by Ruby Chowdhury

These are some of the most significant structural changes to Australian wealth management in nearly three decades.

This is a clear pivot away from supporting traditional passive property investment and family trust structures.

1. Negative Gearing Changes

The Budget proposes limiting negative gearing concessions for investment properties purchased after Budget night.

It is proposed that from 1 July 2027, deductions for investment losses will only remain available for:

  • Newly constructed properties.
  • Certain government-supported housing programs.

​Grandfathering relief

  • Existing properties acquired before 7:30pm (AEST) on 12 May 2026 are expected to remain unaffected.

Strategic opportunities

  • Review upcoming property acquisitions before reforms commence.
  • Consider focusing future investment on new developments.
  • Consider alternative structures for investments going forward.
2. Capital Gains Tax (CGT) Reform

The Government proposes replacing the current 50% CGT discount with an inflation indexation model. A proposed 30% minimum tax rate would apply to inflation-adjusted gains.

The Indexation Model: From 1 July 2027, the 50% CGT discount for individuals, trusts, and partnerships will be replaced. Instead, the cost base of an asset will be adjusted for inflation (indexation), ensuring you are only taxed on the real profit above inflation.

The 30% Minimum Tax: Crucially, a minimum tax rate of 30% will be applied to those realised, inflation-adjusted gains. This aligns the tax rate closer to standard corporate and marginal rates.

Transitional Rules & New Builds: These changes will apply prospectively. Any capital gains on existing investments up to 30 June 2027 will continue to qualify for the 50% CGT discount.

In addition, investing in new residential properties will have the option, upon disposal, to apply either the existing 50% discount method or the new indexation model.

3. Proposed 30% Minimum Tax on Discretionary Trusts

The Government stated this measure is intended to reduce income-splitting opportunities and align the taxation of trust income more closely with individual tax rates.

The 30% Minimum Rate: Effective 1 July 2028, a minimum tax rate of 30% will be applied to distributions from discretionary trusts to mature beneficiaries. This functionally sets a tax floor, neutralising the financial incentive to stream business or investment profits to family members in lower tax brackets.

​Rollover Relief for Restructuring: Acknowledging that many families hold these structures for estate planning and asset protection, the government is providing a three-year rollover relief window starting 1 July 2027. This will allow us to restructure your holdings or wind up trusts into alternative corporate structures without triggering massive capital gains tax liabilities.

4. Other Measures

The Government announced:

  • An instant work-related tax deduction of $1,000 from 1 July 2026.
  • Further personal income tax cuts from 1 July 2026:
    • From 1 July 2026, the 16% tax rate, which applies to taxable income between $18,201 and $45,000, will be reduced to 15%.
    • From 1 July 2027, the 15% rate will be further reduced to 14%.
  • Instant asset write-off threshold of $20,000 for small businesses made permanent.
  • Minimum HELP debt repayment threshold increased to $67,000.
  • A new $250 Working Australians Tax Offset (WATO) from 2028.
Timeline of Key Implementation Dates
Effective Date Key Measure
12 May 2026 Cut-off for negative gearing grandfathering; established properties acquired after 7:30 PM AEST are subject to future loss quarantining.
1 July 2026 $20,000 instant asset write-off becomes permanent.
1 July 2026 Company loss carry-back regime is reintroduced.
1 July 2026 Income tax rate drops (16% to 15%) and $1,000 instant work-related tax deduction begins.
1 July 2027 50% CGT discount replaced by cost base indexation and the 30% minimum tax.
1 July 2027 Pre-CGT assets enter the CGT system for future gains.
1 July 2027 Negative gearing quarantining rules take effect for post-Budget purchases.
1 July 2027 Three-year temporary rollover relief for trust restructuring begins.
1 July 2028 30% minimum tax on discretionary trust distributions takes effect.