Against a difficult backdrop, including the Iran conflict, global fuel disruption and slowing GDP growth, the 2026 Federal Budget is the most significant structural reform to Australia's tax system in nearly three decades. Treasurer Jim Chalmers has used Labor’s strong parliamentary majority to pursue reform that previous governments consistently avoided.
The changes to capital gains tax, negative gearing and family trusts will reshape how Australians invest, structure their finances and plan for retirement. The decisions made in the next 12 months could have lasting consequences for your financial position.
We’ve organised each announcement as either a positive impact or an area to watch, so you can cut straight to what matters for you.
The 50% CGT discount will be replaced by an inflation-adjusted model from 1 July 2027. Gains accrued before that date still qualify for the existing discount, making the window between now and then a critical planning horizon.
Negative gearing will be restricted to new residential builds only for properties purchased after 12 May 2026. Existing properties are grandfathered, but future investment property strategies need to be rebuilt around the new rules.
A 30% minimum tax on discretionary trust distributions takes effect from 1 July 2028, with a three-year restructure window. Anyone with a family trust should seek advice now.
A new $250 Working Australians Tax Offset and $1,000 instant work-related expense deduction deliver modest but real relief for wage earners from 2026–27.
The private health insurance rebate for Australians aged 65 and over will be reduced to the standard 24% rate. This increases out-of-pocket costs by $226–$255 per year for more than 3 million Australians.
From 2027–28, a new $250 Working Australians Tax Offset (WATO) will apply to more than 13 million Australians who earn wages or salaries. Investment income, including superannuation pension payments, does not qualify.
The measure is estimated to cost $6.4 billion over four years.
From the 2026–27 income year, a new $1,000 instant deduction for work-related expenses will be available to wage and salary earners without needing to itemise individual claims. Around 6.2 million workers, or 42% of taxpayers, are expected to benefit, with average savings of $205.
The $1,000 instant deduction applies from this income year and removes the record-keeping burden that has historically put many people off claiming work-related expenses.
The WATO does not arrive until 2027–28. If you're considering income-splitting arrangements or a move toward passive income in retirement, it’s worth understanding how wage-income-only eligibility might affect your position.
Speak to your Findex advisor about how these measures apply to your situation.
The 50% capital gains tax (CGT) discount will be replaced by an inflation-adjusted model. In simple terms, instead of automatically halving your taxable gain, the gain will be adjusted for inflation and only the real gain above that will be taxed. A new minimum 30% tax rate on capital gains will also apply, with exemptions for pensioners and income support recipients.
The new rules apply only to gains accrued after 1 July 2027. Gains made before that date will continue to qualify for the 50% discount. Assets acquired before 1985 will no longer be fully exempt, with gains accrued after 1 July 2027 subject to the new rules.
Investors in new-build residential properties may elect to use either the 50% discount or the new settings at time of disposal. Combined with negative gearing changes, the measures are estimated to raise $3.6 billion over five years.
This is one of the most significant structural tax changes in many years. If you hold investment properties, a share portfolio or any assets acquired before 1985, the changes to the CGT discount and the new 30% minimum rate are likely to be relevant to your position.
The window between now and 1 July 2027 may represent a planning opportunity worth discussing with your Findex advisor, particularly if you hold assets with large, embedded gains.
Negative gearing will be restricted to new residential builds only for properties purchased after budget night, 12 May 2026.
All properties owned or purchased before this date are grandfathered under current rules and may continue to be negatively geared. Investors who purchase existing dwellings after Budget night will still be able to deduct losses against other residential property income and carry forward unused losses to future years. They simply cannot offset those losses against other income such as wages.
The government estimates rents will increase by approximately $2 per week as a result of these changes. Combined with the CGT reforms, the measures are projected to raise $3.6 billion over five years.
If you were considering purchasing an existing investment property, the change in negative gearing treatment from 12 May 2026 is material to that decision. Existing properties are unaffected.
If you're reviewing your property investment strategy in light of these changes, including whether new builds now make more sense than established dwellings, your Findex advisor can help you model the options.
The CGT and negative gearing reforms are projected to transfer approximately 75,000 properties from investors to owner-occupiers over the next decade, though a reduction in housing supply of approximately 35,000 dwellings is also forecast.
An additional $2 billion over four years will fund roads, utilities and services infrastructure to support the construction of 65,000 new homes, producing a net increase of approximately 30,000 homes.
Foreign investors will be banned from purchasing existing residential properties for two years, until mid-2029. A new AI tool worth $105.9 million over four years will streamline environmental approvals for residential developments.
If you're supporting younger family members into the property market or considering residential property as part of your investment strategy, the structural changes to supply and demand are worth understanding in the context of your broader financial plan.
Speak to your Findex advisor about how the changes to CGT and negative gearing treatment for new builds might be relevant to your situation.
Headline inflation is forecast to reach 5% in the June quarter 2026, before declining to 2.5% by the June quarter 2027 within the Reserve Bank of Australia’s target band. These forecasts assume global oil prices begin to ease from mid-2026 and stabilise by mid-2027.
GDP growth is forecast at 1.75%, down from 2.25% in the prior financial year. Unemployment remains low by historical standards and labour force participation is high.
Treasury has identified material downside risks, including a prolonged Middle East conflict, sustained domestic supply chain disruptions, higher-than-expected inflation and cautious consumer spending. A severe conflict scenario with oil prices reaching $200 per barrel could produce a quarter of negative GDP growth and inflation peaking at 7.25%.
The combination of low unemployment and slowing, inflation-pressured growth creates complexity, particularly for those at or near retirement.
Near-term inflation at 5% has real implications for purchasing power, retirement income and investment returns. If you'd like to understand how the current economic environment affects your financial plan, speak to your Findex advisor.
The 2025–26 deficit is projected at $31.5 billion, $2.8 billion lower than forecast in the Mid-Year Economic and Fiscal Outlook (MYEFO). The budget is not forecast to return to surplus until 2034–35.
Gross debt is still projected to exceed $1 trillion. An unexpected $41 billion windfall over the four-year period, driven by commodity taxation, GST receipts and inflation, has largely been directed to debt reduction.
The government noted this creates capacity to address bracket creep in future budgets.
The long path to surplus is worth keeping in mind for anyone factoring government transfer payments, including the Age Pension, NDIS, aged care subsidies and Medicare, into long-term financial planning.
The government’s stated intent to address bracket creep in future budgets may also be relevant depending on your income level. Your Findex advisor can help you understand the implications for your plan.
An additional $53 billion will be allocated to defence over the next decade, including $14 billion over the next four years. Major commitments include the AUKUS nuclear-powered submarine program, long-range strike missiles, drone acquisition and counter-drone technology.
Defence spending will increase to 3% of GDP by 2033 under NATO methodology, or approximately 2.4% by 2034 under the narrower definition. Offsetting savings of $5 billion were identified through project reprioritisation, including the early retirement of 10 RAAF C-27 Spartan aircraft.
The sustained increase in defence spending creates a multi-year demand signal across a range of sectors. If you'd like to understand how this might be relevant to your investment portfolio, speak to your Findex advisor.
The NDIS currently costs $50 billion per year, four times its original projection. The government is targeting a reduction in annual growth from approximately 10% to 5–6% long term.
More than 160,000 participants will transition to state-run support programs by 2030. Projected savings total $37.8 billion over the forward estimates, while avoiding a further $13 billion projected blow-out.
$2 billion will be allocated to establish the Thriving Kids program for children with autism and other neurodevelopmental conditions.
If you or a family member are an NDIS participant, the transition of 160,000 participants to state-run programs by 2030 creates genuine uncertainty around service continuity and funding levels.
It’s worth reviewing your NDIS plan and engaging with your Support Coordinator proactively. If NDIS access forms part of your disability or estate planning, your Findex advisor can help you understand the impact.
A minimum 30% tax rate will apply to discretionary trust distributions from 1 July 2028. Trustees will be required to remit tax directly, with beneficiaries still declaring income in their returns.
Exemptions apply to fixed trusts, superannuation funds, deceased estates, charitable trusts, primary production income and certain income relating to vulnerable young people.
Small businesses and other taxpayers will have three years from 1 July 2027 to restructure out of discretionary trusts into companies or fixed trusts. The measure is expected to raise $4.5 billion over four years.
If you use a discretionary trust for family wealth, business income or investment, the 30% minimum tax rate from 1 July 2028 is likely to affect tax efficiency.
A three-year restructure window opens from 1 July 2027. The right path forward depends on your circumstances, including beneficiary profile, asset mix and distribution history. This is a conversation worth having with your Findex advisor sooner rather than later.
The additional private health insurance rebate for Australians aged 65 and over will be removed. Those aged 65–69 currently receive 28% and those 70 and over receive 32%. All Australians will move to a standard 24% rebate.
More than 3 million Australians are expected to face additional costs of $226–$255 per year. Savings of approximately $3 billion will fund additional aged care beds and in-home support.
If you're aged 65 or over and hold private health insurance, the reduction to the standard 24% rebate increases ongoing health costs.
Whether your current level of cover remains appropriate at the higher net cost is worth reviewing with your Findex advisor in the context of your retirement income plan.
An additional 5,000 residential aged care beds per year will be funded from July 2027. The government has reversed its previous decision to remove funding for some in-home aged care services, a $1 billion reversal over four years.
The reversal on in-home aged care funding may improve affordability assumptions for Australians planning to age at home.
Aged care costs continue to rise, so integrating aged care into retirement planning is becoming increasingly important.
A record $25 billion has been committed to public hospitals under a new five-year agreement with the states. An additional $1.8 billion will maintain Urgent Care Clinics.
The Medicare levy low-income threshold will increase, keeping approximately 1 million Australians exempt or on a reduced rate.
Sustained investment in public healthcare may influence how Australians assess private health insurance over time.
Healthcare planning is becoming a more material part of long-term financial decisions.
The productivity package targets low productivity growth through regulatory reform, venture capital incentives and a permanent two-year loss carry back for companies with turnover up to $1 billion from 1 July 2026. Up to 85,000 companies are expected to benefit.
The loss carry back improves cash flow flexibility during downturns and strengthens tax planning options for businesses. It also improves resilience across cyclical trading conditions.
The $20,000 instant asset write-off will be made permanent. Small start-ups will also gain access to a refundable tax offset.
This removes uncertainty around timing and eligibility for capital purchases. Small businesses can now plan investment decisions with greater confidence.
The electric vehicle FBT exemption will be partially wound back from April 2027. Full exemptions apply only to EVs below $75,000 until 1 April 2029 and after that the full exemption will be scaled back to a 25% discount.
Novated lease and salary packaging arrangements involving EVs may need to be reviewed ahead of implementation. Timing of purchases becomes more important under the new settings.
More than $10 billion will be invested in fuel security, including stockholding requirements and a national diesel and jet fuel reserve.
Fuel security is now closely tied to inflation and operating costs. Transport, logistics, agriculture and mining sectors will feel this most directly.
The temporary reduction in fuel excise will end on 1 July 2026 with no extension announced.
Fuel costs will rise once the temporary measure ends. This will affect both households and businesses through higher transport costs.
Funding will support community safety, mental health services and national security initiatives following the 2025 Bondi Beach attack.
Federal funding for the inland rail project will not proceed beyond Parkes, NSW.
This affects freight logistics and long-term supply chain assumptions for regional industries.
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