2026–2027 Federal Budget Highlights: What It Means for You and Your Business
The 2026–27 Federal Budget has landed, and it introduces some of the most significant tax and investment reforms Australia has seen in years.
This year’s Budget focuses on easing cost-of-living pressures, encouraging business investment and innovation, improving productivity, and reshaping Australia’s long-term tax system.
While some measures provide welcome relief for workers and small businesses, others — particularly around capital gains tax, trusts and property investing — may significantly impact how Australians structure their investments and businesses going forward.
Most proposed changes commence from 1 July 2027, meaning now is the ideal time to review your current structure and future plans.
For Individuals & Investors
- Capital Gains Tax (CGT) Changes
One of the biggest announcements is the proposed replacement of the current 50% CGT discount with a cost-based indexation method from 1 July 2027.
The Budget also proposes a 30% minimum tax on real capital gains income.
These changes could affect investment properties, shares, cryptocurrency, business assets, and long-term investment portfolios.
Importantly, investors may need updated asset valuations, improved record-keeping, and additional tax planning before the proposed commencement date.
- Negative Gearing Limited to New Builds
From 1 July 2027, negative gearing for residential property investments is proposed to apply only to newly constructed properties.
Existing investment properties are expected to retain current arrangements, however future investors purchasing established residential properties may no longer be able to offset losses against salary and wage income.
- Working Australians Tax Offset (WATO)
The Budget introduces a $250 Working Australians Tax Offset from 1 July 2027.
The offset increases the effective tax-free threshold for workers and aims to provide modest tax relief for employees and sole traders.
- Medicare Levy Threshold Increases
The Medicare levy low-income thresholds will increase by 2.9% from 1 July 2025 for singles, families, seniors, and pensioners. This means more low and middle-income earners may either pay a reduced Medicare levy or none at all.
- Instant Tax Deduction for Employees
From the 2026–27 income year, eligible individuals may be able to claim an instant deduction of up to $1,000 for work-related expenses without requiring detailed substantiation.
Further details are still expected.
For Small Businesses
- Permanent $20,000 Instant Asset Write-Off
The Government has confirmed the permanent extension of the $20,000 Instant Asset Write-Off
for businesses with aggregated turnover below $10 million.
Eligible businesses can continue immediately deducting certain business asset purchases, including tools, equipment, office technology, and eligible motor vehicles (subject to limits).
Importantly, making this measure permanent provides greater certainty for business planning and investment decisions.
- Loss Carry-Back Returns
Eligible companies will once again be able to offset current-year tax losses against profits and tax paid in previous years.
This may provide improved cash flow, potential tax refunds, and greater support during difficult trading periods.
- Support for Start-Ups & Innovation
The Budget introduces several measures aimed at encouraging innovation and entrepreneurship, including:
- refundable tax losses for eligible start-up companies,
- expanded venture capital concessions,
- and changes to the Research & Development (R&D) Tax Incentive.
The Government also plans to:
- increase R&D expenditure thresholds,
- expand turnover eligibility,
- and encourage greater investment in growing Australian businesses.
PAYG & Business Reporting Changes
From 1 July 2027:
- businesses may opt into monthly PAYG instalments, and
- eligible businesses will be able to use ATO-approved calculations within accounting software to vary instalments based on real-time business performance.
This may assist businesses with managing cash flow, improving PAYG accuracy, and reducing unexpected tax liabilities.
Discretionary Trust Changes
The Budget proposes introducing a 30% minimum tax on discretionary trust income from 1 July 2028.
This is a significant proposed change for family groups, investment entities, and small businesses currently operating through discretionary trusts.
The Government has also proposed temporary restructuring relief to assist businesses transitioning into alternative entity structures if required.
Electric Vehicle (EV) Incentives
The Budget proposes a 25% FBT discount for eligible electric vehicles over $75,000 from 1 April 2027, extending to all eligible EVs from 1 April 2029.
This may create additional tax incentives for businesses considering transitioning their vehicle fleets to electric vehicles.
Fuel Excise Relief
To assist with fuel costs, the Government announced a temporary reduction in fuel excise:
- reducing excise by 32 cents per litre for petrol and diesel for a three-month period from 1 April 2026.
Other Important Changes Already Enacted
The Budget also references several measures already legislated prior to the Budget announcement, including:
- Removal of tax deductibility for General Interest Charges (GIC), and Shortfall Interest Charges (SIC) from 1 July 2025.
- Personal income tax rate reductions for lower income earners from 1 July 2027.
- Additional foreign resident CGT reporting and compliance obligations.
At Zweck, we’re closely monitoring the progress of these announcements and how they may affect our clients.
If you would like to discuss how the 2026–27 Federal Budget may impact you or your business, please contact our office.
