2026-27 Federal Budget: What It Means for Individuals and Investors

The 2026-27 Federal Budget delivered some of the most significant changes to individual taxation in years. Whether you are a salaried employee, a property investor, a retiree, or managing family wealth through a trust, there are measures in this Budget that are worth understanding now.

This article covers the changes most relevant to individuals and investors. If you run a business, see our companion article: 2026-27 Federal Budget: What It Means for Business Owners. For the full technical details on all measures, download the DFK Everalls Federal Budget Tax and Superannuation Overview.

Capital gains tax: New rules

Multiple changes have been made to the CGT rules for growth accrued on assets after 1 July 2027, and for investors with significant assets, this is the biggest change in the Budget.

The new rules include indexation, a minimum 30% tax rate, changes to pre-CGT assets, and different rules for brand-new vs existing residential property bought after Budget Night.

The new rules are only applicable to sales from 1 July 2027 (FY 28), i.e., old rules apply to all sales before 30 June 2027. They apply to ALL assets (property, businesses, shares and other investments) held by individuals, partnerships and trusts. The new rules are not applicable to Super Funds, nor companies (who were never allowed 50% discount anyway, and non-small business companies already pay 30% tax).

For sales of any asset on or after 1 July 2027 (27/28), the capital gain amount needs to be split between pre and post 1 July 2027 components using either

Valuation as at 30 June 2027; or
Pro-rata based on time pre & post

This means it would be prudent for most taxpayers to have their unlisted assets (e.g., property) valued as at 1 July 2027 for future CGT calculations. We do note that there is no particular rush on this, as a) asset values as of 1 July 2027 obviously can’t be determined until after then; and b) valuers can prepare valuations as of a particular time, even years after.

The ‘First Part’ of the capital gain comprises the growth from purchase to 30 June 2027. The same old rules will apply, but subject to a minimum 30% tax rate:

Exempt if pre-CCGT property
Eligible for 50% discount if owned for more than 12 months (otherwise 100% taxable as usual)

The ‘Second Part’ of the capital gain comprises the growth from 1 July 2027 to the sale and is subject to the new rules:

Pre-CGT Assets – will now have a TAXABLE capital gain based on the difference between valuation at 1 July 2027 plus indexation versus the sale proceeds. This gain will be taxed at the new minimum tax rate of 30%.
Post-CGT Assets – All assets except New Residential Constructions will have this part of their taxable capital based on the difference between the valuation as at 1 July 2027, plus indexation, and the sale proceeds. This gain will be taxed at the new minimum tax rate of 30%.
Post –CGT Assets – New Residential Constructions (bought post 1 July 2027) will have the choice to use either the 50% discount or indexation methods. Either way, the gain will be subject to the new minimum 30% tax rate.

The practical implications for anyone holding investment assets is that you’ll need a valuation as at 1 July 2027 to establish your new cost base. If you hold property or a significant share portfolio, it’s worth talking to your adviser to review your investments and investment strategy before 1 July 2027 rather than after, particularly if you had planned sales in mind. For people considering purchasing an established rental property going forward, please talk to us to confirm the new tax and cash-flow implications.

Negative gearing restricted for established properties

From 1 July 2027, negative gearing on residential property will be limited to new builds only. This means that the net rental loss incurred on any non-new residential properties purchased after Budget night will no longer be offset against other income, such as wages from 1 July 2027 onwards, but can be carried forward.

The key boundaries are:

Any residential property held before Budget night is fully grandfathered under existing rules for as long as it is held.
Properties purchased between Budget night and 30 June 2027 may be negatively geared only during that period, not from 1 July 2027 onwards.
Losses on established properties purchased after Budget night can be carried forward and offset against future residential property income or capital gains from any residential property.
New builds remain fully eligible. A new build is a dwelling on vacant land or where existing properties are demolished and replaced with more dwellings. Knock-down rebuilds and substantial renovations do not qualify.
Commercial property and other asset classes, including shares, remain fully eligible for negative gearing.

Together, the CGT and negative gearing changes reshape the economics of holding established residential investment property. If property forms a significant part of your portfolio, a strategy review with your adviser is a sensible step before July 2027.

Discretionary trusts: a minimum 30% tax from 2028

From 1 July 2028, discretionary trusts will pay a minimum tax of 30% on their taxable income. That’s a meaningful shift from how trusts work today, where income flows through to beneficiaries and gets taxed at their individual rates — sometimes as low as zero for family members below the tax-free threshold. Under the new rules, the trustee pays the minimum tax directly, and beneficiaries receive a non-refundable tax credit for the amount already paid.

Not every trust is affected. Unit trusts, widely-held trusts, complying super funds, special disability trusts, deceased estates, charitable trusts, and discretionary testamentary trusts that existed on budget night are all excluded.

The change is aimed squarely at income splitting — the practice of distributing trust income to lower-income family members to reduce the overall tax bill. The Government has been clear that the intent is to bring the tax treatment of trust distributions closer to that paid by a wage earner on the same income.

If you use a discretionary trust for business or investment purposes, this warrants a conversation with your adviser well before 2028. CGT & income tax Rollover relief will be available from 1 July 2027 for those who want to restructure, for example, into a company or fixed trust, but the planning required — particularly where the trust holds property — takes time to work through properly.

Standard Deduction for Work Expenses

The Government has announced a “Standard Deduction” from 1 July 2026 that will allow workers to lower their taxable income from work by $1,000 without keeping receipts when they lodge their tax return, making tax time simpler. The Government believes that 42% of taxpayers will benefit from this minimum deduction, but the reduced tax benefit won’t be received until lodgement of their tax return after 30 June 2027.

From 1 July 2026, workers and sole traders will have the choice to claim:

A “Standard Deduction” of $1,000 to cover all their work-related expenses (although workers earning less than $1,000 will have their deduction capped at the amount of income received); or
Keep receipts and claim actual work-related expenses if they exceed $1,000.

The Standard Deduction will cover all work-related expenses, including car, travel, and self-education expenses; however, Union fees and Professional Association fees can still be claimed separately.

There is no change to other non-work-related expense claims such as donations, income protection insurance, tax agent fees & investment deductions.

Tax cuts: Lower rates and a new offset for every working Australian

From 1 July 2026, the 16 per cent tax rate on taxable income between $18,201 and $45,000 will drop to 15 per cent.

From 1 July 2027, the tax rate will drop to 14 per cent.

From the 2027-28 income year, every working Australian taxpayer will receive a new Working Australians Tax Offset (WATO) of up to $250 per year. It covers income from wages, salaries and sole trader business income, and is paid automatically through your annual tax return. No action is required.

The WATO increases the effective tax-free threshold for work income by nearly $1,800, bringing it to $19,985 (or up to $24,985 for those also eligible for the Low Income Tax Offset). It is a permanent annual measure and sits on top of already legislated tax cuts taking effect from 1 July 2026 and 1 July 2027. Over 13 million Australian workers are expected to benefit.

Medicare levy thresholds increased

The low-income thresholds have been increased by 2.9% as of 1 July 2025. For singles, the threshold moves from $27,222 to $28,011. Families go from $45,907 to $47,238. Single seniors and pensioners move from $43,020 to $44,268, with the family threshold for that group rising from $59,886 to $61,623.

Most clients won’t feel this one — it’s a modest adjustment to keep pace with wages rather than a structural change.

Private health insurance rebate: Reducing for over 65’s from April 2027

If you’re over 65 and hold private health insurance, this one is worth noting. Currently, Australians aged 65 to 69 receive a 28% rebate on premiums, and those over 70 receive a 32% rebate, compared to 24% for those under 65. From 1 April 2027, those age-based uplifts go, and a single flat rate applies across the board.

For clients in or approaching that age bracket, the out-of-pocket cost of maintaining the same level of cover will increase. It’s worth reviewing your policy and what you’re actually using before that date, rather than waiting for the bill to change.

Foreign ownership restrictions on housing were extended

The temporary ban on foreign purchases of established residential dwellings has been extended to 30 June 2029. Permanent residents and New Zealand citizens are unaffected, and limited exceptions remain for purchases that genuinely add to housing supply.

Superannuation

The good news is no changes to super were announced in the May 26 Budget!

We note that the previously announced Div 296 Tax starts on 1 July 2026 but is only imposed when a person has more than $3M in total super as at 30 June 2027. Please seek advice if this applies to you, as we can evaluate the practical implications for you and discuss strategies to mitigate.

What should you do now?

Several of these changes reward early attention. The CGT and negative gearing changes take effect from 1 July 2027, and the trust minimum tax from 1 July 2028. Both give you time to plan, but planning starts earlier is more valuable than planning that starts closer to the deadline.

If you hold investment assets, have a family trust, or are approaching or in retirement, we encourage you to review your position with your adviser in light of these changes.

Download the DFK Everalls Federal Budget Tax and Superannuation Overview for the full technical details on all Budget measures. To speak with a DFK Everalls adviser, contact your Client Account Manager directly. For investment and wealth planning, our colleagues at Everalls Wealth Management are available to assist.

This article is a general summary of selected 2026-27 Federal Budget measures and does not constitute financial, taxation or legal advice. The measures described are proposals subject to the passage of legislation. Please speak with a qualified adviser regarding your individual circumstances.