Tax Planning
How to Plan for Australia’s Working Australians Tax Offset (WATO) & Key Changes from Budget 2026-27
Australia is rolling out major tax changes from the 2026-27 budget—including the Working Australians Tax Offset, CGT reform, and limits on negative gearing. Here's how you can plan ahead.
By NomadicTax Research Team • 5-8 min read • July 17, 2026
## Overview of Budget 2026-27 Tax Changes
Australia’s **Budget 2026-27** introduces several substantial reforms that will affect individuals, investors, trusts, and property owners. Key measures include:
- A **$250 Working Australians Tax Offset (WATO)** for eligible workers from the 2027-28 income year. ([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai))
- A **standard deduction up to $1,000** for work-related expenses, starting 1 July 2026. ([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai))
- Replacement of the 50% Capital Gains Tax (CGT) discount with **inflation-adjusted indexation** and a **minimum tax rate of 30%** on realised capital gains from 1 July 2027. ([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai))
- Limiting **negative gearing** of residential property to **new builds** from 1 July 2027. Established properties held before 7:30pm AEST on 12 May 2026 will be exempt. ([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai))
- A **minimum 30% tax rate for discretionary trusts**, with some exceptions, applying from 1 July 2028. ([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai))
## Practical Tax Planning Strategies
Here’s how you can prepare:
### For Employees / Wage Earners
- Calculate your eligibility for the **Working Australians Tax Offset**. If you earn income from work and residency status qualifies, this offset could lift your effective tax-free threshold by nearly **$1,800**. ([pm.gov.au](https://www.pm.gov.au/media/tax-reform-workers-businesses-and-future-generations?utm_source=openai))
- Keep detailed records of any work-related expenses, even if you anticipate using the standard deduction, in case your actual expenses exceed that amount. ([consult.treasury.gov.au](https://consult.treasury.gov.au/c2026-757530?utm_source=openai))
### For Property Investors
- If you're considering acquiring new residential property, **new builds** will continue to benefit from negative gearing post-1 July 2027. ([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai))
- For existing investment properties (especially those held before 12 May 2026), understand how the rules apply to **loss deductions** and eligibility. ([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai))
### For Investors & Asset Holders
- Think about realising certain capital gains before 1 July 2027 to maintain the existing 50% CGT discount where applicable. ([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai))
- Review the structure of your trusts—especially discretionary trusts—to evaluate whether the new **30% minimum tax** regime (from 1 July 2028) might affect distributions. ([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai))
## Example Scenarios
| Scenario | Before Reform | After Reform | What You Can Do Now |
|---|---|---|---|
| Employee earning $60,000 | No WATO, standard deductions | Eligible for WATO plus possibly standard $1,000 work deduction | Estimate tax benefit; adjust withholdings or PAYG instalments accordingly |
| Investor with established rental property | Negative gearing allowed as now | Loss deductions limited unless new build | Consider acquiring new build or assess carry-forward losses now |
| Owner of discretionary trust distributing income | Varying tax outcomes | Minimum 30% tax applies from 2028-29 on distributable income | Plan distribution timing; explore rollover relief options |
## Actionable Insights & Next Steps
1. **Review your investment and property plans** with the timeline in mind—actions taken before key dates (12 May 2026, 1 July 2027) may preserve existing benefits.
2. **Engage with your accountant or financial adviser early**, to project tax liabilities under new rules.
3. **Update your record-keeping systems** to distinguish working expenses, track super balances, and prepare for compliance in new schemes.
4. **Stay informed**: several reforms are still in exposure draft or legislative stages, meaning details may change. Monitor Treasury / ATO updates.
By understanding these changes now and aligning your financial and tax planning accordingly, you can make the most of the transitional periods and safeguard against unwanted surprises.