Kasker Associates
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Call Us:
(02) 9498 2655
2026 Federal Budget

2026 Federal Budget – laws passed

Personal Income Tax:

  • From 1 July 2026, the tax rate for income between $18,201 and $45,000 drops from 16% to 15%, then to 14% from 1 July 2027.
  • From 1 July 2027, every working Australian will automatically qualify for the $250 Working Australian Tax Offset.
  • From 1 July 2026 (2027 FY), many people will be able to claim a flat $1,000 deduction without keeping receipts (replacing $300 in the past).

Negative gearing (properties):

  • Negative gearing (where rental losses are deducted from taxable income) will be limited to new builds only.
  • Existing properties owned before Budget night (12 May 2026) are not affected.
  • Held property before the Budget night as a main residence and subsequently changing the property to rental, negative gearing will still be applicable.
  • Properties purchased under SMSF are not affected.

Capital Gains Tax (CGT)

  • The Capital Gains Tax (CGT) discount will move from a flat 50% discount to an inflation-based model with a minimum effective tax of 30% on gains (waived in years you receive means-tested support, e.g. Age Pension, JobSeeker).
  • Assets include real estate, shares, managed funds, cryptocurrencies and most businesses.

Pre-1 July 2027 Gains: For assets held before 1 July 2027 and sold before 30 June 2027, any capital gains accrued on the existing assets sold before 1 July 2027 will remain eligible for the traditional 50% CGT discount.

Post-1 July 2027 Gains: For any assets acquired before 1/7/2027, when you eventually sell the asset after 1 July 2027, the gain must be split into two periods. For the growth before 1 July 2027, the 50% CGT concession rule applies provided the asset is held for more than 12 months. The growth following 1 July 2027 will be subject to the new law, which replaces the 50% discount with cost-base indexation and enforces a minimum 30% tax rate on the gain.

  •  A legitimate valuation report is required as at 1/7/2027.
  • Share prices and crypto prices published on 1/7/2027 need to be obtained.
  • New build election: Investors who buy a qualifying new residential build can elect either the old 50% discount or the new indexation + 30% minimum tax – whichever produces a better outcome. A subsequent buyer of the same property will lose this election.
  • Knock down and rebuilding is not treated as a new built home as there is still one home on the same block of land. Exceptions apply to multiple dwellings (e.g. duplex or units).
  • A granny flat is not treated as a newly built home.
  • Properties purchased or built as new residential builds after Budget night retain the choice to use either the legacy 50% CGT discount or the new indexation rules.
  • Death and Divorce Transfer Rules: Transitional rules ensure that grandfathered CGT concessions on jointly owned assets are protected and can be maintained in the event of a partner’s death or a family law court order.
  • The 6-Year CGT exemption Rule: Main residence GST exemption rule is not affected (the property has to be your principal residence as soon as it was purchased).

    SMSF

    • The SMSF CGT regime remains unchanged. Unlike personal investments, SMSFs retain the statutory one-third CGT discount, meaning realised gains are taxed at an effective rate of only 10% in the accumulation phase (or 0% in the pension phase).
    • Residential Property Ban: SMSFs can no longer take out new loans to buy residential homes.
    • Existing Loans Grandfathered: Current residential Limited Recourse Borrowing Arrangements (LRBAs) are not affected.
    • Commercial Properties: SMSFs can still borrow to buy commercial real estate (e.g., factories, warehouses, or shops)
    • Transition Windows: For contracts signed prior to the law being passed, the LRBAs are not affected.

      Small businesses:

      • From 1 July 2026, the $20,000 (GST inclusive) instant asset write-off will become permanent, making it easier to immediately deduct the cost of business essentials like tools, equipment or vehicles.
      • The 50% capital gain tax discount for small businesses will be extended to those with a turnover of up to $10 million instead of $2 million.

      Not passed – The proposed 30% minimum tax on beneficiary’s distributions under Discretionary Trust structures.

      Limitation of Liability  Our liability is limited by a scheme approved under Professional Standards Legislation. Further information on the scheme is available from the Professional Standards Councils’ website: http://www.professionalstandardscouncil.gov.au