2026–27 Federal Budget: Key Takeaways for Our Clients
Practical insights for individuals, investors and business owners — and what to consider before 30 June and into 1 July 2026.
The 2026–27 Federal Budget handed down 12 May 2026 focused on cost of living relief, housing and tax reform. Below are the key announcements most likely to affect our accounting and financial planning clients, along with practical “what to do next” considerations. This summary is general information only and does not take into account your objectives, financial situation or needs. That’s what our advisors are here to assist you with as part of the personal service we offer to our clients
1) Individuals & families: income tax relief and simpler claiming
Personal tax cuts already legislated: From 1 July 2026, the marginal tax rate on taxable income from $18,201 to $45,000 reduces from 16% to 15% (with a further step to 14% from 1 July 2027 legislated). This is applied through PAYG withholding, so most employees should see a small lift in take‑home pay from the first pay cycle after 1 July.
Proposed $1,000 standard deduction for work‑related expenses: From the 2026–27 income year, a simplified deduction of up to $1,000 is proposed to reduce record‑keeping for many employees. If you typically claim more than $1,000, you may still choose the usual substantiation method.
New $250 Working Australians Tax Offset (WATO): A permanent offset of up to $250 is proposed from the 2027–28 income year (i.e., received when lodging the 2027–28 tax return), designed to help with cost of living pressures.
Medicare levy low income thresholds: The Budget lifts low income thresholds, which may reduce Medicare levy payable for eligible individuals and families.
What to consider: Review your expected taxable income for 2026–27, ensure your employer payroll settings are up to date for 1 July, and decide whether the standard deduction (if legislated) or itemised claiming is better for you. If your income is near Medicare Levy Surcharge thresholds, it may also be time to revisit private health cover and salary sacrifice strategies as part of your broader cash flow and super planning. Discuss these and other changes with your accountant and financial planner.
2) Property & investing: major CGT and negative gearing reform (from 2027)
CGT discount proposed to be replaced: From 1 July 2027, the Government proposes replacing the 50% CGT discount with cost base indexation (inflation) and introducing a 30% minimum tax on net capital gains for relevant taxpayers. The detail will matter, particularly for investors, business owners and groups with large portfolios.
Negative gearing changes proposed: Also from 1 July 2027, negative gearing on residential property is proposed to be limited to new builds (with restrictions for established dwellings). Investments held before Budget night are proposed to be grandfathered.
Transitional complexity: The proposed design includes transitional rules so gains accrued before 1 July 2027 may be treated differently from gains accrued after that date. Depending on final legislation, some clients may need valuations or improved record‑keeping ahead of 1 July 2027. Don’t panic we can assist with any of your concerns.
What to consider: If you own (or are considering) investment property or other growth assets, talk to your advisor and start scenario testing now: potential hold vs sell timing, anticipated cash‑flow under revised negative gearing settings, and whether asset ownership should sit in your personal name, company, trust or super. We also recommend tightening your record keeping, documentation such as purchase costs, improvement costs, and valuations where relevant well ahead of 1 July 2027.
3) Small business & employers: cash‑flow support and compliance changes
$20,000 instant asset write‑off to become permanent (small business): The Budget proposes permanently extending the $20,000 instant asset write‑off for businesses with aggregated turnover under $10 million from 1 July 2026, providing more certainty for investment in equipment, tech and tools.
Loss carry‑back returns for eligible companies: For income years starting on or after 1 July 2026, companies with aggregated annual global turnover under $1 billion are proposed to be able to carry back revenue losses against tax paid in the prior two years (subject to limits such as franking balances).
PAYG instalment simplification: Measures are proposed to give businesses more flexibility to vary PAYG instalments to better match trading conditions, supporting cash‑flow management.
Superannuation and payroll readiness: From 1 July 2026, the Superannuation Guarantee (SG) rate increases to 12%, and payday super reforms commence—requiring super to be paid in line with pay cycles rather than quarterly.
What to consider: If you’re planning equipment purchases, link them to your cash flow and taxable profit forecasts for 2026–27. For companies, review franking account positions before relying on loss carry back benefits. For employers, prioritise payroll and clearing house readiness for payday super and the SG increase—these changes can affect cash flow timing, employment costings and compliance processes.
4) Trusts & business structures: proposed 30% minimum tax (from 2028)
Minimum 30% tax rate proposed for discretionary trusts: From 1 July 2028, the Government proposes a 30% minimum tax on discretionary trust income. Beneficiaries would generally receive credits for tax paid at the trust level, but the overall impact will vary widely depending on beneficiary profiles and distribution strategies.
Restructuring support: The Budget flags time limited rollover relief to help eligible small businesses restructure out of discretionary trust arrangements (e.g., into companies or other structures), subject to final design and eligibility rules.
What to consider: If you operate through a family/discretionary trust, it’s worth starting a structure review early. Trust taxation interacts with business succession, asset protection, financing and estate planning. We can help you model after tax outcomes under different distribution mixes and assess whether a restructure window (if legislated) is worth exploring well before 1 July 2028.
5) Superannuation & retirement: contribution timing and higher-balance issues
Payday super (from 1 July 2026): More frequent super payments should improve compounding outcomes for employees, but it also means employers need tighter payroll processes and cash flow management.
High‑balance super remains under the microscope: The Budget maintains focus on the Division 296 regime for total super balances above $3 million (including how ‘earnings’ are calculated). If you’re approaching this threshold, forward planning and liquidity management become increasingly important.
SG at 12%: With SG increasing to 12% from 1 July 2026, review how employer contributions interact with your concessional contributions cap, salary‑sacrifice arrangements and overall retirement strategy.
What to consider: For individuals and families, this is a good time to revisit contribution strategies (including carry‑forward concessional contributions where available), insurance inside super, and retirement income planning. For those with larger balances, we recommend proactively modelling potential Division 296 impacts and ensuring appropriate liquidity outside super to meet future tax liabilities.
6) What we’re watching (and how we can help)
Please remember several measures outlined above are proposed and will require legislation. The practical impact for you will depend on final law being passed, commencement dates and your personal or business circumstances. Key dates to keep in view are 1 July 2026 (tax rate change, SG 12% and payday super), 1 July 2027 (proposed CGT and negative gearing reforms), and 1 July 2028 (proposed discretionary trust minimum tax).
Individuals: update your tax estimate for 2026–27; review deductions approach; check private health and super contributions.
Investors: start record‑keeping improvements now (cost base, improvements, valuations) and model property strategy options ahead of 2027.
Business owners: plan asset purchases; update cash flow forecasts; check payroll readiness for payday super and SG changes; review entity structures.
Family groups: review trust distribution strategies and whether a restructure could be beneficial if rollover relief becomes available.
Need tailored advice? We are an integrated accounting and financial planning advisory firm, so we can look at your tax position, business structure, cash flow and investment strategy together. If you would like us to run a budget impact check in for you (individual, business or family group), get in touch and we can work through the next steps.
Disclaimer: This article is general information only and is not tax, legal or financial product advice. It does not consider your objectives, financial situation or needs. You should reach out to your advisor and seek advice tailored to your circumstances before acting on this information.