1) What did the budget changed about negative gearing?
The Government announced that from 1 July 2027, negative gearing will be limited to newly built residential properties. Investors who buy established (existing) residential property after Budget night will no longer be able to deduct rental losses against their salary, wages, or other non-property income.
2) When do the negative gearing changes start and what is the key date?
The new rules are proposed to apply from 1 July 2027. The critical cut-off is 7:30pm AEST on 12 May 2026 (Budget night) — this is the contract date that determines whether a property is treated as "existing" or "newly acquired" under the changes.
3) I already own an investment property. Am i affected?
No. Properties you held before 7:30pm on 12 May 2026 — including properties that were under contract but not yet settled at that time — are grandfathered. You can continue to negatively gear them under the current rules until you sell.
4) What happens if I bought an established rental property after Budget night?
From 1 July 2027, any rental loss on that property can no longer be offset against your wages or other income. Instead, the loss is "quarantined" — you can only offset it against residential rental income or against capital gains when you sell a rental property. Unused losses can be carried forward to future years.
5) Are new builds treated differently?
Yes. Eligible newly built residential properties remain exempt from the changes. Investors in qualifying new builds can still access negative gearing, and the announcement indicated they keep access to the current 50% CGT discount as well.
6) Does this apply to commercial property or only residential?
The negative gearing changes target residential investment property. Commercial property is not the focus of this particular measure, though other Budget measures (such as the CGT changes) can still apply more broadly.
7) Are there any other exemptions from the negative gearing changes?
Yes. The announcement indicated that residential property held within widely held trusts and superannuation funds is excluded, and there are targeted carve-outs for build-to-rent developments and for private investors supporting Government housing programs.
8) Should I rush to buy or sell property before these rules start?
We strongly recommend you do not make rushed decisions. The rules are not yet law and the detail may change, and the right move depends on your overall position. Please talk to us first so we can model how the changes would affect you specifically
9) What is changing with the CGT discount?
The Government announced that from 1 July 2027, the current 50% CGT discount for individuals will be replaced with a system based on cost base indexation combined with a 30% minimum tax on net capital gains for assets held more than 12 months.
10) What does "cost base indexation" mean in practice?
Instead of simply halving your gain, indexation increases your asset's cost base in line with inflation, so only the gain above inflation is taxed. The actual benefit depends on the inflation rate over the period you hold the asset, which can produce a very different outcome from the flat 50% discount.
11) What is the "30% minimum tax" on capital gains?
It sets a floor on the tax payable on a capital gain (after indexation is applied). If your marginal tax rate is below 30%, you may face a top-up so that at least 30% is paid on the gain. If your marginal rate is above 30%, the indexed gain is generally taxed at your marginal rate.
12) When do the CGT changes start, and do they affect gains I've already made?
The new regime is proposed to apply from 1 July 2027. Transitional arrangements mean it applies only to gains arising on or after that date. Gains accrued before 1 July 2027 are intended to remain subject to the current 50% discount rules.
13) Which assets are affected--- is it just property?
No. The CGT changes are much broader than property. They are proposed to apply to all CGT assets held by individuals, trusts, and partnerships, including (from the start date) certain pre-1985 assets, not just residential investment property.
14) Does this affect the family home?
The main residence exemption is not affected by these changes. Your family home generally continues to be exempt from CGT under the existing rules.
15) What about my superannuation fund's capital gains?
Based on the announcement, the CGT discount for complying superannuation funds is not expected to change at this stage. The replacement of the 50% discount is targeted at individuals, trusts, and partnerships.
16) Are there choices available for new residential property investors?
The announcement indicated that investors in eligible new residential property may be able to choose, on disposal, between the existing 50% CGT discount and the new indexation/minimum-tax regime — whichever applies to their situation. The detail will depend on the final legislation.
17) Are any taxpayers exempt from the 30% minimum tax on gains?
The announcement indicated that income support recipients would be exempt from the minimum tax. We can confirm eligibility once the draft legislation is released
18) What is the new tax on discretionary trusts?
The Government announced a 30% minimum tax on the taxable income of discretionary trusts, proposed to start from 1 July 2028. The tax is imposed at the trustee level on the trust's net income.
19) How will beneficiaries be treated under the new rules?
Non-corporate beneficiaries (for example, individuals) who are presently entitled to trust income will receive a non-refundable tax credit for the tax already paid by the trustee, which they can apply against their own tax. Importantly, corporate beneficiaries will not receive this credit
20) What does this mean for " bucket companies"?
Because corporate beneficiaries do not receive a credit for the trustee-level tax, the long-standing strategy of distributing trust income to a bucket company to cap tax at the company rate is expected to no longer be effective. This is one of the most significant practical impacts of the measure.
21) Will this affect income splitting through a family trust?
Yes. The main purpose of the measure is to curb income splitting — distributing income to family members on lower marginal rates. With a 30% floor applied at the trustee level, the benefit of distributing to low-rate beneficiaries (such as adult children studying) is substantially reduced.
22) Are existing family trusts grandfathered?
No general grandfathering was announced. The measure is proposed to capture existing discretionary trust structures from 1 July 2028, not just trusts set up after the Budget.
23) Which trusts and types of income are excluded?
The announcement indicated the minimum tax will not apply to fixed trusts, widely held trusts, complying superannuation funds, charitable trusts, special disability trusts, and deceased estates. Certain income is also carved out — including primary production income, certain income of vulnerable minors, amounts already subject to non-resident withholding tax, and testamentary trusts in existence on 12 May 2026.
24) Is there any relief to help restructure out of a discretionary trust?
Yes. The Government announced expanded rollover relief available for a limited three-year period (from 1 July 2027) to allow eligible businesses and individuals to restructure from a discretionary trust into another entity, such as a fixed trust or a company, without triggering certain tax costs.
25) I run my family business through a discretionary trust--- what should i do now?
Don't make any changes yet. The rules are not law, the detail is still to come, and restructuring has its own legal, asset-protection, and tax consequences. The right answer depends on your trust's income type, your beneficiaries, and your long-term plans. Please book a review with us so we can map out your options ahead of the 2028 start date.
Alongside the three major reforms above, the Budget contained several relief measures for businesses and individuals. Their status varies — some are more advanced than the headline reforms — so the position of each is noted below.
26) What is the permanent $20,000 instant asset write-off?
From 1 July 2026, the $20,000 instant asset write-off becomes a permanent part of the simplified depreciation rules, ending years of temporary annual extensions. Small businesses with aggregated annual turnover under $10 million can immediately deduct the full cost of each eligible depreciating asset costing less than $20,000, in the year it is first used or installed ready for use.
27) Is the $20,000 write-off per asset or a total cap?
It applies per asset. A business buying three separate items at $8,000, $12,000 and $18,000 can immediately deduct all three. Assets costing $20,000 or more instead go into the small business simplified depreciation pool (deducted at 15% in the first year and 30% in following years). The $20,000 threshold is not indexed, and access remains limited to businesses using the simplified depreciation regime.
28) What is the company loss carry-back measure?
For income years starting on or after 1 July 2026, a company with aggregated annual global turnover under $1 billion can carry a current-year tax loss back and offset it against tax paid in the previous two income years, generating a refundable tax offset (a cash refund). It is a permanent measure, expected to benefit around 85,000 companies, and gives cash-flow relief to companies that have a one-off or cyclical loss year after paying tax in prior years.
29) What are the limits on loss carry-back?
Three main conditions apply: aggregated annual global turnover must be under $1 billion; the loss must be a revenue loss (capital losses do not qualify); and the refund is capped by the company's franking account balance, so it cannot exceed the tax actually paid in the prior years. This is a tighter turnover threshold than the COVID-era version, which applied to companies up to $5 billion.
30) What is the $1,000 instant tax deduction (standard deduction) for individuals?
From the 2026–27 income year, eligible individuals can claim a standard deduction of up to $1,000 for work-related expenses without needing receipts or to itemize. It is aimed at people who have had PAYG withholding applied to their income (employees) and is not available to sole traders. Draft legislation has been released for consultation.
31) Who benefits from the $1,000 standard deduction, and how does it interact with actual deductions?
Individuals with no work-related deductions, or with less than $1,000 of them, can simply claim the $1,000— improving their position and removing the need to keep receipts. Those whose genuine work-related deductions exceed $1,000 would instead claim their actual (higher) amount, as they do now. In effect, you get the better of the two. Around 6.2 million workers are expected to benefit, with an average gain of roughly $205.
32) What is the $250 Working Australians Tax Offset?
From the 2027–28 income year, a permanent, non-refundable tax offset of up to $250 will be available to individuals with employment or sole-trader income. The ATO will calculate and apply it automatically when the return is lodged. It is intended to lift the effective tax-free threshold for work income by roughly $1,800 (to about $19,985, or up to $24,985 where the Low Income Tax Offset applies). It was announced during the 2025 election campaign and is not yet legislated.
33) What is the difference between the $1,000 deduction and the $250 offset?
A deduction reduces your taxable income, so its value depends on your marginal rate (a $1,000 deduction is worth $1,000 × your rate — for example $390 at a 39% rate). An offset reduces the tax payable directly, dollar for dollar (the $250 offset reduces your tax by up to $250). They also differ in timing and eligibility: the $1,000 deduction starts in 2026–27 and is for employees with PAYG withholding; the $250 offset starts in 2027–28 and also covers sole traders.
34) What is changing with the Research & Development (R&D) Tax incentive?
From 1 July 2028, the Budget proposes the most significant R&D Tax Incentive (R&DTI) reform since 2020, refocusing the incentive on "core" (experimental) R&D. The seven announced changes are: removing eligibility for "supporting" R&D activities; increasing the offset rates for core R&D by 4.5 percentage points across all tiers; lowering the R&D intensity premium threshold from 2% to 1.5%; raising the refundable-offset turnover threshold from $20 million to $50 million; limiting refundability to companies in their first 10 years; increasing the minimum annual R&D spend from $20,000 to $50,000; and increasing the maximum expenditure cap from $150 million to $200 million. These changes are not yet law.
35) What do the R&D offset rate increases mean in practice?
The 4.5 percentage point uplift lifts the premium on core R&D across every tier — for example, the refundable offset premium rises from 18.5% to 23% (so a base-rate company's refundable benefit moves from about 43.5% to about 48%), the low-intensity non-refundable premium from 8.5% to 13%, and the high-intensity premium from 16.5% to 21%. The trade-off is that spending on "supporting" activities (such as administration, literature reviews, or routine equipment maintenance) would no longer qualify — so the net effect for any business depends on how much of its claim is genuine core experimental work versus supporting activity.
36) Will similar R&D claims still be worthwhile?
The minimum annual R&D spend rises from $20,000 to $50,000. Claims below $50,000 may still be eligible where the R&D is conducted through a Registered Service Provider or a Cooperative Research Centre. Businesses making smaller, or supporting-activity-heavy, claims should review whether they will still qualify ahead of 1 July 2028.
37) When do these other measures take effect?
In summary: the permanent $20,000 instant asset write-off and company loss carry-back both apply from 1 July 2026; the $1,000 instant tax deduction applies from the 2026–27 income year; the $250 Working Australians Tax Offset applies from the 2027–28 income year; and the R&D Tax Incentive reforms are proposed from 1 July 2028. As with the headline reforms, several of these remain unlegislated, so the final detail may change.
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