2026 Federal Budget: Implications for Investors
Tuesday night’s Federal Budget proposed some of the most significant changes to Australia’s tax system in decades, with property investors and family trusts squarely in focus.
Ronald Reagan once observed that “the nine most terrifying words in the English language are: I’m from the government, and I’m here to help.” That sentiment runs through this Budget. As the rules shift, the burden falls on individuals to adapt.
The key implication for investors is straightforward. Investment structure is becoming just as important as the investment itself.
What this means in practice:
- Discretionary (family) trusts will be less effective
- Company structures will become more relevant in some cases
- Superannuation will be the most attractive investment structure, even for large balances
For many self-funded retirees, the impact is likely limited, with super continuing to benefit from concessional tax treatment on income and capital gains. For those building wealth outside super, this may warrant a review of current structures and, in some cases, shift assets to improve after-tax outcomes.
What are we doing:
Importantly, these are proposals only. Most measures are unlikely to take effect for one to two years, providing time to assess and plan appropriately. Acting now will create more risk than benefit, particularly given the proposed transition relief period from 1 July 2027.
If legislated, we will contact clients where we believe there is an impact or a need to review structures in more detail, in consultation with their accountant.
Four key points from the Budget:
1. Capital Gains Tax (proposed 1 July 2027)
Discount change: The 50% CGT discount for individuals and trusts is replaced with inflation indexation, with a 30% minimum tax on the gain.
Scope: Applies broadly to shares, investment property and other capital assets.
Grandfathering: Gains accrued before 1 July 2027 retain current treatment, making valuation resets at that date important.
2. Discretionary Family Trusts (proposed 1 July 2028)
30% tax floor: Discretionary trust distributions will face a minimum 30% tax rate, reducing the effectiveness of income-splitting.
Bucket companies: Distributions to companies will not be credited for tax paid at the trust level, creating a form of double taxation. This reduces the appeal of bucket companies and increases the relative attractiveness of standalone company structures.
Restructure window: Temporary rollover relief is proposed to allow families and businesses to restructure during the transition period.
3. Negative Gearing (proposed 1 July 2027)
New builds only: Negative gearing for residential property will be limited to newly constructed dwellings.
Established property: Losses on newly acquired established properties will no longer offset other income and must be carried forward.
Grandfathering: Properties purchased before Budget night retain current treatment.
Other assets: Shares and commercial property remain eligible under existing rules.
4. Superannuation (no changes)
Concessions maintained: Aside from previously legislated changes, no new material measures were announced. Earnings remain taxed at 0 to 15% depending on phase, with a one-third CGT discount on assets held over 12 months.
Further detail is included in the First Tech Budget Briefing paper link below.
Please reach out if you would like to discuss how these changes may affect your position.
Warm regards,
Mackay Private Wealth
General Advice Warning: Any comments in this communication do not consider your objectives, financial situation or needs. Before acting on any general advice, consider whether it is appropriate for you.