2026/2027 Federal Budget - Our summary

The 2026/27 Federal Budget contained some of the most significant proposed tax changes for Founders, Business Families and Family Offices seen in years. Acknowledging that many of the measures are not yet law, the direction is clear: the tax landscape for family groups and their holding structures is changing.

We have summarised measures that we believe to be key:

1. Discretionary trust minimum tax (proposed from 1 July 2028)
A 30% minimum tax is proposed on discretionary trust income, fundamentally changing how discretionary trusts may be taxed going forward. Under the proposed measures, trustees will pay a minimum 30% tax on certain trust income. If enacted, this will directly impact:

• Distribution strategies within family groups, including use of bucket company arrangements;

• Asset holding structures (investment and business assets); and

• Intergenerational wealth planning.

Credits for the 30% tax paid by the trust may be passed on to individual beneficiaries but will be non-refundable. Importantly, it appears corporate beneficiaries will not get credit for the 30% tax paid by the trust, creating the potential for double taxation.

This is a major structural reform with the potential to reshape how family groups operate, including use of corporate beneficiaries.

2. Capital gains tax reform (proposed from 1 July 2027)
The current 50% CGT discount is proposed to be replaced with the following:

• Cost base indexation model; and

• Minimum 30% tax on net capital gains.

Transitional rules are proposed so that gains accrued before 1 July 2027 will continue to access existing CGT treatment, with the new rules only applying to gains arising after that date. Importantly, the proposed changes will also apply to gains accruing post 1 July 2027 on pre-CGT assets. New residential properties will continue to be eligible for the CGT 50% discount.

The proposed changes have the potential to materially impact after-tax family wealth on future CGT events relating to gains accruing from 1 July 2027, including business exits, investment disposals and intergenerational asset transfers.

3. Negative gearing reform (proposed from 1 July 2027)
Rental losses will only be deductible against rental income and future residential property capital gains on established residential properties acquired after 7:30pm AEST on 12 May 2026.

Negative gearing arrangements in place for existing residential property holdings will not be affected. Newly constructed residential properties are also excluded from the proposed changes.

These changes will directly impact acquisition structuring, funding decisions and longer-term investment strategy of future residential property acquisitions.

4. Loss carry-back rules reintroduced (from 1 July 2026)
Eligible companies with aggregated annual global turnover below $1bn will again be able to offset current year revenue tax losses against taxable income from the previous two financial years, potentially generating refunds of tax previously paid. This is subject to limitations around the franking account balance.

5. Permanent $20,000 instant asset write-off (from 1 July 2026)
Small businesses with turnover below $10m will permanently retain access to the $20,000 instant asset write-off. This provides some certainty for capital expenditure and annual year-end tax planning processes in future years for eligible businesses.

In the interests of focusing on the key measures affecting family groups, this summary does not include commentary on a number of other Budget announcements, including:
• R&D incentive changes;
• EV FBT concessions;
• PAYG instalment reforms;
• Increased ATO integrity and compliance activity;
• Minor personal tax measures; and
• Incentives around investment in start-ups and venture capital.

Further detail on these proposed measures is expected over the coming weeks.  Reach out if you would like to discuss any of the above in more detail.