A structural tax reset, with a measured macro signal.

The most visible change for many clients is the treatment of residential investment property. Negative gearing will remain in place, but from 1 July 2027 it is effectively restricted to new builds; losses on established residential properties acquired after the cut-off will be quarantined to residential property income.

Properties held at 7:30pm AEST on Budget night retain full negative gearing under the existing rules until they are sold, including contracts exchanged but not yet settled at that time. This heavy grandfathering is designed to avoid a sudden shock to current investors and markets.

Treasury modelling suggests the tax changes will lead to a modest increase in rents, a contained impact on prices, and a net increase in total housing supply once the broader housing package is considered. The system is being tilted away from speculation on existing dwellings and toward adding new homes.

Practical implications for property investors

• Existing holdings are largely protected, but future purchases of established property will be less tax-efficient.
• New builds become more attractive, retaining full negative gearing and benefiting from broader housing supply support.
• Records of ownership at Budget night will matter for proving grandfathered status.

The Budget directly targets discretionary trusts, which have long been central to high net worth tax planning. From 1 July 2028, most discretionary trusts will pay a 30% minimum tax at the trustee level on trust taxable income, with non-refundable credits passed to beneficiaries.

Fixed trusts, complying superannuation funds, charitable trusts, certain primary production trusts and some testamentary trusts are exempt, recognising their different role. There is also rollover relief from 1 July 2027 to 30 June 2030 to facilitate restructures into companies or fixed trusts without immediate tax on the transfer of assets.

Practical effects for high net worth families

• Traditional income splitting to adult children on low marginal rates becomes far less effective, because the trust has already paid 30% tax and any excess credit can be trapped.
• Investment income flowing through discretionary trusts will often face a higher combined effective tax rate than under current rules, depending on the profile of beneficiaries.
• The choice of structure – discretionary trust vs fixed trust vs company vs super – becomes more important for after-tax outcomes and estate planning.

On the personal tax side, the Budget continues the shift toward rewarding work. Alongside previously legislated tax cuts, a new Working Australians Tax Offset (WATO) from 1 July 2027 will provide an additional offset for income from work only – wages, salaries and business income – effectively increasing the tax-free threshold for workers.

Support for small and medium-sized businesses

• A permanent $20,000 instant asset write-off from 1 July 2026, providing ongoing certainty for equipment and technology purchases.
• Permanent loss carry-back for companies with turnover under $1 billion from 1 July 2026.
• Start-up loss refundability from 1 July 2028, enabling eligible young companies to receive cash for early-year losses.
• A retargeted and more generous R&D Tax Incentive from 2028, with higher offset rates and a higher threshold for refundable claims.

The overall message is that the tax system is being tilted to favour income from work and investment in productive assets, rather than tax-driven leverage in property or opaque structures.

For retirees and superannuation members, the Budget is notable for what it does not change. There are no new super tax measures: no adjustments to contribution caps, transfer balance caps, Division 293 thresholds or preservation age in this Budget.

Super funds – including SMSFs – are exempt from the new CGT measures, from the negative gearing restriction, and from the 30% discretionary trust minimum tax. This preserves the existing concessional treatment of investment earnings and capital gains within super, especially in pension phase.

Age Pension and DVA asset tests and deeming rates are also unchanged. Income support recipients are exempt from the new 30% minimum CGT rate, further insulating lower-income retirees from the main tax reforms.

From an investment perspective, we see the Budget as supportive of certain sectors rather than a game-changer for the overall market.

Key beneficiaries

• Defence and national security – a sizeable lift in multi-year defence spending backs a pipeline of contracts for defence, cyber and related industries.
• Infrastructure and housing – additional funding for rail, road and enabling infrastructure underpins medium-term demand for construction, engineering, transport and materials.
• Healthcare and aged care – higher funding supports earnings visibility for healthcare providers and related services.
• Technology, innovation and clean energy – more targeted R&D incentives, venture capital expansions and energy transition programs support selective growth.

Headwinds

• Highly leveraged residential property investors focused on existing stock rather than new supply.
• Traditional listed property vehicles and income strategies heavily reliant on discretionary trust capital.

The key Budget changes are significant but phased and heavily grandfathered, which allows time for thoughtful planning rather than rushed reactions.

• Map how the new trust and CGT rules interact with your existing structures and long-term goals.
• Re-examine property strategies across personal, trust and super environments.
• Ensure business-owner clients capture new incentives around loss relief, R&D and venture capital.
• Keep portfolios aligned with structural growth opportunities, while managing risk through diversification and active currency and rate management.

As legislation develops and ATO guidance emerges, we will update our views and recommendations to ensure your strategy remains both tax-aware and investment-led, rather than driven by short-term headlines.