The Federal Budget 2026–27 introduces some of the most significant tax and business reforms Australia has seen in many years. From changes to negative gearing and capital gains tax to new tax cuts for workers and permanent small business concessions, these announcements are expected to impact millions of Australians over the coming years.
At R G Partners & Associates, we have summarised the key Budget measures and what clients should start reviewing now.
1. New Tax Cuts for Individuals
The Government has announced multiple new tax relief measures for Australian workers.
Key Changes
- New Working Australians Tax Offset (WATO) of up to $250 annually from 1 July 2027
- Tax rate reduction from:
- 16% to 15% from 1 July 2026
- 15% to 14% from 1 July 2027
- New $1,000 instant tax deduction for employees from FY27 without needing receipts
What This Means
Most employees will see lower tax withheld and increased take-home pay over the next few years.
For workers who normally claim small work-related deductions, the new $1,000 instant deduction may simplify tax returns significantly.
What You Should Review
- PAYG withholding estimates
- Salary packaging arrangements
- Work-related deduction claims
- Tax planning strategies from FY27 onwards
2. Major Changes to Property Investment Rules
The Budget includes substantial proposed reforms to negative gearing and Capital Gains Tax (CGT).
Negative Gearing Changes
From 1 July 2027:
- Negative gearing will generally only apply to new builds
- Existing residential properties purchased after Budget night will no longer allow losses to offset salary or wages
- Unused rental losses can still be carried forward against future rental income
Importantly:
- Existing investors before Budget night are expected to be grandfathered
Capital Gains Tax Changes
The Government plans to:
- Replace the current 50% CGT discount with an inflation-based model
- Introduce a minimum 30% tax on gains from 1 July 2027
Investors in new builds may still be able to access the current 50% CGT discount.
What Property Investors Should Do Now
- Review future acquisition plans
- Consider timing of purchases and disposals
- Reassess cash flow projections
- Review ownership structures
- Obtain property valuations where appropriate
These reforms may significantly affect long-term investment returns and tax outcomes.
3. New 30% Minimum Tax on Discretionary Trusts
The Government has proposed a minimum 30% tax rate for discretionary trusts from 1 July 2028.
This may affect:
- Family trusts
- Investment trusts
- Service trusts
- Income distribution strategies
Transitional Relief
A 3-year rollover relief period will be available from 1 July 2027 for restructuring purposes.
Why This Matters
Many small businesses and investment groups currently use discretionary trusts for flexibility and tax planning. These changes may require:
- Trust restructuring
- Review of bucket company arrangements
- Reassessment of income distributions
- Succession and asset protection planning
Clients with trust structures should begin reviewing their arrangements early.
4. Permanent $20,000 Instant Asset Write-Off
One of the more positive announcements for small business is the permanent extension of the $20,000 instant asset write-off from 1 July 2026.
Eligible Businesses
- Businesses with turnover under $10 million
What Can Be Claimed
Immediate deductions for eligible business assets under $20,000.
Examples may include:
- Computers and IT equipment
- Tools and machinery
- Office equipment
- Business vehicles (subject to thresholds)
Planning Opportunities
Businesses may wish to:
- Bring forward equipment purchases
- Upgrade technology
- Improve operational efficiency
- Review depreciation schedules
5. Loss Carry Back Returns for Companies
The Government is reintroducing loss carry back rules from 2026–27.
This allows eligible companies to:
- Carry current year losses back to prior profitable years
- Obtain refunds of previously paid company tax
Potential Benefits
This may provide valuable cash flow support for:
- Hospitality businesses
- Construction companies
- Expanding businesses
- Businesses affected by economic slowdown
Businesses forecasting losses should review whether they may qualify.
6. Start-Up & R&D Incentive Changes
The Budget also includes measures designed to encourage innovation and investment.
Key Measures
- Expanded venture capital concessions
- Increased support for early-stage businesses
- Changes to the R&D Tax Incentive from 1 July 2028
- Start-up loss refundability measures
Businesses That May Benefit
- Technology companies
- AI businesses
- Software developers
- Manufacturing innovators
- Research-intensive businesses
7. Fuel Excise Relief & ATO Support
The Government has temporarily reduced fuel excise and announced additional ATO support measures.
Fuel Relief
Fuel excise reduced from:
- 52.6 cents to 20.6 cents per litre for three months
ATO Relief Measures
Eligible businesses may access:
- Payment plans
- Remission of penalties and interest
- PAYG instalment variations
- Temporary debt collection pauses
This may particularly assist:
- Transport operators
- Logistics businesses
- Trades
- Agriculture businesses
8. What Business Owners Should Be Doing Now
The Budget changes create both opportunities and risks.
Recommended Actions
- Review trust structures
- Reassess investment property strategies
- Update tax planning forecasts
- Review business cash flow
- Consider asset purchase timing
- Review CGT exposure
- Check restructuring opportunities before transitional periods end
Early planning will be critical, particularly for property investors and trust clients.
Final Thoughts
The 2026–27 Federal Budget introduces significant reforms that will impact individuals, investors, trusts and businesses over the next several years.
Some measures provide welcome relief and simplification, while others may substantially change the way taxpayers structure investments and businesses going forward.
At R G Partners & Associates, we are already assisting clients in reviewing how these proposed changes may affect their tax position, investment strategy and business structure.
If you would like personalised advice regarding the Budget changes, please contact our office to arrange a consultation.
