- Capital gains tax (from 1 July 2027 – proposed): The 50% CGT discount would be replaced with CPI-style cost base indexation for assets held >12 months, plus a minimum 30% tax rate on net capital gains. Transitional rules mean gains accrued up to 1 July 2027 would generally be taxed under current rules, with post‑1 July 2027 gains under the new approach. Income support recipients (including Age Pension) would be exempt from the 30% minimum tax. Super funds are not impacted (they retain the 1/3 discount for assets held >12 months). Previously CGT exempt assets (acquired on or before 19 September 1985) will lose their grandfathering with gains made from 1 July 2027 until the date of sale to be subject to the new CGT regime (30% minimum tax).Taxpayers will need to obtain a valuation of pre‑CGT assets as at 1 July 2027, which will act as the starting point for calculating capital gains under the new regime if the asset is sold after that date.
- Negative gearing (changes from 1 July 2027 – proposed): Negative gearing for residential property would be restricted to new builds. Existing established properties held at Budget night would be grandfathered. For affected established properties, rental losses could be ring‑fenced to rental income/capital gains from residential property, with unused losses carried forward. Super funds (including SMSFs) and widely held trusts would be excluded. Additionally, these changes do not apply to investment portfolios comprising shares or managed funds.
- Discretionary trusts (from 1 July 2028 – proposed): A 30% minimum tax on discretionary trust taxable income, paid by trustees, with beneficiaries receiving non-refundable credits (corporate beneficiaries would not receive credits). Some trusts (e.g., fixed/widely held trusts, complying super funds, certain testamentary arrangements, deceased estates, charities) would be excluded.
- Age Pension (to impact from 20 September 2026): The rules for the Pension Supplement will change for people who are overseas. The maximum Pension Supplement will continue for up to 12 weeks when a person is temporarily overseas, instead of 6 weeks. After 12 weeks overseas, or if the move is permanent, the Pension Supplement will stop.
- Personal tax relief for workers: The Budget proposes a $1,000 instant tax deduction from 2026–27 for eligible workers, and a $250 Working Australians Tax Offset from 2027–28. For the 2025/26 financial year (backdated), the Medicare levy low-income thresholds will increase by 2.9% for singles, families, seniors and pensioners. Singles now stay exempt up to $28,011, while families get a higher threshold of $47,238.
- NDIS Changes (from April 2026): For current participants, these changes are mostly about how the system is run rather than an immediate loss of essential day-to-day support. However, over time there may be tighter checks around plans, reassessments, providers and the types of supports funded. For people seeking access in future, eligibility is expected to focus more clearly on substantially reduced functional capacity. Some changes are expected to begin from 1 October 2026, with broader planning and access reforms staged from 2027 and 2028.
- Aged care (from 1 July 2026): Additional funding to increase residential aged care bed supply (targeting those with limited means), improve dementia supports, and improve affordability/access to home care. From 1 October 2026, Support at Home recipients approved for personal care can access these services without out-of-pocket costs. Personal care (which includes assistance with showering, dressing and non-clinical continence management), will be reclassified into the fully Government funded ‘clinical support’ category.
- Private health insurance rebate (from 1 April 2027): Proposed removal of the age-based uplift. Instead, the same base rebate scale will apply across age groups, with income tiers still determining how much rebate is available. For some people aged 65 and over, this will mean higher net premium costs.
- Electric vehicle FBT concessional scale back (from 1 April 2027): From 1 April 2027, the tax concession for eligible electric vehicles provided through work arrangements, including novated leases, will start to reduce for more expensive vehicles. Until 31 March 2027, eligible EVs up to and including the fuel-efficient luxury car tax threshold can continue to access a full FBT exemption. From 1 April 2027 to 31 March 2029, the full exemption remains only for eligible EVs costing $75,000 or less. Eligible EVs above $75,000 and up to the fuel-efficient luxury car tax threshold receive a 25% FBT discount instead. From 1 April 2029 onwards, eligible EVs up to the fuel-efficient luxury car tax threshold receive a 25% FBT discount.
- Small Business Instant asset write-off (1 July 2026): The instant asset write-off threshold will be permanently increased to $20,000. This means that eligible small businesses with an aggregated turnover under $10 million will be able to immediately deduct the cost of eligible assets costing less than $20,000 each, rather than doing so over a number of years.
Please note this summary is not intended to cover every measure announced in the Federal Budget on 12 May 2026. We have highlighted the changes most likely to be relevant to our clients.
General advice only: This update is general information and does not take into account your objectives, financial situation or needs. Budget measures may change as legislation is developed and passed. Please seek personal advice before acting.