Federal Budget: the changes that are now law.

The following paragraphs give you an overview of what is changing. They are not intended to replace specific advice.

Negative Gearing

Negative gearing for residential properties is restricted to new builds. If you buy an established property after 7:30pm AEST on 12 May 2026, rental losses can only be offset against other residential property income or gains.

Properties acquired before that time are permanently grandfathered and exempt from the changes. The new treatment for non-exempt established properties takes effect 1 July 2027.

What it means: properties you already owned on budget night, commercial and industrial properties and new residential properties are comparatively tax-advantaged; neutrally or positively geared portfolios might become the norm.

Capital Gains Tax – part 1

The 50% discount that is currently available to individuals and trusts that hold assets for more than 12 months, will cease on 1 July 2027 and be replaced by indexation of your cost base.

If you continue to hold assets at 30 June 2027, you will have a deemed disposal event at market value on that date. The taxing event is deferred until you have an actual sale of the asset.

The cost base for those assets, and newly acquired assets, is thereafter indexed for inflation. Capital gains will also become subject to a minimum 30% tax rate.

Pre-CGT assets (assets acquired on or before 20 September 1985) will be brought into the regime, with gains accruing after 1 July 2027 subject to CGT.

What it means: you will need to value the CGT assets you own on 30 June 2027; there are no changes to the taxation of gains made by your superannuation fund.

Capital Gains Tax – part 2

The small business CGT concessions will remain. Where those rules apply, the 30% minimum tax on capital gains does not apply. Further, from 1 July 2027, the turnover threshold for the 50% active asset discount will increase from $2m to $10m.

What it means: more small business owners will be able to apply the active asset discount; keep an eye on turnover – as you get closer to the $10m threshold, you might need to start doing the sums on post-tax money to work out if selling earlier makes sense for you in all of your circumstances.

Working Australians Tax Offset

From the 2028 tax year, the WATO provides a non-refundable annual tax offset of up to $250 for Australian residents earning ‘labour income’.

What it means: practically nothing.

Work-related Expenses

From the 2027 tax year, Australian residents earning ‘labour income’ can claim up to $1,000 in unsubstantiated work-related expenses.

What it means: only slightly more than nothing.