13/05/2026
⚖️ 2026 BUDGET 💰️ - While announced last night with various start dates, please remember these changes are only announced. Parliamentary process still needs to happen. The devil will be in the detail, which we don’t have yet.
✅️ 2026 – 2027 Tax Year – from 1 July 2026
📌 Permanent $20,000 Instant Asset Write-Off
The $20,000 instant asset write-off for businesses with turnover under $10 million will become permanent from 1 July 2026. Eligible businesses can immediately deduct assets costing less than $20,000 each (ex GST), rather than depreciating them over time.
📌 Loss Carry-Back Rules Reintroduced
Eligible companies (those with combined global turnover of less than $1 billion) will be able to carry back current year tax losses against profits from the previous two income years to obtain a tax refund. The loss carried back is limited to the amount of tax paid in the past as per the company’s Franking Schedule.
📌 Simplified Tax Deductions – Individual Tax Returns
From 1 July 2026, individuals will be able to claim a standard work-related deduction of up to $1,000 without needing detailed receipts. Whether this covers all work related deductions, including MV, uniform & PPE and Self-Education costs, remains to be seen.
📌 FBT and Electric Vehicles
Currently electric vehicles no matter what their cost, are 100% exempt from FBT.
From 1 April 2027:
- only electric vehicles valued at $75,000 or less are 100% exempt and they will continue to be exempt while they are held;
- for those valued between $75,000 and the fuel efficient LCT threshold (currently $91,387) a 25% FBT discount will apply;
- for those costing over the LCT threshold, normal FBT rules apply, with no discounts.
✅️ 2027 – 2028 Tax Year – from 1 July 2027
📌 Working Australians Tax Offset (WATO) of $250
An annual tax offset for Australian workers, effectively increasing the tax-free threshold from $18,200 to $19,985.
📌 50% Capital Gain Tax (CGT) Discount replaced with indexation
The current 50% CGT discount where an asset is held for more than 12 months will be replaced by cost base indexation for assets. Applies to all assets held by all entities other than companies and SMSFs.
For those assets sold after 1 July 2027, the CGT calc will contain 2 components. 1. The gain for the period up to 30th June 2027 can utilise the 50% discount; and 2. The gain after 30th June 2027 will either use indexation if held more than 12 months or be 100% of the gain if held for less.
The CGT on the gain will be at least 30%. This means if the selling entities tax rate is less than 30%, 30% will apply. Except if you are an individual and receive any means tested government payments such as the Age Pension or Jobseeker in that year.
📌 Negative Gearing
Negative gearing is where the yearly expenses of owning an investment property are more than the yearly rent income, so a negative loss results. Currently this loss can reduce other income of a taxpayer and usually result in tax savings and refunds.
From 1 July 2027 this loss can only be used to reduce other income if the investment property is either:
- already owned as at 7:30pm AEST 12th May, 2026 (last night)
- a new residential property*
If the loss is unable to be claimed under the new rules, the loss is carried forward and deducted either in a year there is positive rental income (however if there are excess losses, these are then carried forward again) or in the year the property is sold against the capital gain.
*The intention here is to allow negative gearing only for investment properties that are adding to the housing supply. For eg, you knock down and rebuild a new house on your existing block. Negative gearing not allowed. BUT, you knock down and add dual occupancy on the same block – negative gearing is allowed.
✅️ 2028 – 2029 Tax Year – from 1 July 2027
📌 Loss Refundability for Start-up Companies
Companies that generate a tax loss in the first 2 years of operation, will be able to obtain a refund of tax paid. This is not a refund of income tax (if they are in losses no income tax would have be paid). This is a refund of PAYG withholding tax on wages and also FBT tax on benefits.
📌 30% Minimum Tax on Discretionary Trusts
From 1 July 2028 Discretionary Trusts will be taxed in their own right. Currently Trustees of Discretionary Trusts use their discretion to determine which beneficiary receives a distribution. Distributions are usually spread across beneficiaries in a way to achieve the best (lowest) tax outcome. Tax is paid at the tax rate of each beneficiary.
Under the new rules, the Trust itself will pay tax first at 30% on the income. Then what is distributed will have a tax credit attached for this tax paid. If the beneficiaries tax rate is more than 30%, top up tax will be payable. If the beneficiaries rate is less, there is no refundable offset.
If you would like to discuss any of these changes,please contact us.
Australian Federal Budget, 2026-27
