Treasurer Jim Chalmers’ fourth Budget delivers the most ambitious package of tax reform Australia has seen in roughly three decades. The headline measures touch wage earners, small business owners, property investors, retirees and trust structures — and the staged commencement dates between 2026 and 2030 create real planning windows for our clients to act in.
This guide distils the announcements into a practical client briefing — what stays the same, what shifts, when it starts, and where our team at Trinity Accounting Practice recommends you focus your attention first. It is written for our clients in plain English, with the practical implications front and centre. Detailed file notes and individual modelling are being prepared separately for clients who need them.
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At a glance — the headline takeaways
- Personal tax cuts already legislated continue, with the 16% bracket dropping to 15% from 1 July 2026 and 14% from 1 July 2027.
- $1,000 standard work-related deduction available without receipts from 1 July 2026 — opt-in, you can still claim actual expenses if higher.
- $250 Working Australians Tax Offset from the 2027–28 income year, including for sole traders.
- $20,000 instant asset write-off proposed to become permanent for businesses with turnover under $10 million.
- 50% CGT discount replaced by an indexation-based system from 1 July 2027 — pre-existing assets get transitional treatment.
- 30% minimum tax on discretionary trust distributions proposed from 1 July 2028, with a restructure rollover window through to 1 July 2030.
- Negative gearing tightened for established residential investment property; commercial property is excluded.
- Superannuation caps and Division 296 settings remain on the existing trajectory, with SMSFs relatively well-placed under the new framework.
1. Individuals and families — tax cuts, simpler deductions, cost-of-living measures
The biggest changes for individual taxpayers are the continuation of the stage-three rate cuts, a new flat work-related deduction, and a modest permanent offset for working Australians.
Personal income tax rates
| Taxable income | 2025–26 | 2026–27 | From 2027–28 |
|---|---|---|---|
| $0 – $18,200 | Nil | Nil | Nil |
| $18,201 – $45,000 | 16% | 15% | 14% |
| $45,001 – $135,000 | 30% | 30% | 30% |
| $135,001 – $190,000 | 37% | 37% | 37% |
| $190,001+ | 45% | 45% | 45% |
Trinity example: a client earning $90,000 in 2027–28 will be roughly $540 a year better off than under the 2025–26 settings once the rate change fully takes effect. Modest in isolation, but it compounds when combined with the new deduction and offset below.
The $1,000 standard work-related deduction
From 1 July 2026, employees and sole traders can claim a flat $1,000 deduction for work-related expenses without substantiation. It is opt-in — where your genuine expenses exceed $1,000, the usual evidence-based claim continues to apply. Charitable donations, professional memberships and the cost of managing your tax affairs remain claimable on top.
The $250 Working Australians Tax Offset
A permanent, non-refundable tax offset of up to $250 a year for taxpayers with labour income — including PAYG employees and sole traders. It reduces tax payable rather than producing a refund in its own right, and is first received in 2027–28 returns lodged from July 2028.
Cost-of-living and Medicare
- Medicare levy low-income thresholds lift by 2.9% from 1 July 2025 — fewer low-income earners pay the full levy.
- Energy bill relief continues with a further round of household rebates flowing through retailers.
- Private Health Insurance rebate — the age-based uplift for those 65+ is removed from 1 April 2027. Review your cover before then if your premium is sensitive to this.
- HELP/HECS indexation reverts to the lower of CPI or WPI permanently, with a 20% balance reduction already legislated.
2. Small business and SMEs — cash flow, write-offs and compliance relief
The Budget contains a clear message for small business: the temporary settings of recent years are being made permanent, and compliance thresholds are being eased. None of these changes are transformative on their own, but together they make planning and reinvestment easier.
$20,000 instant asset write-off — now permanent
The $20,000 instant asset write-off threshold for businesses with aggregated turnover under $10 million is proposed to be made permanent from 1 July 2026. The threshold applies per asset, so multiple qualifying assets can be deducted immediately in the same income year. For most of our SME clients this removes the year-by-year uncertainty that has driven last-minute purchase decisions for the past several Budgets.
Loss carry-back extension
Eligible corporate tax entities will be able to carry current-year tax losses back against tax paid in prior profitable years, generating a refundable tax offset. Particularly useful for clients absorbing a soft trading year after strong profitability in 2023–24 and 2024–25.
Higher reporting thresholds for proprietary companies
Two of the three “large proprietary company” thresholds are being lifted, which will reduce audit and financial reporting obligations for a number of mid-tier private groups. We will be reviewing affected clients individually as the legislation progresses.
Other practical changes worth flagging
- Single Touch Payroll Phase 3 enhancements continue, with a broader real-time visibility framework being scoped.
- GST reporting modernisation pilot programs are being expanded — Xero, MYOB and QuickBooks integrations are being prioritised.
- Cyber resilience grants and the small business technology investment program are continued in modified form.
- Energy efficiency grants for SMEs under 50 employees are being recalibrated rather than ended.
If you are planning capital expenditure before 30 June 2026, talk to us about whether to bring purchases forward or hold for the permanent write-off.
3. Property and investment — negative gearing, CGT and the residential/commercial split
Property is one of the more nuanced parts of this Budget. The reforms differentiate clearly between established residential investment property — where deduction settings are tightening — and commercial property, where the existing framework is largely retained.
Residential investment property
- Negative gearing on established residential investment property is being limited — losses able to be offset against wages and salary income will be capped.
- Newly built residential property remains fully deductible to encourage supply.
- Existing investors hold grandfathered status for properties already owned, with detail to be confirmed in draft legislation.
- Depreciation rules for second-hand residential assets remain as previously legislated — no further tightening announced.
Commercial and industrial property
Commercial property is explicitly excluded from the residential negative gearing changes. Existing deductibility for interest, depreciation and operating costs continues. Where we expect commercial investors to feel the Budget most is in the broader CGT and trust changes covered below — not in property-specific measures.
What stays the same vs what is changing
| What stays the same | What is changing |
|---|---|
| Commercial property deductibility framework | Negative gearing limited on established residential investment |
| Newly built residential property settings | 50% CGT discount replaced from 1 July 2027 |
| Existing depreciation regime | Pre-CGT exemption effectively ends 1 July 2027 |
| Small business CGT concessions | Trust distribution taxation from 1 July 2028 |
| Main residence exemption | Foreign resident CGT withholding rate increased |
The single biggest planning point for property clients is not negative gearing — it is the interaction between the new CGT framework and trust ownership. Where you hold long-term property in a discretionary trust, we strongly recommend a structural review before 1 July 2027.
4. Capital gains tax reform — from discount to indexation
The proposed CGT changes are the most consequential single reform in the Budget for long-term investors. The familiar 50% discount on assets held more than 12 months is being retired and replaced with an indexation-based model from 1 July 2027.
Mechanics of the new framework
- The cost base of an asset will be indexed by CPI between acquisition and disposal.
- Tax applies to the real gain — the gain above inflation — rather than the nominal gain.
- A minimum effective tax rate of 30% will apply to indexed capital gains.
- Capital losses continue to offset capital gains under the existing carry-forward rules.
Transitional rules for existing assets
Assets acquired before 1 July 2027 are split into two notional growth periods. Growth attributable to the period before 1 July 2027 retains access to the existing 50% discount, while growth from that date onwards is taxed under the new indexation regime. The asset’s market value at 1 July 2027 becomes the pivot point — which is why formal valuations matter.
Pre-CGT assets (acquired before 20 September 1985)
The full exemption for pre-CGT assets is effectively ending. From 1 July 2027 the market value at that date becomes the new cost base, with historical growth preserved tax-free but future growth brought into the system. This is particularly relevant for legacy family business premises, long-held land and intergenerational holdings.
Why valuations matter — and when to commission them
A defensible market valuation as at 1 July 2027 will:
- Lock in the cost base for assets entering the new regime
- Preserve the value of pre-CGT growth at a specific reference point
- Reduce the risk of ATO dispute on disposal in five or ten years’ time
- Support trust restructure decisions during the rollover window to 2030
5. Trusts and structures — a 30% minimum and a restructure window
Discretionary trusts are the structure most directly affected by this Budget. From 1 July 2028, a minimum 30% tax rate is proposed to apply to distributions from discretionary trusts. The change does not abolish trusts, but it does compress the historical income-splitting benefit that has driven much trust use in Australia.
What the 30% minimum means in practice
- Distributions to adult beneficiaries on marginal rates below 30% will be topped up to that minimum.
- Distributions to corporate beneficiaries (bucket companies) may not generate franking credits in the way the current rules allow.
- Streaming of capital gains and franked dividends to specific beneficiaries remains permitted, subject to the trust deed.
- Testamentary discretionary trusts are expected to be carved out of the measure, though final wording is awaited.
Restructure rollover window: 1 July 2027 – 1 July 2030
Treasury has flagged a three-year capital gains tax rollover window to allow discretionary trusts to restructure into more tax-efficient holding entities without triggering immediate CGT. For clients with appreciated assets in a discretionary trust, this is the most important planning window in the Budget.
Comparing your structural options
| Structure | Treatment under new framework | Where it suits |
|---|---|---|
| Discretionary trust | 30% minimum on distributions from July 2028; restructure window available. | Active operating businesses; family asset protection; not income-splitting. |
| Company | 30% (or 25%) on retained profits; full nominal gains on disposal — gap to individuals narrows. | Reinvestment; long-hold operating assets; succession planning. |
| Unit trust | Taxed in the hands of unit holders; not subject to the 30% minimum. | Joint ventures; defined-benefit ownership; arm’s-length partners. |
| SMSF | 15% on income, effective concessional treatment on long-held assets, no impact from trust changes. | Retirement-stage investment property; intergenerational wealth structuring. |
6. Superannuation and SMSF — stability, with SMSFs comparatively well-placed
Compared with the structural changes elsewhere in the Budget, the superannuation system is left largely intact. The main moving parts are indexation of caps and the staged implementation of Division 296.
Concessional and non-concessional caps
- Concessional contributions cap remains indexed and is currently $30,000 for 2025–26 — no further change announced.
- Non-concessional cap remains at $120,000 per year with bring-forward arrangements unchanged.
- Carry-forward unused concessional contributions continue for members with Total Super Balance under $500,000.
Division 296 — earnings tax above $3 million
The additional 15% tax on earnings attributable to balances over $3 million (commonly referred to as Division 296) remains on its previously legislated trajectory. We continue to recommend modelling exposure for high-balance members and reviewing whether to bring planned contributions forward or hold.
Payday super — finalised settings
Employer super guarantee will be required to be paid contemporaneously with wages from 1 July 2026. The compliance interface with Single Touch Payroll and the new SBR-based reconciliation framework is being finalised — we will be in touch with all SME clients about payroll configuration well before the start date.
Why SMSFs are comparatively well-placed
The SMSF environment is largely untouched by the broader reforms. SMSFs are not affected by the trust distribution measure, retain the 15% income tax rate, and continue to deliver effective capital gains outcomes on assets held for longer periods. For clients weighing structures for long-hold investment property in particular, the SMSF option is now relatively more attractive than it was under the current law.
7. Key dates — your planning timeline at a glance
| When | What changes |
|---|---|
| 1 July 2026 | Personal tax rate drops to 15% on the $18,201–$45,000 bracket · $1,000 standard deduction available · $20,000 instant asset write-off becomes permanent · Payday super commences |
| 1 April 2027 | Age-based uplift to the Private Health Insurance rebate is removed for those aged 65+ |
| 1 July 2027 | Personal rate drops to 14% on the same bracket · CGT discount replaced by indexation framework · Transitional cost base provisions apply · Pre-CGT exemption effectively ends · Trust restructure rollover window opens |
| 2027–28 year | $250 Working Australians Tax Offset first available · Negative gearing limits on established residential property commence |
| 1 July 2028 | Minimum 30% tax on discretionary trust distributions commences |
| 1 July 2030 | Trust restructure rollover window closes |
A Trinity insight from 22 years in practice
The most valuable thing a Budget of this scale gives you is time. The transitional dates between 2026 and 2030 are long enough to plan structural changes properly — and short enough that delaying the first conversation by 12 months will materially compress your options. The clients who got the most out of the 1999 Ralph Review, the 2017 small business CGT tightening and the 2019 Division 7A changes were the ones who started the structural conversation early. The same will be true this time.
What this means for you — the next 90 days
- If you operate through a discretionary trust: book a structural review. The 30% minimum from 2028 and the 2027–2030 rollover window are the central planning points of this Budget.
- If you hold long-term investment assets: list anything you were planning to dispose of in the next 18 months. The pre-2027 CGT settings remain available until then.
- If you have pre-CGT or legacy family assets: commission a defensible market valuation. The 1 July 2027 value becomes a permanent reference point.
- If you are an SME planning capital expenditure: the $20,000 write-off becomes permanent from 1 July 2026, so the timing question is whether to bring purchases forward or wait.
- If you have a high-balance super account: model Division 296 exposure and review contribution timing.
- If you are an employee or sole trader: the $1,000 standard deduction and $250 offset are automatic once the legislation passes — no action needed, but worth understanding so you can compare against actual claimable expenses.
How Trinity is working with clients on the Budget
We are scheduling Budget review sessions through May and June 2026. Business clients will be contacted to align Budget planning with year-end strategy meetings. SMSF and high-net-worth clients with discretionary trust exposure are being prioritised for early structural reviews.
The measures in this Budget will affect every client differently. The right next step depends on your structure, your assets and your timing horizon. Our role is to translate the headlines into a plan you can act on — covering tax, business advisory, Virtual CFO and SMSF work as needed.
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General advice only. This article contains general information current as at May 2026 and does not constitute tax, financial or legal advice. The measures discussed are based on announcements made in the 2026–27 Federal Budget and may change as legislation is introduced, amended and finalised. It does not take into account your personal circumstances, objectives or needs. Before acting on any information in this article, you should consider its appropriateness to your situation and seek professional advice from Trinity Accounting Practice or another qualified adviser. Liability limited by a scheme approved under Professional Standards Legislation.