2026-27 Budget Tax Changes: What They Mean for You
The 2026-27 Federal Budget, handed down on 12 May 2026, delivered the biggest shake-up of Australia's tax system in a generation. Here's what it means for family trusts, property investors and workers.
Family trusts: a 30% minimum tax from 1 July 2028
This measure isn't law yet, with draft legislation released in September 2026. Trustees will pay at least 30% tax on the trust's taxable income. Beneficiaries receive a credit for this, but it's non-refundable.
The biggest impact falls on families who distribute to adults on low or no income, such as students, retirees or a non-working spouse. They lose the tax-free threshold and lower tax rates on that income, worth up to $9,480 per beneficiary each year. Distributions to adults already earning over $45,000 are broadly unaffected.
Fixed trusts, super funds, charitable trusts, deceased estates, primary production income and pre-Budget testamentary trust assets are among the exclusions. Rollover relief from 1 July 2027 will help those who want to restructure.
Negative gearing: new builds only from 1 July 2027
These changes are now law. How you're affected depends on when, and what, you bought.
Your situation | What happens |
Bought before 7:30pm AEST on 12 May 2026 | No change. Full negative gearing continues |
Bought an established property after Budget night | Full negative gearing until 30 June 2027. After that, losses only offset residential rental income, and unused losses carry forward |
Buy a new build, at any time | No change |
Invest in shares or commercial property | Not affected |
Also from 1 July 2027, the 50% capital gains tax discount will be replaced with an inflation-based discount and a 30% minimum tax on gains made after that date. New-build investors can choose either method.
Income tax: a little more in every pay
Workers will see three changes, all now locked in:
The tax rate on income between $18,201 and $45,000 dropped from 16% to 15% on 1 July 2026, and will fall to 14% from 1 July 2027. That's worth up to $536 a year.
A new instant deduction of up to $1,000 for work expenses, with no receipts needed, applies from 2026-27.
A new $250 Working Australians Tax Offset starts in 2027-28, lifting the effective tax-free threshold on work income to $19,985.
If your work expenses are well under $1,000, the instant deduction saves time and paperwork. If they're higher, keep your records, as claiming your actual costs may leave you better off.
Let's talk about your numbers
Every situation is different, and the detail of these reforms is still being finalised. The team at Turners can review your income, investments and trust structure, and help you plan with confidence. Get in touch to book a conversation.
This article provides general information only and does not take into account your personal circumstances. It is current as at 1 October 2026. Please seek professional advice before acting.
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