The 2026/27 Federal Budget, handed down by Treasurer Jim Chalmers, delivered one of the most significant tax reform agendas Australia has seen in many years. The Budget sought to balance cost-of-living pressures with long-term structural reform, while also addressing housing affordability, productivity, fiscal sustainability and business investment. Here is a breakdown of the major measures affecting individuals and businesses.
Individual Tax & Cost-of-Living Measures include:
Personal Income Tax Relief
The government confirmed previously announced personal income tax cuts will proceed:
- The 16% tax bracket will reduce to 15% from 1 July 2026
- Then reduce again to 14% from 1 July 2027.
- In addition, a new Working Australians Tax Offset (WATO) worth approximately $250 annually will apply from 2027–28. These measures are designed to provide targeted cost-of-living relief for wage earners.
$1,000 Instant Tax Deduction
The Budget also introduced a simplified $1,000 instant deduction for work-related expenses without the need for receipts for eligible taxpayers. This measure is intended to:
- Reduce compliance burden
- Simplify tax returns
- Assist lower and middle-income earners
Housing & Property Tax Reform
The most controversial and significant Budget measure centers around property taxation – Negative Gearing Changes.From 1 July 2027:
- Negative gearing concessions will generally be limited to newly built properties
- Existing investment properties acquired after Budget night may no longer generate deductible losses against salary and wage income.
The government argues this will improve housing affordability and encourage construction of new housing supply.
Capital Gains Tax (CGT) Reform
The long-standing 50% CGT discount will be replaced with an inflation-indexed cost base approach from 1 July 2027. This means:
- Taxpayers will only pay CGT on “real” gains above inflation
- The flat 50% discount will disappear for many future investments
The reform is expected to significantly reshape long-term investment strategies.
Superannuation Changes
Higher taxation on very large super balances continues to progress through Parliament, with balances above $10 million facing materially higher tax rates. This further reinforces the government’s focus on wealth taxation and intergenerational equity.
Business Measures & Impacts include:
Permanent $20,000 Instant Asset Write-Off
One of the most welcomed announcements for small business is the $20,000 instant asset write-off now permanent. This allows eligible small businesses to:
- Immediately deduct qualifying asset purchases
- Improve cash flow
- Continue investing in equipment and technology
Loss Carry-Back Returns
The government also announced the return of Business loss carry-back provisions. This enables eligible companies to:
- Offset current year losses against prior year taxable profits
- Receive cash refunds for taxes previously paid
This measure is particularly beneficial for businesses experiencing volatile trading conditions or investing heavily in growth.
Changes to the R&D Tax Incentive
The Budget included major reforms to the Research & Development (R&D) Tax Incentive. Key themes include:
- Expanded eligibility
- Higher thresholds
- Greater focus on innovation and commercialisation
Innovation-driven businesses should closely review these changes as further details become available.
Trust Taxation Reform
A new 30% minimum tax on discretionary trust distributions was announced. This measure could significantly impact:
- Family groups
- Investment structures
- Professional practices
- SMEs using discretionary trusts
Many existing tax planning strategies may need review once legislation and technical details are released.
Broader Economic Impacts
The Budget also included significant investment in:
- Fuel security
- Defence
- Housing infrastructure
- Energy resilience.
At the same time, the government continues attempting to manage inflation, economic uncertainty and long-term fiscal pressures.
Final Thoughts
The 2026/27 Federal Budget represents a major shift in Australia’s tax landscape.
For individuals:
- Cost-of-living relief
- Housing affordability
- Tax simplification
For businesses:
- Ongoing investment incentives
- Cash flow support
- Significant structural tax reform
However, many of the announced measures, particularly around CGT, trusts and property investment, will require detailed legislation before their full impact can be assessed. Business owners, investors and family groups should consider reviewing their structures and future planning strategies in light of these proposed changes.
How Abound Group Can Help
The proposed changes may affect:
- Your tax position
- Investment strategy
- Business structure
- Long-term wealth planning
Our team can help you understand how these reforms may impact your personal and business circumstances and identify planning opportunities ahead of implementation.
If you would like to discuss the Budget measures and what they may mean for you, please contact the Abound Group team.
