07/05/2026
2026–27 Federal Budget Update
What the Proposed Changes Could Mean for You
The 2026–27 Federal Budget is shaping up to include some of the most significant proposed tax and superannuation changes seen in recent years.
While not all measures have been legislated, a number of announcements and pre-budget proposals may impact individuals, investors, business owners, employers and retirees.
Below is a summary of some of the key measures currently expected or proposed.
As always, we will continue monitoring developments after Budget Night and provide updated advice once legislation and final details are released.
Proposed $1,000 Automatic Tax Deduction
One of the headline proposals is a possible automatic $1,000 tax deduction for individual taxpayers.
The proposal is aimed at simplifying work-related expense claims and reducing substantiation requirements for employees with relatively modest deductions.
If introduced, taxpayers may have the option of either:
* Claiming the standard deduction; or
* Continuing to claim actual deductible expenses with records.
At this stage, full details and eligibility requirements have not been confirmed.
Earned Income Offset
Another proposal under discussion is a new earned income offset of up to $300 for eligible workers.
The measure is intended to provide cost-of-living relief to lower and middle income earners.
Thresholds and phase-out rules are still expected to be clarified following the Budget release.
Capital Gains Tax (CGT) Changes
Potential changes to the CGT system are generating significant discussion.
One proposal being considered is replacing the current 50% CGT discount with an indexation-style approach.
Under this model:
* Capital gains would instead be adjusted for inflation; and
* The taxable gain would be based on “real” growth above inflation.
If implemented, the changes could significantly alter the tax outcomes for:
* Property investors
* Share investors
* Business owners
* Trusts
Importantly, grandfathering provisions may apply to existing assets.
Negative Gearing
Negative gearing changes continue to be a major area of attention.
Current discussion suggests that:
* Existing investment properties may be grandfathered; while
* Future purchases could face reduced deduction availability or altered treatment.
At this stage no final legislation has been released.
Property investors considering purchases or restructures should seek advice before making major decisions.
EV FBT Exemption Changes
The electric vehicle Fringe Benefits Tax exemption may also be tightened or phased out over time.
Businesses and employees using novated leases or salary packaging arrangements should be aware that:
* Eligibility dates may become critical;
* Grandfathering rules could apply; and
* Delays in ordering or delivery may affect access to concessions.
If you are considering purchasing or salary packaging an EV, timing may become increasingly important.
Trust Distribution Changes
Proposed trust withholding measures may particularly impact distributions to low-income adult beneficiaries.
Draft discussions indicate withholding requirements of either 15% or potentially 25% in some circumstances.
This could significantly affect:
* Family trust tax planning
* Cash flow
* Beneficiary tax outcomes
Business owners operating through discretionary trusts should review existing distribution strategies before year-end.
Superannuation Changes
Several superannuation measures remain on the agenda, including:
Division 296 Tax
Additional tax on earnings relating to superannuation balances above the proposed threshold.
Payday Super
Employers may soon be required to pay superannuation at the same time as wages instead of quarterly.
This may create:
* Cash flow impacts for employers
* Payroll system changes
* Increased ATO visibility of unpaid super
Transfer Balance Cap Changes
Further adjustments to pension transfer balance caps are also expected.
Individuals approaching retirement should review pension strategies and contribution planning.
Instant Asset Write-Off
The instant asset write-off is expected to continue, with proposals to make the measure permanent for eligible small businesses.
This may continue to provide opportunities for:
* Equipment purchases
* Vehicle acquisitions
* Technology upgrades
Businesses should still ensure purchases are commercially appropriate and not solely tax-driven.
Fuel Excise Relief
An extension of fuel excise relief measures has also been flagged to assist with ongoing cost-of-living pressures.
This may provide some relief for:
* Households
* Transport operators
* Small businesses with significant fuel usage
What Should You Do Now?
At this stage, many measures remain proposed only and may change following:
* Budget announcements
* Parliamentary negotiations
* Final legislation
However, now is a good time to:
* Review investment structures
* Consider timing of asset sales
* Review trust distributions
* Check superannuation strategies
* Discuss planned purchases or restructures
Need Advice?
If you think any of these proposed changes may affect you, please contact our office to arrange a review.
Early planning can often provide more flexibility and better outcomes before new rules commence.
The information above is general in nature and based on publicly available announcements, consultation papers and pre-budget proposals as at May 2026. It does not constitute personal financial or tax advice.
