Our complete guide to every measure in the 2026-27 Federal Budget with timing, who is affected, and what to do.
Download the Full Autumn 2026 Budget Edition Newsletter
Every measure from the 2026-27 Federal Budget explained in one document, with practical guidance for your situation.
The 2026-27 Federal Budget, delivered by Treasurer Jim Chalmers on the evening of 12 May 2026, is one of the most significant overhauls of the Australian tax system in nearly three decades. In a single Budget, the government has made changes to capital gains tax, negative gearing, trust distributions, superannuation, electric vehicles, research and development, and a range of cost-of-living measures.
This guide covers every measure with the practical detail you need. The biggest topics have their own dedicated articles linked below. The smaller and more procedural changes are covered in full in this guide.
The Complete Commencement Schedule
The Budget measures take effect at different dates between 1 July 2026 and 30 June 2029. The table below sets out every measure with its commencement date and a link to the relevant detail.
| Date | Measure | Who is affected | More detail |
|---|---|---|---|
| 1 July 2026 | $1,000 Instant Tax Deduction | All Australian workers | Section below |
| 1 July 2026 | $20,000 instant asset write-off (permanent) | Small businesses under $10m | Section below |
| 1 July 2026 | Additional 15% tax on super balances over $3m | High-balance super members | Read more |
| 1 July 2026 | Transfer balance cap rises to $2.1m | Members near or in retirement phase | Read more |
| 1 July 2026 | Payday super begins | Every small business employer | Read more |
| 1 July 2026 | Loss carry-back returns for companies | Companies under $1bn turnover | Section below |
| 1 July 2026 | Fuel excise reverts to full rate | Heavy fuel users | Section below |
| 1 July 2027 | $250 Working Australians Tax Offset begins | All workers with a tax liability | Section below |
| 1 July 2027 | 50% CGT discount replaced with indexation + 30% minimum | All CGT asset holders | Read more |
| 1 July 2027 | Negative gearing quarantining (established residential) | Investors acquiring after 12 May 2026 | Read more |
| 1 July 2027 | Trust restructure rollover window opens (3 years) | Discretionary trust operators | Read more |
| 1 July 2027 | Venture capital incentive caps expand | VC fund participants | Section below |
| 1 April 2027 | FBT EV exemption narrows above $75k | EV salary packaging holders | Section below |
| 1 July 2028 | 30% minimum tax on trust distributions | Discretionary trust beneficiaries | Read more |
| 1 July 2028 | R&D Tax Incentive reforms | All R&D claimants | Section below |
| 1 July 2028 | Loss refundability for start-up companies | Start-ups in their first 2 years | Section below |
| 1 April 2029 | FBT EV exemption narrows for all EVs | All EV salary packaging holders | Section below |
| 30 June 2029 | Foreign purchase ban on established dwellings ends | Foreign property buyers | Section below |
The Major Changes (Dedicated Articles)
Five of the most significant measures have their own dedicated articles. We strongly recommend reading the one that applies to your situation.
Capital Gains Tax Changes — Replacing the 50% Discount
The 50% CGT discount is being replaced with cost base indexation, combined with a new 30% minimum tax on net capital gains, for gains arising from 1 July 2027. This applies to all CGT assets including shares, investment property, and business assets. Read our full guide to the end of the 50% CGT discount for the transitional rules, worked examples, and what to do about substantial assets.
CGT Changes for Business Owners and Goodwill
For business owners, particularly sole traders and discretionary trust operators, the CGT changes hit hardest where goodwill has a zero cost base. Indexation cannot reduce nothing. Our article on what the CGT changes mean for business owners covers the doubling of tax on goodwill, why business structure matters more than it has in 25 years, and the time-limited rollover window from 1 July 2027 to 30 June 2030.
Negative Gearing Changes for Property Investors
Established residential property acquired after 7:30pm on 12 May 2026 will face new quarantining rules from 1 July 2027. Existing properties are grandfathered. New builds remain fully geared. Our full article on the 2026 negative gearing changes covers the cutoff, the new build exception, and the combined effect with the CGT changes.
30% Minimum Tax on Trust Distributions
From 1 July 2028, discretionary trusts will pay a 30% minimum tax on their taxable income. Beneficiaries below 30% effective rate lose the excess credit permanently. Our article on the 30% minimum tax on trust distributions covers the breakeven point, what is excluded, the major uncertainties in the announcement, and the rollover relief window for restructuring.
Superannuation Changes From 1 July 2026
Three super changes hit on the same day: the additional 15% tax on balances above $3 million (now law), the transfer balance cap increase to $2.1 million, and the move to payday super. Our article on the five superannuation changes from 1 July 2026 covers each in detail with worked examples and the practical setup work for employers.
Cost-of-Living Measures for Workers
$1,000 Instant Tax Deduction From 1 July 2026
From 1 July 2026, eligible Australian workers can claim a flat $1,000 deduction for work-related expenses without keeping receipts or itemising. It is a choice, not an automatic change. You still need to decide whether the flat deduction or your actual expenses produces a better outcome.
The flat deduction applies to tax residents who earn income from work, including employees, sole traders earning from their own labour, and workers with multiple jobs. If your only income is from investments or rental properties, this does not apply.
The actual saving depends on your marginal rate:
| Combined marginal rate | Tax saving on $1,000 deduction |
|---|---|
| 18% (16% + 2% MLS) | $180 |
| 32% (30% + 2% MLS) | $320 |
| 39% (37% + 2% MLS) | $390 |
| 47% (45% + 2% MLS) | $470 |
If you currently claim less than $1,000 in legitimate work expenses, the flat deduction is the better path. If you typically claim more, actual expenses remain the better option. You cannot mix the two methods. Charitable donations, union fees, and accountant fees can still be claimed on top of the $1,000. When we prepare your individual tax return, we compare both options and apply whichever gives the better outcome.
$250 Working Australians Tax Offset From 1 July 2027
The Budget introduced a permanent $250 Working Australians Tax Offset for Australians who earn income from work, including wages, salaries, and the business income of sole traders. The offset is permanent rather than a one-off measure.
The offset does not apply until the 2027-28 financial year. Most workers will first see the benefit when their 2027-28 tax return is processed, generally between July and October 2028. PAYG withholding does not change in the meantime.
Two important points to watch:
- The offset reduces tax owed but cannot generate a refund on its own. Low-income workers with little or no tax liability receive a reduced benefit or none at all
- Any outstanding ATO debt or other liabilities can absorb the offset before it reaches your bank account. The offset also does not reduce the 2% Medicare Levy
Alongside the offset, the effective tax-free threshold for work income lifts by nearly $1,800 to approximately $19,985, or up to $24,985 when combined with the Low Income Tax Offset. For low-income workers, that threshold change is often the more meaningful benefit.
Small Business Investment and Cash Flow
The $20,000 Instant Asset Write-Off Is Now Permanent
The $20,000 instant asset write-off is now a permanent feature of the tax system for small businesses with turnover under $10 million. This removes the year-by-year uncertainty that has surrounded the concession since 2020 and lets you plan capital expenditure with confidence. Our earlier article on the $20,000 write-off was written when the rules were extended only until June 2026 – the Budget has now made the threshold permanent.
The write-off allows you to immediately deduct the full cost of an eligible asset in the year it is first used or installed ready for use. The $20,000 limit applies per asset, not per business, so multiple assets can be written off in the same year provided each is under the threshold.
| Eligible assets | Ineligible items |
|---|---|
| Tools, plant, and equipment | Trading stock and inventory |
| Office furniture, computers, printers | Buildings and structural improvements |
| Motor vehicles (subject to car limit) | Goodwill and intangible assets |
| Specialised machinery | Items held for private rather than business use |
| Solar panels and energy efficiency equipment | Capital works improvements |
| Second-hand equipment used in the business | Software development costs above the threshold |
Where an asset is used partly for business and partly privately, the deduction is apportioned to reflect the business-use percentage. A vehicle used 70% for business gets 70% of the cost as an immediate deduction – keep contemporaneous records to support the apportionment. Talk to us about your business tax return position before any significant purchase, so we can confirm eligibility and time the purchase against your year-end.
Loss Carry-Back Returns for Companies
From 1 July 2026, companies with aggregated annual turnover under $1 billion will be able to carry back a tax loss and offset it against tax paid in either of the two previous financial years. If your company paid tax in 2024-25 or 2025-26 and then incurs a loss in 2026-27 or later, you can apply that loss against the earlier tax paid and receive a cash refund.
This is particularly valuable for companies that were profitable in recent years but are now experiencing a downturn. Rather than carrying the loss forward and waiting years for the tax benefit, the cash refund is available now.
Worked example: $200,000 loss in 2026-27 after profitable years
A company paid tax of $150,000 in 2024-25 and $180,000 in 2025-26. The company incurs a $200,000 tax loss in 2026-27. Franking account balance is $250,000.
- Carry loss forward: $50,000 tax benefit applied against future profits, potentially years away
- Carry loss back: Cash refund of $50,000 applied against earlier tax paid, available now
Same loss, very different cash flow timing. The carry-back accelerates the benefit by years.
Three important constraints: the carry-back applies to revenue losses only (capital losses still ring-fenced against capital gains); the refund cannot exceed your franking account balance (a constraint that catches companies that have paid out fully franked dividends); and the election is voluntary so you can still carry forward if that suits you better. Division 7A can be a related trap if related-party loans are involved.
From 1 July 2028, a separate measure allows small start-up companies (turnover under $10m) to convert losses in their first two years into a refundable tax offset, capped at the value of FBT and withholding tax on Australian wages paid in the loss year. The offset flows to companies genuinely employing people and building a business, not to shell entities.
Venture capital incentive caps also expand from 1 July 2027: standard VCLPs rise from $250m to $480m, and early stage VCLPs from $50m investment / $250m tax-exempt return to $80m / $420m. The separate Eligible Venture Capital Investor program has been closed to new applications from Budget night.
Fringe Benefits Tax on Electric Vehicles
FBT EV Exemption Phase-Out
The full FBT exemption on electric vehicles provided through novated lease or salary packaging will be wound back in stages. The full exemption continues until 31 March 2027. From 1 April 2027, EVs priced above $75,000 lose the full exemption and attract only a 25% FBT discount. From 1 April 2029, the 25% discount applies to all EVs below the Luxury Car Tax threshold regardless of price.
| Period | EVs $75,000 and under | EVs above $75,000 (below LCT threshold) |
|---|---|---|
| Until 31 March 2027 | 100% FBT exemption | 100% FBT exemption |
| 1 April 2027 to 31 March 2029 | 100% exemption continues | 25% discount only |
| From 1 April 2029 | 25% discount only | 25% discount only |
Watch out
Grandfathering is not as comprehensive as it sounds. The Budget states that all eligible electric cars will retain the FBT discount rate in place when the arrangement began, but the word ‘eligible’ refers to eligibility under the new rules. EVs priced above $75,000 appear to lose the full exemption at 1 April 2027 regardless of when the arrangement was entered into.
The Budget papers do not define what ‘commenced’ means. When plug-in hybrids were removed from the exemption in 2025, the rules required a financially binding ongoing commitment – optional lease extensions did not qualify. A similar test may apply here. Do not assume an existing arrangement is automatically protected until the legislation is released.
If you currently hold an EV under a novated lease, do not assume your arrangement is fully protected. If you are considering entering one, the next 12 months are the most attractive entry window for higher-priced vehicles. Please contact us before committing to a new lease so we can walk through the after-tax numbers as part of your tax planning.
Research and Development
R&D Tax Incentive Changes From 2028
Significant changes to the Research and Development Tax Incentive take effect from 1 July 2028. The reforms are broadly positive for businesses engaged in genuine core R&D activity, though some aspects tighten the scope of what is eligible. R&D claims are common in our IT and tech professional and medical practice client groups.
| Parameter | Current | From 1 July 2028 | Direction |
|---|---|---|---|
| Offset rate increase for core R&D | Existing rates | +4.5 percentage points | More generous |
| Intensity threshold for higher rate | 2% | 1.5% | More businesses qualify |
| Turnover cap for refundable offset | $20 million | $50 million | More businesses access cash refund |
| Maximum R&D expenditure threshold | $150 million | $200 million | More headroom at the top |
| Minimum expenditure for in-house claim | $20,000 | $50,000 | Smaller claims excluded |
| Supporting R&D expenditure | Eligible | Removed | Narrower expenditure base |
Two changes tighten eligibility in ways that matter. Supporting R&D expenditure – which has historically allowed claims for a broader range of associated costs – will no longer be eligible. Only core R&D expenditure qualifies. If your current claim relies substantially on supporting expenditure, the dollar value of your claim from 2028 will be lower than it is today even with the higher offset rate.
The minimum expenditure threshold also doubles from $20,000 to $50,000. Research activities below that amount will only be eligible if undertaken with a registered Research Service Provider or Cooperative Research Centre. The intent is to direct smaller-scale R&D through structured research partnerships rather than allowing modest in-house claims.
Watch out
The changes take effect from 1 July 2028, which feels distant, but R&D claims require deliberate setup. Documentation, project structure, and contracting arrangements often need to be in place months or years before a claim is submitted. If you currently claim the R&D Tax Incentive, the lead-up to 2028 is the time to tighten the structure of your claim through our business advisory service.
Other Budget Updates
Fuel Excise Reverts to the Full Rate From 1 July 2026
The 32 cent per litre cut to the fuel excise introduced on 1 April 2026 was always a temporary three-month measure. The Budget did not extend it. The cut expires on 30 June 2026 and the full excise rate returns from 1 July 2026. The impact is largest for trades and construction, couriers, automotive, and tourism operators.
For a business consuming 50,000 litres of diesel per year, the cost impact of the reversion is approximately $16,000 annually compared to the rebate period. A business consuming 100,000 litres faces approximately $32,000 in additional cost. These numbers should be factored into 2026-27 cash flow planning.
Businesses that use fuel in their operations may be eligible to claim fuel tax credits through their BAS, which partially offset the cost of excise. Eligible uses include fuel in off-road vehicles, plant and equipment, heavy vehicles on public roads (at a partial rate due to the road user charge), primary production, and marine operations. If you are not already claiming fuel tax credits and believe you may be eligible, please contact us.
Foreign Purchase Ban on Established Dwellings Extended
The temporary ban on foreign purchases of established residential dwellings, originally introduced for two years from 1 April 2025, has been extended by a further two years and three months to 30 June 2029. Foreign persons are generally prohibited from purchasing established residential properties in Australia during the ban.
The existing exemptions continue to apply – purchases by permanent residents and New Zealand citizens, purchases that support housing supply, and commercial property are not affected by the ban. New residential developments remain available to foreign purchasers subject to existing rules.
For most clients this measure has no direct impact. If you have overseas family members considering Australian residential property, a property transaction involving a foreign party, or business arrangements with overseas investors involved in property, please seek advice before proceeding.
How the Changes Interact
What makes this Budget particularly complex is that many of these changes interact with each other. The combined effect on three groups in particular is significantly larger than any single measure considered alone.
| Group | Interacting changes | Net effect |
|---|---|---|
| Property investors | Negative gearing quarantining + CGT indexation + 30% minimum | Significantly higher after-tax cost of established residential property |
| Business owners | CGT indexation on zero-cost goodwill + trust distribution tax + rollover window | Pressing structural review for sole traders and trust-operated businesses |
| High-balance super members | 15% additional tax on >$3m + CGT changes outside super | Asset location decisions matter more than they have for years |
| High-income employees with EVs | FBT EV phase-out + $1,000 deduction available | After-tax position varies based on vehicle price and timing |
What to Do Now
The measures announced in this Budget are far-reaching, and the right response will be different for every client. What is clear is that waiting is not a strategy. The sooner you understand how these changes affect your specific situation, the more options will be available to you. Our tax planning service is the natural starting point for working through how the changes apply to you.
| If this describes you… | …this is the priority |
|---|---|
| You own investment properties | Review investment strategy in light of both negative gearing quarantining and the CGT changes |
| You own a business through a sole trader or discretionary trust structure | Question whether your current structure remains appropriate is now more pressing than it has been in 25 years |
| You are a beneficiary or trustee of a discretionary trust | Early engagement will maximise planning options once the trust distribution legislation is released |
| Your superannuation balance is approaching or exceeds $3 million | The new earnings tax is law and requires careful attention before 1 July 2026 |
| You are a small business employer | Payday super setup work needs to be done before 1 July 2026 |
| Your company has paid tax recently and is now experiencing a loss | Loss carry-back may make a cash refund available sooner than you think |
| Your business claims the R&D Tax Incentive | Claim structure should be reviewed well before 1 July 2028 |
None of these issues need to be resolved overnight, but all of them benefit from early advice. We will be reaching out to clients we believe are most directly affected, but please do not wait to hear from us if you have concerns or questions.
