Key reforms investors and trust beneficiaries must plan for
The Australian 2026-27 Budget introduces sweeping changes affecting investment income, capital gains, and trusts. From 1 July 2027, the government will:
- Replace the 50% capital gains tax (CGT) discount with inflation-adjusted indexation, ensuring tax is paid only on real gains over inflation. (treasury.gov.au)
- Implement a minimum tax rate of 30% on capital gains. (treasury.gov.au)
- Limit negative gearing (deducting losses from residential investments) to new builds only; properties held at 7:30pm AEST 12 May 2026 are grandfathered. (treasury.gov.au)
- Introduce a minimum 30% tax rate on discretionary trusts from 1 July 2028, except where special relief applies (such as rollover relief between 1 July 2027 and 1 July 2030). (treasury.gov.au)
Why this matters for your tax planning
These objectives force review of existing investment structures and timeline for transactions:
- Timing matters: Disposals made after 1 July 2027 of assets acquired before the announcement may use the old 50% discount—but new acquisitions will be subject to new rules. (treasury.gov.au)
- Property investors should prioritize new builds, especially if planning to negatively gear—established property investing will lose that flexibility from 2027. ✦ For developers, choosing to classify projects as new builds may preserve tax benefits.
- Trusts need to assess whether discretionary distributions or income allocations will trigger the 30% minimum rate. Entities may consider restructuring or applying rollover relief.
Actionable insights & examples
| Scenario | Before reform | After reform opportunity or risk |
|---|---|---|
| Alice buys shares in 2027 | 50% CGT discount available | New rate based on inflation + 30% minimum rate—report real gain only |
| Bob negative gears established rental after May 2026 | Full deductions | Once new builds only—Bob’s deductions restricted for new property purchases |
| Trust distributing income arbitrarily | Flexibility with trust distributions | May attract flat minimum rate unless exceptions met |
Steps you can take now:
- Audit your real estate portfolio: Are there opportunities to lock in losses or gains before 1 July 2027?
- Consult lawyers/accountants about trust distributions—could modernize distribute timing or structure income in future years.
- If funding new property investment, prioritize new builds or projects commenced after 12 May 2026 to still access negative gearing.
- Update capital gains forecasts for financial projections under new rules.
What professionals need to watch
- Real estate agents, finance brokers and portfolio managers will need to clearly disclose when assets were acquired relative to 12 May 2026.
- Tax agents must model CGT under both existing and new rules to advise clients properly.
- Trust administrators should monitor policy on exceptions and rollout relief to determine how to apply the minimum rates.
Summary
The government’s 2026-27 Budget represents one of the most significant restructurings of investment and trust taxation in decades. To protect after-tax returns, investors and trustees must plan ahead, taking action before key dates in mid-2026 and mid-2027. What you do now matters more than ever under Australia’s changed tax landscape.