Last night Treasurer Jim Chalmers handed down one of the most significant budgets in years. There is a lot to unpack and some of it will directly affect how you structure your business, your investments and your family’s finances.
We have gone through it all and broken it down into plain English. Here is what you need to know and what is changing.
Don’t panic. A number of these changes, particularly around trusts and bucket companies, are still subject to legislation being passed. We are watching this space closely and will be in contact with you as things progress and become law. We cannot provide specific advice until the legislation is finalised, but rest assured we are across it and working on it for you.
Key Dates at a Glance
| Date | What Changes | Who Is Affected |
| 12 May 2026, 7:30pm AEST | Negative gearing grandfathering cut-off. Investment properties owned before this time are fully protected under current rules. | Property investors. |
| 1 July 2026 | $20,000 instant asset write-off is now permanent. Loss carry- back reintroduced for companies. Payday Super starts. | Small businesses, companies |
| 2026-27 income year | $1,000 automatic tax deduction for work-related expenses. No receipts needed under $1,000. | All employees and sole traders |
| 1 April 2027 | Higher private health insurance rebate for over 65s is removed. | Australians over 65 with private health cover |
| 1 July 2027 | Negative gearing restricted to new builds only for properties bought after 12 May 2026. The tax discount on investment profits is changing. A minimum 30% tax applies to gains made after this date. | Property investors, anyone who owns investments |
| 1 July 2027 | Three-year window opens to restructure out of a family trust into another structure without tax consequences. | Family trust holders |
| 2027-28 income year | $250 automatic tax saving for every working Australian. | All employees and sole traders |
| 1 July 2028 | 30% minimum tax on all family trust income. Bucket company strategies may no longer be viable. | Family trusts, bucket company arrangements |
| 1 April 2029 | FBT on electric vehicles moves to a permanent 25% discount. | Employers providing EVs to staff |
THE GOOD
Permanent $20,000 Instant Asset Write-Off
Good news for small business. The $20,000 instant asset write-off is now permanent.
If your business turns over less than $10 million a year, you can claim an immediate tax deduction for any
single asset costing less than $20,000 in the year you buy it and put it to use.
This has been extended year-by-year for a while now, so the best part here is the certainty. You can now plan equipment, technology and business purchases knowing the rule is not going to change. From 1 July 2026, it is locked in for good.
Companies Can Claim Back Tax From Previous Years
If your company has a tough year and ends up with a tax loss, you can now use that loss to claim back tax you already paid in the previous two years and receive a cash refund from the ATO.
For example, if your company paid $12,500 in tax last year but makes a loss this year, you may be able to get some of that money back. This applies to companies with annual turnover under $1 billion and is permanent from 1 July 2026.
$1,000 Automatic Tax Deduction for Work Expenses
From this tax year (2026-27), every working Australian automatically gets a $1,000 tax deduction for workrelated expenses without needing to keep receipts or itemise anything.
If you spend more than $1,000 on work expenses you can still claim the full amount the normal way. You can also still claim charitable donations, union fees and professional memberships on top of this.
Less paperwork. Simpler tax return. That is a win.
Small Tax Rate Cuts and a $250 Annual Saving for Workers
A couple of small but welcome wins for employees and sole traders. The tax rate on income between $18,201 and $45,000 is dropping from 16% to 15% from 1 July 2026, and down again to 14% from 1 July 2027. Most working Australians will see a modest improvement in their takehome pay.
On top of that, from 1 July 2027 every working Australian gets an automatic $250 tax saving each year,
applied through their tax return. It is not life-changing but it is a permanent annual benefit for every worker and sole trader.
Payday Super: Already Law and Starting 1 July 2026
This is not new Budget news as it was already passed into law, but it kicks in on 1 July 2026 and employers need to be ready.
From 1 July, you must pay your employees’ super at the same time as their wages. The old quarterly payment system is gone. If you are not set up for this, check your payroll software now. The penalties for late or missed super payments have been made significantly tougher.
THE BAD
Negative Gearing on Investment Properties Is Changing
Currently, if your investment property costs you more than it earns in rent, you can claim that loss against your other income like your salary. This reduces your tax bill and is what people mean when they talk about negative gearing.
From 1 July 2027, that changes for properties bought after 7:30pm on 12 May 2026. Losses from established investment properties will only be able to be offset against income from other rental properties, not your salary or business income.
Already own an investment property? Nothing changes for you. Properties owned before 7:30pm last
night, including any where contracts are signed but not yet settled, are fully protected. The current rules apply for as long as you hold those properties.
New houses and apartments being built for the first time are also exempt. You can still negatively gear those against all your income. Commercial properties and shares are not affected by this change at all.
The Tax Discount on Selling Investments Is Changing
Currently, if you sell an investment you have held for more than 12 months, a property, shares or a business asset, you only pay tax on half the profit. This 50% discount has been in place since 1999.
From 1 July 2027, that discount is being replaced. Instead, your profit will be adjusted for inflation and a
minimum 30% tax will apply to whatever is left.
The important thing to understand is that this only applies to profits that build up after 1 July 2027.
Anything you have already made up to that date is still covered by the old rules. If you sell an asset you have held for a long time, your gain gets split into two parts. The profit made before 1 July 2027 and the profit made after. The old rules apply to the first part and the new rules apply to the second.
One thing to be aware of: assets you own will need a market valuation as at 1 July 2027 to work out the split correctly. For shares this happens automatically. For investment properties and business assets you will need a valuation done around that time. We will help you plan for this when the time comes.
Owned assets before 1985? Assets bought before September 1985 have never attracted this tax. From 1 July 2027, profits made after that date will now be taxed. If this applies to you, please talk to us.
Is it worth selling before 1 July 2027? For some clients with large embedded gains, it may make sense to sell under the current rules before the change takes effect. This is a case-by-case calculation and we can model it for you.
Private Health Insurance: Older Australians Pay More
If you are over 65 and hold private health insurance, the government currently gives you a higher rebate on your premiums. From 1 April 2027, that extra rebate is being removed. Everyone will get the same base rebate rate regardless of age.
If this applies to you or someone in your family, it is worth checking your private health insurance policy to understand the impact on your premiums.
THE UGLY
Family Trusts: A 30% Minimum Tax From 1 July 2028
This is the biggest change in the Budget and it will affect a significant number of our clients.
Many families and business owners use a family trust to manage their income and assets. One of the main tax benefits has always been that the trust can distribute income to family members who are on lower tax rates, for example a spouse who does not work, or adult children who are studying. This reduces the overall tax the family pays each year.
From 1 July 2028, that benefit is being wound back significantly. The trustee will be required to pay a
minimum 30% tax on all the trust’s income regardless of who it is distributed to.
Family members who receive distributions will still declare them in their tax returns and will get a credit for the tax already paid by the trustee. But if their personal tax rate is below 30%, they do not get the difference back. The benefit of splitting income to lower-tax family members is effectively gone.
What this looks like in real numbers:
| Structure | Tax Paid in 2028-29 |
| Business run through a company at the 25% small business rate | $72,002 |
| Family trust: income split across four family members under current rules | $42,010 |
| Family trust: same setup with the new 30% minimum tax from 1 July 2028 | $86,002 |
Source: Budget 2026-27 Fact Sheet
The family trust goes from being the most tax-effective option to the most expensive, overnight.
What is not affected: Fixed trusts, widely held trusts, self-managed super funds, special disability trusts, deceased estates and charitable trusts are not affected. Farm income and certain income relating to children with disabilities are also excluded.
Trusts set up through a will: If you are a beneficiary of a trust that was already established through
someone’s will before 7:30pm on 12 May 2026, the income from assets in that trust is excluded from the minimum tax. This is an important protection for existing estate planning arrangements. We are watching how this is treated in the draft legislation closely.
Bucket Company Strategies: Worth a Review
If you currently use a bucket company as part of your trust structure, this is something we will be revisiting with you. Due to the changes pending with the new trust legislation, bucket company strategies may no longer be the best way forward. We will be in touch as the legislation progresses to work through the best options for your situation.
What Happens Next?
The legislation underpinning these trust changes has not yet been released. The detail really matters here. How the minimum tax interacts with franking credits, how the collection mechanism works, and what flexibility remains for distribution strategies are all questions we cannot answer with certainty until we see the actual draft law.
We are already across this and watching it closely. The moment the exposure draft legislation is released, we will be working through the implications for every affected client.
For now, sit tight. Do not make any rushed decisions about your trust structure based on Budget night
announcements alone. There will be time to plan properly and that planning will be far more effective once we have the legislation in front of us.
We will be reaching out directly to clients we believe are most affected. If you are concerned in the
meantime or just want to talk through where things stand, give us a call.
A Few Other Things Worth Knowing
| Change | What It Means | Date |
| Electric Vehicle FBT | If your business provides an electric car to an employee, the full tax exemption continues for vehicles under $75,000 until 1 April 2029. After that it moves to a permanent 25% discount. | Phased to 1 Apr 2029 |
| R&D Tax Incentive | The tax incentive for businesses spending money on genuine research and development is being improved. Higher offsets, lower thresholds to qualify, and a higher cap on eligible spending. | 1 Jul 2028 |
| Tax incentives for earlystage businesses | The caps and fund sizes for venture capital tax incentive programs are being significantly expanded, making it easier to invest in growing Australian businesses with tax advantages. | 1 Jul 2027 |
| Foreign buyers ban | Foreign investors are still banned from buying established residential properties in Australia. That ban has been extended until 30 June 2029. | To 30 Jun 2029 |
| HELP debt | Already law. If you have a student loan (HELP debt), your balance was reduced by 20% earlier this year. The minimum income before repayments kick in has also increased to $67,000. | Already done |
| Fuel prices | The government temporarily cut fuel excise by about 32 cents per litre from 1 April 2026 for three months. The heavy vehicle road charge was also reduced to zero for the same period. | Apr to Jun 2026 |
| Monthly tax payments for business | Small and medium businesses will be able to choose to pay their PAYG tax instalments monthly from 1 July 2027, using live calculations built into accounting software. | 1 Jul 2027 |
The information in this update is general in nature. Everyone’s situation is different and the rules are still being finalised in some areas. Please talk to us before making any decisions based on what you have read here.
