Introduction

The FY2026-27 Federal Budget focuses on tax reform, housing affordability, business investment and cost of living relief. The Government has introduced major changes to negative gearing, capital gains tax, discretionary trusts and business tax settings. The Budget also responds to inflation pressures, higher fuel costs and continued global uncertainty.

Economic Snapshot

The Budget forecasts slower economic growth over the next financial year, with inflation remaining elevated. Interest rates remain high, and household spending is expected to stay under pressure. The Government has focused on measures designed to improve long term productivity while providing targeted relief to households and businesses.

Major Tax Reforms

The most significant changes announced in this Budget relate to property investment and capital gains tax. From 1 July 2027, negative gearing for established residential properties will be restricted, while the current 50% CGT discount will be replaced with cost base indexation and a 30% minimum tax on capital gains.

Business Measures

Small businesses will benefit from the permanent extension of the $20,000 instant asset write off from 1 July 2026. The Government will also allow eligible businesses to opt into monthly PAYG instalments and expand venture capital tax incentives.

Individuals and Families

A new $250 Working Australians Tax Offset will apply from the 2027-28 income year. The Government also plans to introduce a $1,000 instant deduction for work related expenses and increase Medicare levy low income thresholds.

Final Thoughts

The 2026-27 Federal Budget represents one of the most significant tax reform packages in recent years. Property investors, business owners and high income earners will need to review their structures and long term planning strategies carefully.

Notes: These measures were announced in the Federal Budget are not yet law and subject to legislation being enacted. Start dates and details may still change.

If you have any questions regarding the FY26-27 budget report, please discuss with the team at Bates Cosgrave.