Federal Budget Advisory

We keep clients informed of each Federal Budget and the legislative changes that follow, and advise on how to respond, from tax and superannuation measures to restructuring business and family trusts.

Key Services

Budget Analysis: Clear explanations of each Federal Budget and what it means for you.
Tax, Property and Superannuation Measures: Advice on changes affecting negative gearing, trust distributions and pensions.
Trust and Business Restructuring: Detailed advice on restructuring business and family trusts in response to new legislation.

Our Approach

Each Federal Budget can bring changes that affect how individuals, businesses and families manage their finances. We monitor each Budget and the legislation that follows, translating complex announcements into clear, practical advice. Our aim is to help clients respond early and stay well positioned.

Our Process

Budget monitoring: We review each Federal Budget and track the legislation that follows.
Impact assessment: We identify which clients and structures are likely to be affected by the changes.
Client communication: We reach out to explain what the changes mean in plain terms.
Tailored advice: We provide recommendations specific to your circumstances, including any restructuring that may be needed.
Implementation: Where changes are required, we help put them in place and make sure you stay compliant.

What We Provide

Clear explanations of each Federal Budget and its implications
Advice on tax, property and superannuation measures, including negative gearing, trust distributions and pensions
Detailed advice on restructuring business and family trusts in response to new legislation
Ongoing updates as legislation develops

Understanding the 2026-27 Federal Budget Changes

The 2026-27 Federal Budget, delivered on 12 May 2026, announced significant reforms to the taxation of residential property and trusts. Several of these measures remain subject to legislation, and their final form may differ from what was announced. The following overview outlines the key changes and their potential implications.

Negative Gearing and New Properties

From 1 July 2027, negative gearing concessions will be restricted for established residential property.

Scope of the change: For established residential properties acquired after 7:30pm AEST on 12 May 2026, losses may only be offset against residential rental income or residential capital gains, not against salary or other income. Unused losses may be carried forward to future income years.
Existing investments: Properties held, or under contract, before 7:30pm AEST on 12 May 2026 retain their current negative gearing treatment until disposal.
New builds: Newly constructed residential properties that add to housing supply remain eligible for negative gearing.
Exemptions: Self-managed super funds, widely held trusts and certain build-to-rent and government housing investments are excluded from the changes.

Discretionary (Family) Trusts

A 30% minimum tax has been proposed on income distributed from discretionary trusts, including most family trusts.

Operation: The trustee will pay a minimum tax of 30% on trust income before distribution. Individual beneficiaries will receive a non-refundable credit for the tax paid, which may reduce the benefit of distributions to beneficiaries on lower marginal tax rates.
Corporate beneficiaries: Distributions to corporate beneficiaries will not attract a credit, reducing the effectiveness of bucket company arrangements.
Commencement: Under the current draft legislation, the minimum tax is expected to apply from 1 July 2028.
Exclusions: Fixed trusts, widely held trusts, complying super funds, deceased estates, special disability trusts, charitable trusts and certain testamentary trusts are excluded. Specific carve-outs also apply to primary production income.

Fixed Trusts and Fixed Distributions

Trusts that distribute income on a fixed basis, rather than at the trustee’s discretion, are excluded from the minimum tax.

Expanded definition: The draft legislation broadens the definition of a fixed trust, which may bring certain trusts with limited powers to vary entitlements outside the scope of the minimum tax.
Excluded election trust: Discretionary trusts in existence on 1 July 2028 may elect to allocate fixed, equal shares of income and capital to nominated beneficiaries. Nominations may generally only be varied on the death of a beneficiary or a relationship breakdown, and an election cannot be reinstated once revoked.

Unit Trusts

Unit trusts, in which beneficiaries hold defined units, will often be treated as fixed trusts and therefore fall outside the minimum tax. Eligibility will depend on the terms of each trust deed, and individual review is recommended.

Restructuring and Rollover Relief

A three-year rollover relief period has been proposed from 1 July 2027 to support the restructuring of affected entities.

Purpose: Assets may be transferred from a discretionary trust to a company or fixed trust without triggering capital gains tax at the time of transfer.
Considerations: The relief generally requires all of the trust’s assets to be transferred, and state stamp duty may still apply. Trusts may access either the rollover relief or the excluded election trust, but not both.

Capital Gains Tax

From 1 July 2027, the 50% capital gains tax discount is proposed to be replaced by cost base indexation, together with a 30% minimum tax on net capital gains. Gains accrued before 1 July 2027 will retain the 50% discount, and investors in new residential property may elect between the existing and revised methods.

The information above reflects Budget announcements and draft legislation, which remain subject to change. We recommend seeking professional advice before making any decisions regarding your property or trust structures.