The 2026 Federal Budget represents the most significant rewrite of Australia's tax base since the introduction of the CGT discount in September 1999 — a 27-year-old design that this budget unwinds entirely. With major changes to capital gains, negative gearing and trust distributions all landing in the same package, we’re advising clients to start by understanding the changes: what they are, when they commence, and what they could mean for your investments, your business structures, and your long-term plans.
The 50% CGT discount is being replaced by an indexed cost-base model from 1 July 2027, and pre-1985 assets are being brought into the CGT regime for the first time.
Negative gearing on residential property is being restricted from 1 July 2027 for properties purchased after 7:30pm on Budget night (12 May 2026), with new residential builds preserved and properties held before Budget night grandfathered.
A 30% minimum tax will apply to discretionary trust distributions, with a primary producer carve-out. The corporate beneficiary regime is materially changed, with no apparent carve-out announced for active trading companies.
A modest business package — $20,000 instant asset write-off made permanent, a two-year loss carry-back for entities under $1bn turnover, a $250 offset for working Australians, and some new incentives for new start-up entities.
From 1 July 2027, the 50% CGT discount that has applied to individuals and trusts since 21 September 1999 is replaced by an indexed cost-base system. Under the new model, the cost base of an eligible asset is uplifted by CPI growth from the date you acquired it to the date you dispose of it, and the resulting real gain is then taxed at the taxpayer's full marginal tax rate (or a minimum of 30%), rather than the nominal gain being discounted by 50%.
The indexation model also applies to pre-1985 assets, which are being brought into the CGT regime for the first time. For those assets, indexation runs from 1 July 2027, so the effective cost base will need to be substantiated as at that date. This means obtaining a formal valuation versus reliance on a (not yet defined) ATO model will be a live commercial decision for clients with substantial pre-CGT holdings.
While companies are unaffected directly by the discount-to-indexation change, a separate 30% minimum tax framework on capital gains has been announced more broadly. The budget papers flag consultation on how this interacts with existing CGT concessions and rollover regimes — including ESIC and other start-up incentives. Transitional provisions for CGT assets acquired before 1 July 2027 but sold after 1 July 2027 are likely to be complex, with gains accruing up until 30 June 2027 subject to the 50% discount, and indexation applying to the post 1 July 2027 uplift in value.
The trade-off between indexation and the previous 50% discount isn't always obvious, and the right answer depends on your specific assets, holding periods and personal tax position. As a rule of thumb:
Indexation tends to produce a better outcome for long-held assets in higher-inflation periods, where CPI growth captures most of the nominal gain.
The 50% discount tended to be more favourable for shorter-held assets in low-inflation periods, where most of the gain is real rather than inflationary.
The key cut-off is 30 June 2027. Disposals on or after 1 July 2027 are governed by the new indexation model; how CGT assets acquired before that date will be treated under the transitional rules is a critical legislative detail still to come. If you hold long-held assets with significant unrealised gains, working through whether to crystallise before or after 1 July 2027 will be a material decision over the coming 14 months.
Whether this applies to your situation is worth discussing with your Findex advisor.
Established residential properties purchased after 7:30pm on 12 May 2026 lose the ability to be negatively geared from 1 July 2027, with a transitional period in between. New residential builds are preserved whilst existing properties (held before Budget night) are grandfathered.
The limitation applies only to existing residential property. Commercial property, shares, and other asset classes remain under the existing negative gearing regime. From 1 July 2027, losses from existing residential properties can only be deducted against rental income from any property, and no longer against wages or other income. Unused losses carry forward and can offset a future capital gain on the property. The new rules apply to individuals, partnerships, trusts and companies.
The Federal Government has extended the temporary ban on foreign persons purchasing established residential property, with the end date now on 30 June 2029. Importantly, the Budget also clarified certain exceptions will continue to apply.
For established residential property portfolios, the interaction between the negative gearing rules and the new CGT indexation model warrants careful attention. Existing properties remain on the current rules indefinitely, but the CGT element will be impacted on disposals after 1 July 2027.
The structure question becomes a live conversation again:
Individual ownership retains access to indexation from 1 July 2027 and to negative gearing on grandfathered or new-build holdings.
Company ownership never had access to the CGT general discount, but the rental-loss carry-forward against future capital gain produces a similar economic outcome over a longer time horizon.
Trust ownership now interacts with the 30% minimum tax on distributions, which may meaningfully change the after-tax position of family property structures.
It’s important to note that these proposed changes to the CGT regime and negative gearing on existing residential properties are not law yet, and several of these measures will be heavily debated through both Houses of Parliament.
If you'd like to understand how these changes affect your position, speak to your Findex advisor.
A 30% minimum tax rate will apply to discretionary trust distributions. Primary production income is carved out of the measure, which is important for agricultural and farming family structures, however the carve-out's interaction with primary production averaging remains unclear.
The change with the longest practical tail sits with corporate beneficiaries. Where a trust distributes to a corporate beneficiary, tax is paid at the trustee level without a corresponding credit at the company, and the income is then taxed again at the company level. On the current announcement there is no carve-out for active trading companies, so operating entities funded via trust distributions face double tax. If you've used a corporate beneficiary as part of a long-term wealth-accumulation strategy, that strategy is effectively over.
The government has signalled that expanded rollover relief will be available for discretionary trust restructures for a 3-year window, but detail on the eligibility and extent of the rollovers is awaited. There are no retrospective changes, and some existing arrangements may be grandfathered in whole or part, but the design questions are substantial.
Several critical design questions remain unanswered until draft legislation lands:
The scope of rollover relief eligibility — broad or narrow? Which restructures qualify? What evidentiary requirements apply?
The treatment of corporate beneficiaries funding active trading operations — is a carve-out forthcoming, or is the regime as announced?
The interaction with primary production averaging for agri clients within the carve-out.
The legislative path and whether the trust measures survive Parliament intact in their current form.
For now, the right focus is modelling and conversation, not restructuring. If you hold assets through a discretionary trust, it's worth talking to your advisor about whether it remains the right vehicle for you — but the final answer depends on detail that hasn't yet landed.
The Federal Budget re-introduced the loss carry back provisions for two years for companies with annual turnover of under AU$1billion (from 1 July 2026) and loss refundability for small start up entities (from 1 July 2028). These budget measures are targeted at businesses to assist them in periods of economic volatility and encourage investment.
From 1 July 2026, the Federal Government will permanently retain the $20,000 instant asset write-off initiative for small businesses with an annual turnover of less than AU$10million. The previous incentives for Electric Vehicles are also being scaled back with a staged transition from the current full exemption to a 25% discount for new vehicles from 1 April 2029 onwards.
There are also refinements to the R&D tax concession and Venture Capital incentives to try and promote investment in innovation and start up.
Whilst the headline Budget measures are less targeted at businesses themselves, investors who are looking holistically should be across the changes in order to ensure they can maximise their returns at a time of significant upheaval.
As with all Budget measures the legislation will be critical so speak to your Findex advisor for insights and advice.
The 1 July 2026 and 1 July 2027 commencement dates create a planning window. Five considerations for the months ahead:
Model your CGT position. If you hold long-held assets — particularly pre-1985 assets — work with your advisor to model the gain under both the existing discount and the new indexation system. The 30 June 2027 cut-off is the key timing decision. Cost-base substantiation work for pre-1985 assets should start now and the valuation backlog will only grow.
Reconsider investment property plans. If you're thinking about an investment property purchase, the way you hold it (individual, trust, company), the type of property (new build vs established), and the timing of the purchase all materially affect the long-term after-tax outcome.
Review your trust strategy. If you hold assets through a discretionary trust, it's worth a conversation about whether it remains the right vehicle for you under the 30% minimum and the new corporate beneficiary rules. Any restructure should wait for the rollover relief detail, but the modelling can begin now.
Maximise super before 30 June. Superannuation was untouched in this budget, which makes it comparatively more attractive as an accumulation vehicle relative to trust and discretionary structures that have been recalibrated. If you have headroom in your concessional or non-concessional contribution caps, using it before 30 June remains a foundational EOFY consideration.
Watch your income timing. With key changes commencing on 1 July 2026 (negative gearing) and 1 July 2027 (CGT indexation and pre-CGT assets), the timing of when you realise income or capital gains becomes a meaningful planning lever — particularly if you're considering a disposal or restructure in the next 24 months.
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