2026 Federal Budget: What it means for you
The 2026-27 federal budget included proposed changes to negative gearing, capital gains tax and discretionary trusts. These measures are subject to legislation passing parliament. Here’s what you need to know.
Proposed change
Negative gearing
1 Jul 2027Negative gearing will be limited to new residential properties. Existing investment properties held before 12 May 2026 are unaffected.
Properties purchased after 12 May 2026 can only offset losses against rental income, not salary.
Proposed change
Capital gains tax
1 Jul 2027The 50% CGT discount is replaced with cost base indexation. A minimum 30% tax rate will apply to gains made from this date.
Gains accrued before 1 July 2027 are not affected.
Proposed change
Discretionary trusts
1 Jul 2028A minimum 30% tax rate will apply to income distributed through discretionary trusts.
Exemptions include fixed trusts, super funds, charitable trusts, special disability trusts and deceased estates.
Negative gearing
From 1 July 2027, negative gearing arrangements for investment properties held before 12 May 2026 remain unchanged. Negative gearing will be limited to new residential properties for any investment property purchased after 12 May 2026.
Capital gains tax
From 1 July 2027, the way capital gains are calculated will change, with a minimum 30% tax rate applying to gains made from that date. Gains accrued before 1 July 2027 are not affected. Investors purchasing new residential properties will have the option to apply either the existing 50% discount or the new arrangements when they sell.
Discretionary trusts
From 1 July 2028, a minimum 30% tax rate will apply to income distributed through discretionary trusts. The minimum rate will not apply to fixed trusts, widely held trusts, charitable trusts, special disability trusts, complying superannuation funds, deceased estates, or primary production income.
Not sure how this affects you?
Every client’s situation is different. Book an appointment with your DPM consultant to understand exactly how these changes affect you and what steps, if any, you may need to take.