13/05/2026
Key points from the Budget last night:
Major CGT, negative gearing and trusts tax reforms, inflation to peak around 5% by June.
The Treasurer announced major reforms to capital gains tax (CGT), negative gearing and the taxation of trusts. The centrepiece are proposals limiting CGT discounts and negative gearing on assets.
From 1 July 2027, the government plans to scrap the 50% CGT discount on assets held for more than a year. Instead, the CGT will return to the pre-1999 policy of taxing inflation-indexed gains, with a 30% minimum tax on net capital gains. It will apply to all assets including pre-1985 CGT assets), subject to transitional rules. New homes will be exempted from the CGT change. Investors in new builds have the option of retaining the 50% discount or adopting the cost base indexation and the 30% minimum tax.
Negative gearing, which allows investment losses to be offset against taxable income, will be limited to newly built homes after Budget night. An existing property acquired after Budget night will no longer benefit from negative gearing under the proposed changes. From 1 July 2027, losses from established residential properties will only be deductible against rental income or the capital gains from residential properties. Excess losses will be carried forward and offset against residential property income in future years. Properties acquired prior Budget night (including contracts entered into but not yet settled) will be exempt from the changes until disposed of.
From 1 July 2028, a minimum 30% tax rate will apply on discretionary trust distributions, including family trusts. Other trusts are exempt from the change, e.g., fixed trusts, complying super funds and charitable trusts. Expanded rollover relief will be available for three years from 1 July 2027 for those wishing to restructure into companies or fixed trusts.
There will also be a new tax cut for working Australians through a $250 tax offset, the $20,000 instant asset write off will be made permanent and tax loss carry back for small businesses will be reintroduced on a permanent basis.
