Article Summary: 

The 2026–27 Federal Budget introduces a range of tax changes and policy updates that may impact how business owners and investors structure, plan and manage their financial position. With 30 June approaching, this article outlines the key updates, what’s new versus continuing, and what actions you should consider as both an individual and a business.  

Key takeaways: what’s new, continuing and what to watch in the 2026–27 Federal Budget 

For individuals, the major updates relate to tax deductions, negative gearing changes,  Capital Gains Tax changes, income tax offsets, Medicare levy thresholds, healthcare funding and investment tax changes. For businesses, the Budget includes the permanent extension of the instant asset write-off, the reintroduction of tax loss carry-back rules, start-up loss refundability and targeted operating cost relief. 

While some measures provide immediate planning opportunities, others are proposed reforms that may significantly change the way business owners, investors and families structure their tax, investment and wealth strategies over the coming years. 

What’s new: 
  • Proposed changes to Capital Gains Tax (CGT), replacing the 50% discount with cost base indexation and a 30% minimum tax from 1 July 2027  
  • Proposed introduction of a 30% minimum tax on discretionary trust distributions from 1 July 2028  
  • Proposed changes to negative gearing, limiting deductions on established residential properties acquired after 7:30pm AEST on 12 May 2026 
  • A new $250 Working Australians Tax Offset from 1 July 2027 for eligible income from work  
  • A new instant tax deduction of up to $1,000 from 1 July 2026 for work-related expenses  
  • Tax loss carry-back rules reintroduced from 1 July 2026 for eligible companies with turnover under $1 billion  
  • Loss refundability for eligible start-ups from 1 July 2028 for businesses with turnover under $10 million  
  • Temporary fuel excise and heavy vehicle road user charge relief from 1 April 2026 for three months  
  • Medicare levy low-income thresholds increased from 1 July 2025  
  • Additional public hospital funding, including $18.1 billion under the National Health Reform Agreement  
What’s continuing: 
  • The $20,000 instant asset write-off permanently extended from 1 July 2026 for small businesses with turnover up to $10 million  
  • Continued support for small business investment through simplified depreciation arrangements  
  • Ongoing investment in housing supply and affordability  
What to watch: 
  • The proposed replacement of the 50% CGT discount with cost base indexation and a 30% minimum tax from 1 July 2027  
  • Proposed changes to negative gearing for established residential property acquired after 7:30pm AEST on 12 May 2026  
  • A proposed 30% minimum tax on discretionary trust distributions from 1 July 2028  
  • Changes to electric vehicle FBT concessions, particularly for higher-value EVs  
  • Potential restructuring decisions for business owners currently using discretionary trusts  
  • Further detail on rollover relief, eligibility rules and practical tax implications  

These structural measures are proposals and subject to legislation, but they may significantly reshape long-term planning decisions for business owners, investors and individuals. 

How do the 2026–27 Budget changes affect businesses? 

Unlike previous Budgets, there are limited new direct incentives for businesses. This places greater emphasis on how business owners proactively manage tax, cash flow and structure in the current environment. 

The Budget creates both immediate EOFY opportunities and long-term structural considerations for business owners. 

1. Will discretionary trusts become less tax effective? 

A proposed 30% minimum tax on discretionary trust distributions from 1 July 2028 could significantly reduce the flexibility trusts currently provide. 

What this means: 

  • Reduced ability to distribute income to lower-tax beneficiaries 
  • More perceived alignment between trust and company tax outcomes 
  • Increased need to review existing structures 

What to consider: 

  • Begin reviewing your current trust structure and distribution strategy 
  • Model future tax outcomes under a 30% minimum rate scenario 
  • Avoid making immediate structural changes until legislation is confirmed 
  • Remember that there are other things to consider like Stamp Duty, Estate Planning and many other considerations.  

2. Are capital gains tax (CGT) rules changing? 

The Government has proposed replacing the 50% CGT discount with cost base indexation and a 30% minimum tax on capital gains from 1 July 2027.  

What this means: 

  • Potentially higher tax outcomes on asset sales 
  • Reduced benefit of long-term capital holding strategies 
  • Greater importance on timing disposals 
  • Transitional rules mean existing assets may still benefit from current CGT treatment on gains realised before 1 July 2027 

What to consider: 

  • Review upcoming asset sales and exit strategies 
  • Review your current cost base of your holdings 
  • Consider whether to bring forward disposals under current rules 
  • Align investment decisions with long-term tax implications 
  • Consult with your Financial Adviser and Accountant to optimise your outcomes. 

3. Should business owners consider changing structures? 

Proposed tax changes may drive a gradual migration from discretionary trusts to company structures. 

A 3-year rollover relief period from 1 July 2027 to 30 June 2030 has been flagged to support this transition. 

What this means: 

  • Structural decisions will become more tax-sensitive 
  • Opportunity to restructure under concessional rules if legislated 
  • Increased complexity in long-term planning 

What to consider: 

  • Do not restructure prematurely 
  • Begin scenario modelling across trust and company structures 
  • Monitor announcements around rollover relief and estate planning and stamp duty implications 

These measures are proposals and subject to legislation. 

4. What tax opportunities should businesses act on before 30 June? 

The Budget reinforces existing support, but EOFY timing remains critical. 

What this means: 

  • Immediate opportunity to optimise tax position and cash flow 
  • Greater importance on proactive planning versus reactive compliance 

What to consider: 

  • Bring forward capital purchases where beneficial 
  • Leverage the $20,000 instant asset write-off where applicable 
  • Review depreciation and asset schedules 
  • Consider prepaying expenses 
  • Review director and shareholder salary versus dividend strategies 
  • Assess timing of income recognition where possible 
  • Finalise your tax planning strategy before 30 June 

5. What fuel and operating cost relief is available for businesses? 

The Budget includes measures aimed at relieving pressure on fuel-reliant businesses, including a temporary reduction in fuel excise and the heavy vehicle road user charge from 1 April 2026 for three months. It also includes interest-free loans for manufacturing and logistics businesses impacted by higher fuel costs. 

What this means: 

  • Short-term support for fuel-reliant businesses 
  • Potential cash flow relief for eligible operators 
  • Limited long-term structural impact 

What to consider: 

  • Review whether your business may be eligible for fuel-related support 
  • Update cash flow forecasts to reflect fuel cost changes 
  • Review freight, delivery and supplier arrangements 
  • Identify longer-term efficiency improvements rather than relying on temporary relief 

6. Are electric vehicle tax concessions changing? 

The Budget includes changes to electric vehicle fringe benefits tax concessions, with full exemptions being scaled back based on vehicle value and transitioning to a flat discount over time. 

What this means: 

  • Reduced tax benefits for higher-value electric vehicles 
  • Continued incentives for lower-cost EVs 
  • Gradual transition to a standardised FBT treatment 

What to consider: 

  • Review any planned vehicle purchases 
  • Assess whether to bring forward EV acquisitions 
  • Consider total cost of ownership, not just tax benefits 

These changes may also impact employees receiving vehicle benefits through salary packaging arrangements. 

7. Will workforce and skills initiatives help address staffing challenges? 

The Budget continues investment in workforce participation, training and skills development. 

What this means: 

  • Potential access to training and workforce support programs 
  • Ongoing pressure in tight labour markets 

What to consider: 

  • Review hiring and retention strategies 
  • Explore available training incentives 
  • Align workforce planning with growth goals 

8. How do loss carry-back and startup incentives impact businesses? 

From 1 July 2026, eligible companies can carry back tax losses to offset profits from up to two previous years. From 1 July 2028, eligible start-ups may be able to convert early-stage tax losses into refundable offsets. 

What this means: 

  • Improved cash flow through tax refunds 
  • Greater support for early-stage and growing businesses 

What to consider: 

  • Review prior year tax positions for potential refunds 
  • Assess eligibility for loss carry-back provisions 
  • For startups, consider how refundable losses may support early growth 

How do the 2026–27 Budget changes affect individuals? 

The Budget aims to increase disposable income and reduce financial pressure, while supporting long-term financial stability. 

For many individuals, these changes create an opportunity to reassess how increased cash flow is allocated toward debt reduction, investment and long-term financial planning. 

1. How will personal income tax changes affect take-home pay? 

Tax adjustments, including the introduction of a $250 Working Australians Tax Offset and an instant tax deduction of up to $1,000, are designed to increase take-home income. 

What this means: 

  • Improved household cash flow 
  • Greater flexibility in managing expenses 

What to consider: 

  • Review PAYG withholding 
  • Allocate additional income toward debt reduction or savings 
  • Align with your broader financial plan 

2. What cost-of-living relief is available? 

A) Increased healthcare funding 

Additional funding has been allocated to improve access to healthcare services, including significant investment in public hospitals. 

What this means: 

  • Potential reduction in out-of-pocket costs 
  • Improved access to services 

What to consider: 

  • Review your healthcare spending 
  • Factor potential savings into your budget 
B) Housing affordability initiatives 

Continued investment in housing supply and affordability. 

What this means: 

  • Potential easing of housing pressure over time 
  • Ongoing support for buyers and renters 

What to consider: 

  • Reassess property purchase or investment plans 
  • Monitor market conditions and policy changes 
C) Medicare levy threshold changes 

Medicare levy low-income thresholds have been increased from 1 July 2025. 

What this means: 

  • Reduced tax burden for lower-income earners 
  • Additional cost-of-living relief 

What to consider: 

  • Review your tax position 
  • Ensure correct application in your tax return 

3. Should you adjust your superannuation strategy before 30 June? 

EOFY remains a key opportunity for tax-effective super planning. 

What this means: 

  • Opportunity to reduce taxable income 
  • Improve long-term retirement outcomes 
  • Super contributions remain one of the most effective ways to reduce taxable income before 30 June 

What to consider: 

  • Maximise concessional contributions where appropriate 
  • Review unused carry-forward caps 
  • Align super contributions with your broader tax strategy 

4. Is negative gearing changing for property investors? 

Negative gearing will no longer be available for established residential properties acquired after 7:30pm on 12 May 2026. 

From 1 July 2027, losses from these properties will only be deductible against rental income or capital gains from residential property, with excess losses carried forward. New residential properties and certain exemptions will continue to qualify under existing rules. 

What this means: 

  • Reduced tax effectiveness of property investment strategies 
  • Greater reliance on property cash flow rather than tax benefits 
  • Increased focus on new developments and alternative investments 

What to consider: 

  • Reassess your property investment strategy 
  • Model cash flow without relying on negative gearing benefits 
  • Consider diversification beyond residential property 
  • Review timing of any planned property purchases 

FAQs

When do the Budget changes take effect? 

Most measures are expected from 1 July 2026, however some are subject to legislation. 

Are these changes confirmed? 

No, several measures are proposals and must pass Parliament before becoming law. 

Should I act before 30 June? 

Yes, EOFY is a key opportunity to optimise your tax position and cash flow. 

Will these Budget changes impact my business structure? 

Potentially, particularly if proposed changes to trusts and CGT are legislated. Business owners should begin reviewing structures now but avoid making premature changes until further detail is confirmed. 

What is the biggest opportunity from this Budget? 

Taking a proactive approach to tax planning, cash flow and future structuring decisions. 

Turning Budget Changes into Strategic Opportunity 

The 2026–27 Federal Budget presents both immediate opportunities and longer-term strategic considerations. 

For business owners, the focus should be on: 

  • Acting before 30 June to optimise tax outcomes 
  • Reviewing structures in light of proposed changes 
  • Strengthening cash flow and planning for growth 

The difference between reacting to the Budget and planning around it is where real value is created. 

At Cosca, we are already working with clients to model how these changes may impact their long-term position through our Strategic Accounting and Business Advisory services. 

If you need support working through these changes, connect with one of our advisors. 

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