Budget Update – Proposed (BIG!) Tax Changes Explained
The 2026-27 Federal Budget includes some of the most significant proposed tax changes seen in decades. Many of them will have significant impact for business owners and non-business owners.
In the words of our CEO, “It’s just unbelievable.”
Most of these measures still need to pass through Parliament before becoming law. As that happens, we’ll keep you informed and let you know what it means for your business, investments and tax planning.
For now, here’s a quick breakdown of the key announcements most relevant to our clients.
BUSINESS TAX CHANGES
Permanent $20,000 Instant Asset Write-Off
From 1 July 2026, the Government proposes to permanently extend the $20,000 instant asset write-off for eligible small businesses with turnover under $10 million.
Reintroduction of Company Loss Carry Back
Companies with turnover under $1 billion will be able to carry back tax losses and offset them against tax paid in the previous two years from 1 July 2026.
Loss Refundability for Start-Up Companies
From 1 July 2028, eligible start-up companies with turnover under $10 million may be able to access refundable tax offsets for losses incurred in their first two years of operation.
Reform of Discretionary Trust Taxatio
From the 2029 income year, discretionary trusts will be subject to a proposed minimum 30% tax rate. Transitional rollover relief is also proposed for businesses restructuring out of discretionary trusts into alternative entities.
Dynamic PAYG Instalments
From 1 July 2027, the Government proposes to allow business taxpayers to vary PAYG instalments more quickly based on current business conditions.
INDIVIDUAL TAX CHANGES
Changes to Capital Gains Tax (CGT)
From 1 July 2027, the current 50% CGT discount is proposed to be replaced with a cost base indexation method and a minimum 30% tax on net capital gains for assets held more than 12 months. Transitional rules will apply to existing investments.
Negative Gearing Changes
From 1 July 2027, losses from established residential investment properties acquired after 12 May 2026 will generally only be deductible against residential property income and future capital gains. New builds will remain exempt.
Working Australians Tax Offset
A new $250 annual tax offset is proposed from the 2028 income year for individuals earning employment or sole trader income.
$1,000 Standard Deduction for Work-Related Expenses
From 1 July 2026, eligible taxpayers may claim a standard deduction of up to $1,000 for work-related expenses without requiring substantiation. Taxpayers with higher deductions can continue to claim actual expenses as normal.
Previously Legislated Tax Cuts
The Government confirmed previously announced personal income tax cuts:
- The 16% tax rate reduces to 15% from 1 July 2026
- The 15% tax rate further reduces to 14% from 1 July 2027
If you would like to discuss how these proposed changes may affect your business, investments, structure or future tax planning, please contact our office.
