Tax Planning
How the New CGT & Negative Gearing Reforms Will Shape Your Property & Investment Strategy
Australia’s 2026-27 Budget introduces sweeping changes to capital gains tax, negative gearing, and taxing trusts — here’s what investors, landlords and property buyers need to know now to plan smart.
By NomadicTax Research Team • 5-8 min read • June 27, 2026
## Overview of Upcoming Changes
From **1 July 2027**, Australia is introducing major changes to how **Capital Gains Tax (CGT) discounts**, **negative gearing**, and **trust taxation** work under the Budget 2026-27 reforms. ([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai)) These reforms apply only prospectively — investments and income accruing before that date will generally remain under current rules. ([treasury.gov.au](https://treasury.gov.au/publication/p2026-781365?utm_source=openai))
Here are the most critical changes:
| Area | What’s Changing | Implications |
|--|--|--|
| **Capital Gains Tax Discount** | The existing *50% flat CGT discount* replaced with a **discount based on inflation**, plus a **minimum 30% tax rate** on real gains. ([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai)) | Investors must track cost bases and CPI; some gains might attract more tax if the real return is high. |
| **Negative Gearing** | Limited to *new builds* from 7:30pm AEST 12 May 2026; established properties acquired before that time unaffected. ([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai)) | Buyers looking for property investment deductions might prioritize new builds; risk with investing in older housing. |
| **Trust Taxation** | Discretionary trusts face a **30% minimum tax rate** from 1 July 2028, with some exemptions. Granting trusts involving large or complex structures will be affected. ([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai)) | Trust lawyers and beneficiaries should reassess structures; look into exemption possibilities, like primary production or fixed trusts. |
## What This Means for Different Investors
- **Small Businesses & Start-ups**: The threshold for getting the 50% active asset CGT reduction will rise dramatically from $2 million to **$10 million** turnover, making many more businesses eligible. ([treasury.gov.au](https://treasury.gov.au/publication/p2026-781365?utm_source=openai)) Plus, small business CGT concessions largely preserved under the new regime. ([treasury.gov.au](https://treasury.gov.au/publication/p2026-781365?utm_source=openai))
- **Landlords & Property Investors**: If you buy established residential property *after* 12 May 2026, deductions for negative gearing will only apply to new builds. Established property investors might lose ability to offset losses against non-investment income. ([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai))
- **Trusts (Discretionary / Testamentary)**: Minimum tax rules for discretionary trusts kick in from 1 July 2028. Testamentary trusts will have certain exemptions, but new trusts or structures may face higher tax burdens. ([treasury.gov.au](https://treasury.gov.au/publication/p2026-781365?utm_source=openai))
## Actionable Strategies Before the Changes Hit
- **Review acquisition timings**: If you plan to invest in property, try to acquire before 12 May 2026 if aiming for an established build and benefit from full negative gearing and the old CGT discount on gains accrued up to 1 July 2027. ([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai))
- **Evaluate existing investments** to see how much accrued gain is present before 1 July 2027. Where advantageous, consider selling or restructuring before the change to preserve benefit from the 50% discount. But be wary of transaction costs and other tax consequences.
- **Trust restructuring**: If you manage or benefit from a discretionary trust, consult with your tax advisor to assess disabling features, or perhaps using fixed trusts, or planning to meet exemption criteria.
- **Start-ups & Small Business Planning**: If you're founding a new business or investing early, watch out for the upcoming **Innovative Business CGT Concession** that offers 50% discount for early-stage investors with certain tenure and eligibility requirements. ([ministers.treasury.gov.au](https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/media-releases/tax-reform-implementation-small-business-and-startups?utm_source=openai))
## Example Scenario
> *Jane buys a residential investment property (an established home) on 1 April 2026.* Under current rules, she can negative gear losses, and if she sells after gaining value, gains are eligible for 50% CGT discount. After 12 May 2026, if a similar property is purchased that's established, she loses full negative gearing. After 1 July 2027, if she holds that property and real gain accrue, she'll face inflation adjustment and minimum 30% rate on real gains after cost base indexation changes. — Careful acquisition before cut-off may preserve favorable terms.
## Key Take-Aways
- These reforms are **prospective**, meaning no retrospective changes; planning now is critical.
- If you’re in property, start-ups, or trusts, there are windows and thresholds you should be aware of to lock in favorable conditions.
- Cost-base tracking, transaction timing, and trust structure are crucial tools.
- Close attention to upcoming consultation papers (e.g. for innovation, exemptions, definitions) will provide opportunity to influence final rules and plan accordingly.