2026–27 Federal Budget: key takeaways for investors

With the 2026-27 Budget, the Federal Government is seeking to reduce or unwind a number of favourable tax treatments for particular investment types and tax structures to level the playing field for younger Australians, and those who earn their money by working. 

Major proposed changes to investment taxation include:

• Replacing the 50% discount on capital gains tax (CGT) on investments held for more than 12 months from 1 July 2027 with CPI indexation and a minimum 30% tax rate on realised capital gains accruing from 1 July 2027. 
• Restricting negative gearing to new builds from 1 July, with individuals purchasing existing residential properties after Budget night (12 May 2026) no longer being eligible to offset any excess interest deductions against their other income from 1 July 2027.
• Minimum 30% tax on discretionary trusts’ taxable income from 1 July 2028.

As always, the devil is in the detail, so let’s look at how different investment asset classes and tax structures are faring as investors look for the best returns. 

New builds can continue to be negatively geared before and after 1 July 2027, and the Government has confirmed investors in new build residential properties will be able to choose either the 50% CGT discount, or cost base indexation and the minimum 30% tax. 

New build residential properties include: 

• dwellings constructed on vacant land, or
• where existing properties are demolished and replaced with a greater number of dwellings.

For established residential properties: 

• Properties held up until Budget Night (including contracts entered into but not yet settled) will be exempt from the changes until disposed of. 
• Properties purchased between the announcement and 30 June 2027 may be negatively geared during this period, but not from 1 July 2027. 
• Properties purchased from 1 July 2027 will not be able to be negatively geared.

What this could mean:

Investors interested in residential property may consider knocking down existing residences and building duplexes, or investing in new-build apartment complexes to continue to access negative gearing and the 50% CGT discount.

Super is exempt from CGT changes announced in the Budget, meaning the 33% discount on CGT on the earnings of assets held in super for more than a year will remain in place. 

This means earnings on assets held in super – which is generally taxed at 15% rather than an individual’s marginal tax rate – will continue effectively to be taxed at 10% when the existing 33% CGT discount on long-term investments inside super is applied.

While the tax environment in super hasn’t changed, it looks relatively advantageous compared with how earnings on most investment types held outside super will be taxed under the proposed CGT changes. 

What this could mean:

Investors may have more incentive to move assets into super over the coming year as investors transition to new positions under the new rules. This may include selling residential property and using bring-forward or non-concessional contributions to transfer the proceeds into super. It may also include purchasing property through a self-managed super fund (SMSF), as these are also excluded from the proposed negative gearing and changes to the CGT discount.

Commercial property is exempt from the proposed changes to negative gearing but is expected to be affected by the CGT reforms from 1 July 2027. 

There will be no changes in CGT arrangements for assets purchased and sold prior to 1 July 2027. 

Assets owned prior to 1 July 2027 and sold after 1 July 2027 will be treated under current arrangements on gains made up to this date, and under the new CPI indexation arrangements with a minimum 30% tax rate for gains made after this date.

Assets purchased after 1 July 2027 will be treated wholly under the new arrangements, meaning the original purchase price of an asset will be increased according to Consumer Price Indexation to find the ‘cost base’, and any realised capital gains above that cost base will be taxed at a minimum 30%.

What this could mean:

Investors looking to negative gear into property who don’t want the risks associated with new builds may turn to commercial property, taking advantage of their continuing ability to utilise rental losses to reduce income tax in the short term. 

Shares are not affected by the proposed changes to negative gearing but are expected to be affected by changes to CGT from 1 July 2027. 

What this could mean:

Growth stocks whose share prices increase significantly above inflation may attract more tax on realised capital gains under the new rules, while blue-chip stocks that tend to return value to shareholders via franked dividend income may become more attractive.

While share investors are unlikely to avoid growth stocks altogether, there may be a shift towards holding shares for longer to avoid realising capital gains. 

Australian blue-chips – that typically offer investors tax-effective yields due to franking credits – are likely to be more popular. 

The family home is untouched by changes to negative gearing and proposed CGT reforms, retaining its CGT-exempt status. 

What this could mean: 

Investors may look to renovate to increase the value of their existing home, or upgrade to bigger homes to preserve wealth. In addition, homes purchased before Budget night may leave open a pathway to negative gear into existing residential property.

A higher CGT rate and the removal of negative gearing for all but existing investors and new builds makes investing in existing residential property less compelling.

Gold, unlike some asset types, does not generate ongoing income – returns are typically realised when the asset is sold.

For gold held outside super, the proposed 2026–27 Federal Budget changes mean existing holdings won’t lose their current tax treatment on gains accrued before 1 July 2027, which remain eligible for the 50% capital gains tax (CGT) discount.

For gains that accrue from 1 July 2027, the discount would be replaced with inflation indexation, and a minimum effective tax rate of 30% would apply to net capital gains – although investors on a higher marginal tax rate will pay more. 

Bitcoin, which similarly doesn’t generate ongoing income, would be treated in the same way as gold under the proposed changes.

The Government will introduce a 30% minimum tax rate on the taxable income of discretionary trusts. 

The strategy of distributing earnings from a discretionary trust to a so-called bucket company will be more expensive because distributions made to companies won’t get credit for the new 30 per cent minimum tax paid by a trust when it distributes income, effectively double-taxing income to a bucket company.

Assets held before 1985 will attract CGT for the first time, on gains accrued from 1 July 2027.