BUDGET SUMMARY 2026

At Wealth Plus Solutions, we understand that major Government policy and taxation changes can create uncertainty and significantly impact long-term financial strategies.

The 2026 Federal Budget has introduced a number of substantial proposed reforms affecting investors, property owners, business owners and families.

Given the potential significance of these proposed changes, we wanted to provide our clients with a summary of the key announcements and outline some of the potential implications these reforms may have moving forward.Importantly, many of the measures announced remain proposals only at this stage and will require legislation before becoming law. We will continue to closely monitor developments and provide further guidance as more detail becomes available.

Key Proposed Changes

The key focus areas include proposed changes to:

• Negative gearing
• Capital Gains Tax (CGT) concessions
• Family and discretionary trusts

Negative Gearing Changes

The Government has proposed reforms to negative gearing for residential property investments.

From 1 July 2027, negative gearing for residential property investments is proposed to be limited to new builds.

Under current tax settings, losses from a rental property can generally be used to reduce other forms of taxable income, such as salary and wages.

From 1 July 2027, losses relating to existing residential investment properties purchased from 7:30pm AEST on 12 May 2026 will only be deductible against other residential property income, including capital gains.

Where an investor has excess losses, those losses may be carried forward to offset residential property income in future years.

These changes are proposed to apply to individuals, partnerships, companies and most trusts. Superannuation funds including SMSFs are to be excluded.

Transitional Arrangements

New builds are proposed to continue to be eligible for negative gearing both before and after 1 July 2027.

For established residential properties:

• Properties held at the time of the Budget announcement, including where a contract has been entered into but not yet settled continue being negatively geared in future years until sold.
• Properties purchased between 7:30pm AEST on 12 May 2026 and 30 June 2027 may continue to be negatively geared during this period only. From 1 July 2027, losses are quarantined.
• Properties purchased from 1 July 2027 are proposed to no longer be eligible for negative gearing.

Capital Gains Tax (CGT) Changes
The Government has also proposed replacing the current 50% CGT discount with a system based on inflation indexation, together with the introduction of a minimum 30% tax rate on capital gains from 1 July 2027.

These reforms are proposed to apply only to gains accrued after that date.
Importantly, investors purchasing eligible new build properties may be able to choose
between:

• The existing 50% CGT discount rules; or
• The new indexation-based method.

New builds are residential properties which genuinely add to supply. This will include:

• Dwellings constructed on vacant land; or
• Existing properties demolished and replaced with a greater number of dwellings.

Knock-down rebuilds or substantial renovations that do not increase housing supply will not be eligible.

A new build cannot have been previously sold unless first owned by the builder and not occupied for more than 12 months.

These proposed changes are intended to apply to:

• Individuals
• Trusts
• Partnerships

It is also worthwhile noting that Age Pension recipients and Job Seeker recipients are proposed to be exempt from these changes.

Importantly, the proposed reforms are intended to apply broadly across most CGT assets, including shares, not just property investments.

Trust Taxation Changes

From 1 July 2028, discretionary trusts are proposed to be taxed at a flat rate of 30%, payable by the trustee.

The proposed reforms are not expected to apply to:

• Fixed trusts
• Special disability trusts
• Charitable trusts

Superannuation
Importantly, there were no additional proposed changes announced in this Budget relating to superannuation taxation. This means the proposed Capital Gains Tax changes do not apply to superannuation funds, including SMSFs, and superannuation funds will retain their existing CGT discount treatment.

This reinforces that superannuation continues to remain one of the most tax-effective structures available for long-term retirement planning and wealth accumulation.

In further good news, from 1 July 2026, superannuation contribution caps will also be indexed. This may allow individuals to contribute higher amounts into super, potentially increasing the tax benefits available through deductible contributions.

Measures for Workers and Households
The Budget also announced additional measures aimed at providing relief to workers and households.

These include:

• From 1 July 2027, a new permanent tax offset of up to $250 per financial year for income earned from wages, salaries and sole trader business income.
• From 1 July 2026, a new instant tax deduction of up to $1,000 for work-related expenses without the need to itemise or retain receipts. If total work-related expenses exceed $1,000, normal substantiation rules will apply. Charitable donations, union fees, professional association memberships and other eligible deductions can still be claimed in addition to the instant deduction.

Small Business Measures
The Budget also included measures aimed at simplifying the tax system for small businesses.

From 1 July 2026, the Government proposes to permanently extend the $20,000 instant asset write-off for small businesses.

Eligible businesses with annual turnover under $10 million may be able to immediately deduct qualifying assets costing less than $20,000, rather than depreciating those assets over several years.

The $20,000 threshold applies on a per asset basis, meaning multiple eligible assets may potentially be written off instantly.

What This Means for You

At Wealth Plus Solutions, we are closely monitoring these developments and assessing how the proposed changes may affect our clients.

Given the scale of the proposed reforms, we encourage clients to review:

• Existing investment structures
• Property ownership strategies
• Trust arrangements
• Capital gains exposure
• Retirement and estate planning strategies

Proactive planning and early strategy reviews may become increasingly important should these reforms proceed.

Importantly, while these proposed changes may create uncertainty, we strongly encourage clients not to make rushed financial or investment decisions based purely on initial Budget announcements or media commentary.

Many of these measures remain proposals only and may change significantly before becoming law.