Big Tax Changes Coming: What Property Investors and Business Owners Need to Know

The 2026–27 Federal Budget proposed some of the most significant tax changes Australia has seen in decades. If you own an investment property, hold assets in a family trust, run a business through a company, or have a large superannuation balance — these changes may materially affect your tax position before they even become law.

Here is a plain-English breakdown of what is proposed, what it means, and what you should be thinking about now.

Important disclaimer: The changes outlined in this article are proposed Budget measures and have not yet all been legislated. This is general information only and does not constitute financial or tax advice. We strongly recommend speaking with a registered tax agent or adviser before making any decisions based on these proposed changes.

1. Capital Gains Tax is changing — from 1 July 2027

This is the biggest proposed change and the one with the widest impact.

Currently, if you sell an asset you have held for more than 12 months — such as an investment property, shares or a business — you are entitled to a 50% capital gains tax (CGT) discount. This means you only pay tax on half the gain.

From 1 July 2027, the Government proposes to replace the 50% CGT discount with a new system based on CPI indexation — adjusting the cost base of your asset for inflation — plus a minimum 30% tax rate on net capital gains.

How the new calculation works

Under the proposed rules, the tax is calculated after indexation — not on the gross gain:

Item Amount
Original cost base $100,000
CPI-indexed cost base $110,000
Sale proceeds $150,000
Net indexed capital gain $40,000
Minimum tax at 30% $12,000

So the tax is not calculated on the full $50,000 gross gain — it is calculated after inflation is stripped out. But for assets with large gains, the overall tax outcome may still be worse than the current 50% discount, depending on how long you have held the asset and what your marginal tax rate is.

What about assets you already own?

For assets held before 1 July 2027 and sold after that date, there is a split treatment:

• Gain accrued up to 1 July 2027 — current rules apply, including the 50% CGT discount if eligible

• Gain accrued after 1 July 2027 — new CPI indexation system and minimum 30% tax rate applies

This means valuations as at 1 July 2027 may become very important for tax planning purposes.

What this means for you:

• If you are holding assets with large unrealised capital gains, now is the time to review your position

• The key planning date is 30 June 2027 — not 1 July 2026

• Superannuation funds are not impacted and keep their one-third CGT discount

• Companies are not directly impacted because they never had access to the 50% CGT discount

2. Negative gearing on established residential property will be restricted — from 1 July 2027

Currently, if your investment property runs at a loss — meaning your interest and expenses exceed your rental income — you can offset that loss against your salary or other income, reducing your overall tax bill. This is called negative gearing.

From 1 July 2027, the Government proposes to limit negative gearing for residential property to new-build properties only.

For established residential properties:

Property / Situation Treatment
Held before Budget announcement Grandfathered until sold
Bought after announcement but before 1 July 2027 Negative gearing available only until 30 June 2027
Bought from 1 July 2027 No ordinary negative gearing available
New-build residential properties Negative gearing remains fully available
SMSFs Excluded from these changes

For affected established properties, losses would no longer be deductible against salary or other income. Instead, losses would be carried forward and used against future rental income or residential property capital gains only.

What this means for you:

• If you already own established investment properties, you are generally protected until you sell

• If you are thinking about buying an established investment property after Budget night — the tax treatment changes significantly from 1 July 2027

• New-build properties become more tax-attractive for investors from a negative gearing perspective

3. New builds receive preferential tax treatment

As a deliberate policy choice to increase housing supply, the Government is making new-build residential properties more attractive to investors.

For new-build residential properties, investors may be able to choose between:

• The existing 50% CGT discount, or

• The new CPI indexation plus minimum tax model

This flexibility — not available for established properties — means new builds may produce better after-tax outcomes for investors selling in the future.

Important: A property generally needs to genuinely add new housing supply. A basic renovation or knock-down rebuild that does not increase housing supply may not qualify.

What this means for you:

• New residential developments, duplexes, townhouses and off-the-plan apartments may attract more investor interest

• The tax advantage alone does not make a bad investment good — location, yield, build quality and finance costs still matter

• Speak to a tax adviser before structuring any new-build investment

4. Discretionary trusts face a 30% minimum tax — from 1 July 2028

If you use a family discretionary trust to distribute income to lower-income family members or to a bucket company — this strategy is proposed to become significantly less effective.

From 1 July 2028, the Government proposes a 30% minimum tax rate on taxable income of discretionary trusts.

What this means in practice

Strategy Likely effect under proposed rules
Distribute to low-income adult children Less effective — minimum 30% outcome, unused credit not refunded
Distribute to bucket company Much weaker — corporate beneficiaries do not receive the non-refundable credit
Distribute to high-income beneficiaries Still pays top-up above 30% — less distortion
Use trust for asset protection Still useful — trust not dead, purpose changes
and succession

Is a discretionary trust still worth having?

Yes — but the reason for having one changes.

Under the proposed rules, the old pitch of "use a trust to split income and reduce tax below 30%" becomes much weaker. The new pitch becomes:

"Use a trust for family control, succession planning, asset protection and ownership flexibility — but assume trust income will need to bear at least 30% tax."

What is excluded from the 30% minimum tax:

• Fixed trusts and widely held trusts

• Complying superannuation funds

• Special disability trusts

• Deceased estates

• Charitable trusts

What this means for you:

• If your main reason for using a trust is income splitting below 30%, review your structure before 1 July 2028

• Bucket company strategies need urgent review — corporate beneficiaries may not receive the same credit treatment

• Three years of expanded rollover relief is proposed from 1 July 2027 for small businesses restructuring out of discretionary trusts

5. Companies may become more attractive for business structures

Because discretionary trusts are losing some of their historical tax planning advantages, companies are becoming relatively more useful — particularly for retaining and reinvesting business profits.

Companies were not impacted by the removal of the 50% CGT discount because they never had access to it. And companies already pay tax at a capped company rate of 25% (base rate entities) or 30%.

The strongest modern business structure for many clients is now:

Family Discretionary Trust (ownership and succession)
↓
Holding Company Pty Ltd (asset protection and retained profits)
↓
Trading Company Pty Ltd (active business operations)

• Trading company — runs the business, carries trading risk

• Holding company — holds surplus profits away from trading risk, owns shares in trading company

• Family trust — controls ownership and succession above the company group

What this means for you:

• If you run a business through a trust directly, review whether a company structure may be more suitable going forward

• For new businesses, a company is often the cleanest starting structure

• For existing trust structures, do not restructure without proper advice — the proposed rollover relief may assist

6. Small business instant asset write-off becomes permanent

From 1 July 2026, the $20,000 instant asset write-off for small businesses with annual turnover under $10 million is proposed to be made permanent.

This means eligible small businesses can immediately deduct the full cost of assets costing under $20,000 in the year of purchase — rather than depreciating them over time.

What this means for you:

• If you run a small business and are planning asset purchases — timing and structuring these correctly can significantly reduce your tax

• The asset must be installed and ready for use before 30 June in the relevant year

• GST-registered businesses use the GST-exclusive cost to assess the $20,000 threshold

7. Electric vehicle FBT concessions will reduce from 2029

Currently, eligible electric vehicles provided by an employer are exempt from Fringe Benefits Tax (FBT). This makes EV salary packaging and novated leases particularly attractive.

From 1 April 2029, the full FBT exemption is proposed to be replaced with a 25% FBT discount.

Transitional rules:

• Eligible EVs provided before 1 April 2029 and valued up to $75,000 may retain the 100% FBT exemption

• Arrangements generally retain the FBT treatment that applied when they commenced

What this means for you:

• If you or your employees are considering an EV novated lease or company-provided EV, timing before April 2029 matters

• For owner-directors of their own company, a company-owned or company-leased EV may be cleaner than a novated lease — but this depends on your specific structure

• Do not act without understanding the FBT, GST, Division 7A and deductibility rules that apply to your situation

8. High superannuation balances face an additional tax — from 1 July 2026

From 1 July 2026, individuals with total superannuation balances above $3 million will face an additional tax under the new Division 296 rules.

• An extra 15% tax applies to earnings attributable to balances above $3 million

• A further 10% tax applies to earnings above $10 million

• The tax is assessed to the individual — not the fund

• First assessments are expected after 30 June 2027 for the 2026–27 year

What this means for you:

• If your super balance is approaching or above $3 million, review your strategy, liquidity and investment allocation before 30 June 2026

• This is already legislated — not just proposed — and is the most immediate of all the Budget measures covered in this article

Who should act now?

Based on the proposed changes, the highest-priority groups to seek advice are:

1. Property investors with large unrealised capital gains — especially those holding assets likely to be sold after 1 July 2027

2. Established residential property investors — particularly those considering new purchases

3. Family trust and bucket company users — review distribution strategies before 1 July 2028

4. Business owners — consider whether current structure still makes sense

5. Employers — prepare for Payday Super from 1 July 2026

6. Super members with balances above $3 million — Division 296 is already law

7. Employees or directors considering EV salary packaging — timing before April 2029 may matter

The key message

Do not wait until the start date. Many of these changes will affect decisions made before they come into effect. The planning window is now — not 2027 or 2028.

Speak with Axora Tax

At Axora Tax, we work with individuals, sole traders, companies and business owners across Australia. Whether you need a tax return prepared, a trust structure reviewed, or advice on how these proposed changes may affect your position — we are here to help.

We provide a clear, fixed fee quote before any work begins. No surprises.

👉 Get in touch — axoratax.com.au/get-started

Axora Tax | ABN 41 461 717 381 | Registered Tax Agent No. 26324756
info@axoratax.com.au | +61 0492 903 590 | axoratax.com.au

This article is general information only based on proposed 2026–27 Federal Budget measures. It does not constitute tax, financial or legal advice. Not all measures discussed have been legislated. Please consult a registered tax agent or financial adviser before making decisions based on this information.