What the 2026 Budget means for your investments and property

Most of the commentary following budget night centred on whether the capital gains tax and negative gearing reforms amounted to real reform or political maneuvering. That debate will run for some time. For anyone holding investment property, shares outside superannuation, or assets in a discretionary trust, the more useful question is simply this: what does it actually mean for you, and is there anything worth doing about it now?

The 2026/27 Budget introduced some of the most significant tax changes in two decades. None of it is law yet, but the government has signalled it intends to move quickly on enabling legislation, and the direction is clear enough to warrant a considered look.

The capital gains tax overhaul is more nuanced than first glance suggests

The headline change is the replacement of the 50% capital gains tax discount with cost base indexation and a 30% minimum tax on net capital gains, applying from 1 July 2027.

Under the current system, if you have held an asset for more than 12 months, you pay tax on only half the capital gain. Under the new system, you adjust the original purchase price for inflation before calculating the taxable gain, then pay a minimum of 30% on the result.

The transitional arrangement matters: gains accrued before 1 July 2027 will still be treated under the current rules. Only the gain arising from that date onwards falls under the new framework. For anyone holding shares, ETFs, or investment property, establishing a reliable value for those assets at 1 July 2027 will become an important planning step.

There is a point that has been largely missed in public commentary: the new indexation approach is not automatically worse for investors. In a higher inflation environment, adjusting the cost base for inflation before calculating the gain can actually leave long-term investors better off than the 50% discount, particularly where real capital gains are moderate. The old discount was most beneficial in low-inflation periods where asset prices rose sharply in nominal terms. Depending on the asset class and the inflation environment over the coming years, outcomes under the new regime will vary materially between investors and between assets. It is worth understanding that before making any premature decisions about selling ahead of 1 July 2027.

Age Pension recipients are exempt from the 30% minimum tax rate, which is a meaningful carve-out for retirees receiving income support.

The investment economics of established property have changed

From 1 July 2027, losses on established residential investment properties purchased after 7:30pm on 12 May 2026 will only be deductible against rental income or capital gains from property. The ability to offset those losses against other income, such as wages or business earnings, will be removed for newly acquired properties.

Properties purchased before that time are grandfathered under the current rules. New residential builds remain fully exempt, preserving the incentive for investment that adds to housing supply.

For existing investment property holders, the practical impact is limited in the short term; your current arrangements are unchanged. For anyone considering buying an established residential investment property going forward, however, the investment case has shifted. Negative gearing has historically been a material part of the cash flow calculation for many property investors, and removing the ability to offset losses against other income will reduce after-tax returns, particularly in the earlier years of holding a property. The degree of impact will vary depending on income levels, the specific property, and individual circumstances. But it is a real shift in the economics, and one worth factoring carefully into any decision being contemplated.

Discretionary trusts now face a 30% minimum tax with a limited window to restructure

From 1 July 2028, a 30% minimum tax will apply to the taxable income of discretionary trusts, paid by the trustee. Beneficiaries will receive non-refundable credits to offset their own tax liabilities.

Not all trusts are affected. Complying superannuation funds, fixed trusts, testamentary trusts, special disability trusts, and charitable trusts are excluded. The government has also offered a three-year rollover relief window from 1 July 2027 for those who wish to restructure out of a discretionary trust into a company or fixed trust, with relief from capital gains tax consequences for those who choose to do so.

If you hold assets or income through a family discretionary trust, this is worth discussing with your accountant and adviser before long. The change does not take effect until 2028, but the window to consider restructuring options is shorter than it might appear.

Superannuation is the quiet winner

One of the more strategically significant consequences of this budget has not attracted much attention: superannuation has become considerably more attractive as a long-term wealth structure relative to investing outside it.

The CGT and trust changes increase the tax burden on investment wealth held outside super. Superannuation, by contrast, retains its concessional tax treatment, with earnings taxed at 15% in accumulation phase and effectively zero once you are drawing a retirement pension. For those still in the accumulation phase with capacity to make additional contributions, whether concessional (pre-tax) or non-concessional (after-tax), the relative case for prioritising super over outside-super investment has strengthened.

Those already in retirement and drawing income from a superannuation pension are, in many ways, the best insulated from these changes. The assets inside super are unaffected by the new CGT framework or the discretionary trust minimum tax.

There is also a smaller but relevant change for older Australians: the age-based uplift of the Private Health Insurance Rebate will be removed from 1 April 2027. If you are currently receiving an age-boosted rebate, your out-of-pocket premiums are likely to increase, and it is worth reviewing your cover ahead of that date.

Where to from here

None of this is law yet. The enabling legislation has to pass parliament, and there may be adjustments along the way. But the direction is clear enough that some forward planning is worthwhile now, particularly around establishing asset values ahead of 1 July 2027 and considering whether your current investment structure remains the right one.

The instinct to act quickly in response to budget headlines is rarely the right one. Rushing a sale or restructuring based on announcements that have not yet become law can create problems that are difficult to unwind. What is worth doing now is taking stock of how these changes impact own situation, what is the impact on your financial plan and working through the details thoughtfully.