19/05/2026
The Federal Budget. WOW. What a Mess.
More questions than Answers at the moment. Still Digesting all the issues.
Changes to Capital Gains Tax - From 1 July 2027 50% CGT discount no longer applies, Indexed amount used. 50% discount used up to 30 June 2027, then indexed. So a split calculation. There will also be a MINIMUM Tax rate on CGT of 30%. So effectively if you have no other income, you will not get any Tax Free component, the 30% will apply form Dollar 1.
IMPORTANT to obtain a Market Valuation of the Property at or near 30 June 2027 to assist in any future calculation on Sale.
Discretionary Trust Distributions from July 2028 will incur a Non-Refundable 30% tax. This means the 30% tax on distribution can only be used to reduce liability to zero. Again if you have low income, you are PAYING more in Tax. If the Trust has Shares with Franking Credits, which currently stream to the individual, they will effectively be lost, which again means the Individual is paying more tax.
NEGATIVE GEARING - will only apply to NEW BUILDS of Residential property, not existing houses. The Loss amount will be quarantined and can only be used against other Rental Income or a future Capital Gain. If a property is currently owned before the date of the Budget, the old rules apply. Still seeking clarity where an persons Primary Residence changes to a Rental after Budget night as to how that will be treated. Commercial Property not affected, nor Share purchases.
For a Budget that was suppose to help younger taxpayers, I am at a Loss to see how they are better off, nor be able to have a mechanism to Better their life via investment aside from their weekly wage.
To target older Australians who have used these mechanisms to scrimp, save and do without to enable a better life later on, and then deny the next Generations from that same Mechanism is wrong. Considering 23 of 25 Labor Senators have 2 or more properties (along with all the other politicians) and effectively wont be affected, who's nests are being feathered?
This Budget still needs to get through the Senate, so it is still unknown what its final form will be. The final result may in fact be a lot worse given the make up of the Senate.
WATCH THIS SPACE
