2026 Budget Delivers Personal Tax Relief While Leaving Superannuation Largely Untouched
The 2026–2027 Federal Budget introduces major personal tax changes that will reshape financial planning from 2027. While the government delivers tax relief for individuals, it makes only limited changes to superannuation, leaving it largely intact.
Personal Tax Cuts Take Centre Stage
The government will introduce a $250 Working Australians Tax Offset (WATO) from 1 July 2027. This measure effectively increases the tax‑free threshold for work income to $19,985.
Workers will also benefit from the previously announced $1,000 standard deduction for work‑related expenses. Together, these measures could deliver meaningful tax savings.
The government will also proceed with existing tax rate cuts:
- It will reduce the 16% tax rate to 15% in 2026–2027
- It will further cut the rate to 14% in 2027–2028
These changes apply to income between $18,201 and $45,000.
Capital Gains Tax Changes Reshape Investment Planning
The government will overhaul the capital gains tax (CGT) system from 1 July 2027.
It will replace the 50% CGT discount with an inflation‑adjusted indexation method. In addition, it will introduce a minimum 30% tax on realised capital gains.
These new rules will apply to:
- Individuals
- Trusts
- Partnerships
- Assets held longer than 12 months (including pre‑1985 assets)
The government will include transitional rules so that only gains arising after 1 July 2027 fall under the new system. [Long | Word], [budget.gov.au]
Superannuation Remains a Key Tax Advantage
Superannuation will retain its current tax treatment, which strengthens its appeal.
Complying super funds, including SMSFs, will continue to receive a one‑third CGT discount. As a result, super funds will maintain an effective 10% tax rate on capital gains for assets held longer than 12 months.
These settings make superannuation more attractive than holding investments outside super, particularly given the new 30% minimum tax rate on capital gains applied elsewhere. [Medium | Word]
Discretionary Trust Changes Begin in 2028
From 1 July 2028, the government will apply a minimum 30% tax rate to discretionary trusts.
Trustees will pay tax at this rate, and beneficiaries will receive non‑refundable tax credits. However, lower‑income beneficiaries may face higher effective tax rates because they would normally pay less than 30%.
To support restructuring, the government will offer expanded rollover relief for three years from 1 July 2027. [budget.gov.au]
Negative Gearing Rules Tighten for Property Investors
The government will change negative gearing rules from 1 July 2027.
Investors will only be able to claim losses on newly constructed residential properties against other income.
For established properties:
- Investors can only offset losses against rental income or capital gains from residential property
- They cannot offset losses against wages or other income
Properties held at the time of the Budget will remain exempt until they are sold. [ato.gov.au]
What This Means for Your Financial Strategy
These reforms will significantly change how individuals structure investments and manage tax.
Key implications include:
- You may benefit from higher after‑tax income due to tax offsets and rate cuts
- You should review investment structures before July 2027
- You may find superannuation more tax‑effective than personal investments
- You should reassess trust distributions and property strategies before new rules apply
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Important: Clients should not act solely on the basis of the material contained here. Items herein are general comments only and do not constitute or convey advice per se. Also, changes in legislation may occur quickly. We, therefore, recommend that our formal advice be sought before acting in any of the areas.
