managed funds, investment properties and private business interests. Family trust holders and property investors are particularly affected.
What are the headline proposed changes?
The 50% CGT discount is replaced by cost base indexation and a 30% minimum tax on net capital gains from 1 July 2027. Negative gearing on residential investment property is restricted to new builds for properties purchased after 12 May 2026. Discretionary trust distributions will be subject to a 30% minimum tax from 1 July 2028. For individuals, a $1,000 instant tax deduction applies from 1 July 2026 and a $250 Working Australians Tax Offset from 1 July 2027.
When do the changes take effect?
CGT overhaul: 1 July 2027, with transitional rules protecting pre-2027 gains.
Negative gearing: already in effect for properties purchased after 7:30PM AEST on 12 May 2026, with loss quarantining from 1 July 2027.
Trust minimum tax: 1 July 2028, with a rollover window from 1 July 2027 to 30 June 2030.
We recommend speaking with your adviser before making any structural changes ahead of legislation being finalised.
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WEBINAR RECORDING
Federal Budget 2026–27 Debrief
In this recorded webinar, our strategy advisers unpack the 2026 Federal Budget in detail, covering the CGT overhaul, negative gearing restrictions, discretionary trust changes, and what the confirmed superannuation indexation means for members approaching or above key thresholds. Whether you are an investor, a business owner or a trust beneficiary, this recording is a useful starting point.
IN THE NEWS
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The 2026 Federal Budget’s CGT and negative gearing changes are prompting investors to reassess long-held positions. Ishara Rupasinghe, Senior Strategy Adviser at Evans and Partners, spoke with Jessica Penny at the Australian Financial Review to discuss what the 2026 Federal Budget changes actually mean for investors with share portfolios.
FAQ’s
Since the Budget was handed down, these are the questions we are hearing most.
Yes. The Government has proposed that existing properties be fully grandfathered, so you can continue to deduct losses against your other income as before. Note this is not yet legislated.
This is worth considering carefully. These changes are not legislated. Taking irreversible action ahead of legislation passing is premature. The 50% CGT discount applies to gains before that date, creating a genuine planning window. However, selling early triggers a tax event in the current income year.
Not necessarily, and not urgently. The 30% minimum trust tax does not apply until 1 July 2028, and the Government has announced a three-year rollover window from 1 July 2027 to 30 June 2030 for those who do want to restructure, with relief from income tax and CGT consequences. Trusts retain genuine value for asset protection and estate planning. Whether restructuring makes sense depends on your beneficiaries’ tax rates, the nature of trust income, and your longer-term objectives.
Yes, for gains accruing from 1 July 2027. Pre-CGT assets have been exempt from capital gains tax since the regime was introduced in 1985. Under the Budget changes, gains arising on or after 1 July 2027 will be subject to the new 30% minimum tax, even for assets acquired before 1985. Gains accrued before that date remain exempt. If you hold pre-CGT assets, a valuation as at 1 July 2027 will be important to establish the split between exempt and taxable gains.
Superannuation funds are largely unaffected. The CGT changes do not apply to super funds and the one-third CGT discount that applies within super remains intact. Division 296 tax is already legislated and applies an additional 15% on earnings for balances above $3 million from 1 July 2026. The concessional contributions cap rises to $32,500 and the non-concessional cap to $130,000 from 1 July 2026 because of scheduled indexation. The interaction between these changes and your broader estate planning is worth reviewing.
"These are the most consequential tax changes in a generation, but the timing creates a genuine planning window. The people who do best will be the ones who plan calmly, not the ones who react to headlines."
Daniel Gumley
Director, Senior Strategy & Investment Advisor
Let's Talk About Your Position
The 2026 Budget is complex and evolving. Knowing your position before legislation passes gives you time to plan thoughtfully — not reactively. We're here to help you navigate it clearly and confidentl