Federal Budget 2026 – What it means for you
Treasurer Jim Chalmers’ 2026 Federal Budget represents one of the more deliberate shifts in the tax system in recent years — moving away from settings that have supported leveraged investment in property and other assets, and toward a framework more focused on wage income and housing access.
The changes centre on investment taxation, including restrictions on negative gearing and a move back toward an inflation‑adjusted capital gains tax approach broadly aligned with the pre‑1999 regime.
These changes are being driven by demographics. Younger cohorts now make up a larger share of the voting base but hold materially less capital, while an increasing share of wealth sits in property and super with older Australians. That creates pressure to tax capital more heavily.
The risk is that, in doing so, we reduce the incentive to take risk, invest and build. Over time, that can dampen capital formation and slow the responsiveness of the economy — particularly in SMEs, which remain a key driver of growth and productivity.
Key observations from the budget
- Superannuation is not impacted by the CGT changes and becomes relatively more attractive as tax settings outside the system are tightened
- CGT and negative gearing reforms reduce incentives for leveraged property investment and are expected to shift capital toward new housing supply and diversified portfolios
- The introduction of a 30% minimum tax on discretionary trusts from 1 July 2028 will have implications for business owners and families using trust structures, particularly to split income, but there is plenty of time to work through this
- NDIS reforms support fiscal repair but depend on successful execution
- Aged care funding increases from 1 July 2026 with lower home care costs possible from October 2026
- Cost-of-living support is modest and delayed aiming to avoid broad stimulus and limit inflation pressure
- Finally, many measures announced in this Budget are proposals only and will need to pass Parliament before becoming law, so we can expect further change
Further detail on changes that may impact you are as follows:
Personal tax changes
$1,000 instant tax deduction for work‑related expenses
From 1 July 2026, employees will be able to claim a standard tax deduction of up to $1,000 for eligible work‑related expenses without needing to keep receipts. If your work expenses exceed $1,000, you can still choose to claim the actual amount with records.
This simplifies tax returns for people with modest work expenses, while still giving flexibility to claim higher deductions where appropriate.
Working Australians Tax Offset
From the 2027–28 financial year, people earning income from work will receive a new ongoing tax offset of up to $250 per year. This applies to wages, salaries and eligible sole‑trader business income and is in addition to already legislated tax cuts.
Property and investment tax changes
Changes to capital gains tax
From 1 July 2027, for assets held longer than 12 months, the current 50% CGT discount will be replaced for future gains with an inflation‑based indexation method.
In addition, a minimum 30% tax rate will apply to capital gains, except for people receiving income support payments such as the Age Pension. Importantly, gains accrued before 1 July 2027 will continue to be taxed under existing rules. Superannuation funds are not affected by these changes.
If you’re considering selling an asset, rebalancing your portfolio, or planning a major property decision before or after 1 July 2027, speak with your FMD adviser so we can model the potential CGT outcomes and timing options.
A summary of the CGT treatment based on acquisition date is below:
| Asset acquired | Asset Sold | CGT implications |
| Pre‑1985 | Before 1 July 2027 | Current rules apply – generally no CGT |
| On or after 1 July 2027 | No CGT on gains accrued before 1 July 2027. Indexation method applies to gains accrued from that date | |
|
Post‑1985 to pre‑21 September 1999 |
Before 1 July 2027 | Current rules apply – choice of 50% discount or indexation |
| On or after 1 July 2027 | Current rules apply to gains before 1 July 2027. Indexation method applies to gains accrued from that date | |
|
Post 21 September 1999 to 30 June 2026 |
Before 1 July 2027 | 50% CGT discount applies if held for at least 12 months |
| On or after 1 July 2027 | 50% discount applies to gains accrued before 1 July 2027 if eligible. Indexation method applies to gains accrued after that date | |
| On or after 1 July 2027 | Anytime | Indexation method applies to gains accrued after acquisition |
Negative gearing restrictions
From 1 July 2027, losses from established residential investment properties, bought after Budget night, will no longer be able to offset other income. Losses can still be used against rental income and future capital gains. Existing properties and eligible new‑build properties are excluded.
Negative gearing benefits are preserved for existing holdings and new housing supply, but strategies for other property investing may need to be reviewed, especially as these changes are intended to slow housing price growth.
Minimum 30% tax on discretionary trusts
From 1 July 2028, discretionary trusts will generally be subject to a minimum 30% tax on trust income. There will be exemptions for certain trusts and income types, and a three‑year window to restructure out of discretionary trusts where appropriate.
Family trust strategies may become less effective for income splitting in some cases, making it important to review existing structures well before these rules start. But expect more changes here as the farming lobby goes to work.
Instant asset write‑off made permanent
From 1 July 2026, the $20,000 instant asset write‑off will be made permanent for eligible small businesses with turnover under $10 million. Small business owners may benefit from improved cash flow by claiming immediate deductions rather than spreading them over several years.
For small business owners closer to exit, the CGT changes leave the small business CGT concessions largely untouched, which is a positive.
Government support and aged care
Residential aged care funding and Support at Home
Aged care remains a priority in this Budget, with additional funding aimed at improving access to home care and expanding residential aged care places.
From 1 July 2026, funding will support increased residential care capacity, while changes to the Support at Home program will reduce out‑of‑pocket costs over time. From 1 October 2026, personal care services such as help with showering and dressing will be fully Government‑funded, with contributions continuing for other types of support based on individual circumstances.
While these changes improve affordability, aged care decisions remain complex and are often best considered well before care is required. For those planning ahead for themselves or a family member, early advice can help clarify options, manage costs and preserve choice.
In Summary
For most retirees this Budget has little negative impact. For business owners, those with discretionary trust structures and those investing outside of superannuation, plans may need to be adjusted. We will continue to monitor these announcements, but please contact your FMD adviser if you have any immediate questions.
General advice disclaimer: This article has been prepared by FMD Financial and is intended to be a general overview of the subject matter. The information in this article is not intended to be comprehensive and should not be relied upon as such. In preparing this article we have not taken into account the individual objectives or circumstances of any person. Legal, financial and other professional advice should be sought prior to applying the information contained on this article to particular circumstances. FMD Financial, its officers and employees will not be liable for any loss or damage sustained by any person acting in reliance on the information contained on this article. FMD Group Pty Ltd ABN 99 103 115 591 trading as FMD Financial is a Corporate Authorised Representative of FMD Advisory Services Pty Ltd AFSL 232977. The FMD advisers are Authorised Representatives of FMD Advisory Services Pty Ltd AFSL 232977. Rev Invest Pty Ltd is a Corporate Authorised Representative of FMD Advisory Services Pty Ltd AFSL 232977.