The 2026 Federal Budget introduces significant changes to how investment income, property and structures are taxed. While most measures are not immediate and importantly, these are announced proposals that are not yet law and may change as they move through Parliament, they represent a structural shift that we recommend planning for now.

This article breaks down the four changes that matter most, who they affect, and what’s worth considering before the new rules apply. None of it requires action today, but it does reward getting ahead of it.

The short version

Before we get into the detail, here are the key takeaways:

• A 30% minimum tax is being introduced on trusts and capital gains, which may reduce the effectiveness of existing structures and timing strategies.

• Negative gearing is being restricted to new builds, making established property less tax-effective for new investments.

• Capital gains tax rules change from July 2027 — the 50% discount is replaced with inflation indexation and a minimum tax.

• Existing assets are largely grandfathered, creating an opportunity to review and potentially act before the new rules apply.

• Company and super structures become relatively more attractive, increasing the importance of structure in long-term planning.

Now to what’s actually changing.

1. Discretionary trusts, a 30% minimum tax (from 1 July 2028)

From 1 July 2028, a 30% minimum tax will apply to discretionary trust income, regardless of how that income is distributed.

In practice, this:

• Limits the benefit of distributing income to lower-tax family members
• Reduces the effectiveness of “bucket company” strategies
• Doesn’t apply to certain trusts, super funds and fixed trusts, for example, remain excluded

What this means

Trusts will still have a clear role to play in asset protection and estate planning. What changes is their usefulness purely as a tax-minimisation tool, that benefit is significantly reduced. If a trust in your structure exists mainly to distribute income tax-effectively, it’s worth reviewing what it’s actually achieving under the new rules.

2. Capital gains tax reform (from 1 July 2027)

From 1 July 2027, the Government will make two changes to how capital gains are taxed:

• The 50% CGT discount will be replaced with inflation indexation
• A minimum 30% tax on capital gains will be introduced

The important details:

• The new rules apply only to gains made from 1 July 2027 onward
• Gains on existing assets remain grandfathered under the current rules
• The change reduces the benefit of two long-standing strategies, holding assets purely to qualify for the CGT discount, and timing sales for low-income years

What this means

After-tax returns will depend more on real (inflation-adjusted) performance, and less on tax timing. For anyone holding assets with significant unrealised gains, the period before July 2027 is worth thinking through carefully, though the right answer depends entirely on individual circumstances, and selling simply to “beat the deadline” is rarely the whole picture.

3. Residential property investment changes (from 1 July 2027)

From 1 July 2027, negative gearing rules change depending on the type of property:

• New builds: negative gearing is retained
• Established properties: negative gearing is restricted

For established properties specifically:

• Losses can only be offset against other property income
• Any excess losses are carried forward, rather than offset against other income

Importantly, existing properties are fully protected, they’re grandfathered under the current rules.

What this means

For new property investment decisions, the change tilts the field toward new developments, or toward alternative investment opportunities altogether. Existing property portfolios are unaffected, so this is a forward-looking consideration rather than a reason to revisit what you already hold.

Structure matters more than ever

Taken together, these changes point to a single broader theme: structure is becoming more important in long-term planning, not less.

With trusts facing a minimum tax and the CGT discount disappearing, company and superannuation structures become relatively more attractive by comparison. That doesn’t make them automatically the right answer, structure decisions are highly individual and carry their own trade-offs, but it does mean the question is worth revisiting if your current setup was designed around rules that are now changing.

What to consider next

None of these changes require immediate action. What they create is a valuable planning window between now and the various 2027 and 2028 start dates. It’s worth using that time to:

• Review trust structures and distribution strategies
• Consider the timing of asset sales ahead of July 2027
• Reassess property strategy, new versus established stock
• Evaluate ownership structures across trust, company and super

The right approach to each of these depends on your specific circumstances, your structures, your asset mix, and your goals. The value of the planning window is precisely that it gives you time to work through those questions properly, rather than reacting once the rules are already in force.

Talk it through with us

The planning window between now and July 2027 is genuinely valuable, and the right strategy will depend on your specific structures and assets. We’d recommend scheduling a review to work through what these changes mean for you.

If you’d like the complete picture, our Budget 2026 white paper unpacks each change in full, including the technical details, worked scenarios and considerations we couldn’t fit here.

[Download a copy of our Budget white paper]

Our Financial Advisers are Representatives of Focus Partners Australia Wealth Pty Ltd ABN 77 089 567 573 (ASIC No 273989) a Corporate Authorised Representative of Focus Partners Wealth Pty Ltd ABN 88 081 672 077 AFSL No. 234525.

Taxation advice and services are provided in accordance with the Tax Agent Services Act 2009 and the Code of Professional Conduct administered by the Tax Practitioners Board.

This communication contains general information regarding the recent budget update and has been prepared using information sourced from third parties believed to be reliable at the time of writing. While reasonable care has been taken to ensure accuracy, we do not warrant or guarantee the completeness, reliability, or accuracy of this information and accept no responsibility or liability for any errors, omissions, or outcomes arising from reliance on third-party content

The information is general in nature and does not take into account your individual objectives, financial situation, or needs. We strongly recommend that you seek advice from a qualified financial adviser or registered tax agent to assess how the budget update may impact your personal financial goals, circumstances and taxation position before making any decisions.