2026–27
Federal Budget wrap-up: what matters for households and investors
The 2026–27 Federal Budget was delivered against a difficult
backdrop: persistent inflation, higher interest rates, pressure on
household budgets and an ongoing shortage of housing.
The announcements are broad, but the practical consequences will
differ considerably from one household to another. Some measures have
already been legislated. Others remain proposals and may change before
becoming law.
The useful response is not to react to every headline. It is to
identify the measures that may affect your structure, clarify their
status and review your plan when sufficient detail is available.
Tax changes for individuals
Lower personal income tax
rate
Legislation has passed to reduce the tax rate applying to taxable
income between $18,201 and $45,000 from 16% to 15% from 1 July 2026. The
rate is scheduled to reduce again to 14% from 1 July 2027.
The benefit will depend on taxable income and should be considered
alongside a household’s broader cash-flow position.
$1,000 instant tax deduction
The Government has legislated an instant tax deduction of up to $1,000
from the 2026–27 income year for eligible Australian tax residents who
earn income from work. People claiming the instant deduction will not
need to itemise work-related expenses below that amount; those with
higher eligible expenses can continue to claim in the usual way.
Charitable donations, union fees and professional association fees
remain separately claimable where the relevant rules are met. Taxpayers
should still confirm how the rules apply to their circumstances.
Medicare levy thresholds
The Budget also increases the Medicare levy low-income thresholds for
singles, families, seniors and pensioners. These changes are intended to
prevent people on lower incomes from paying more of the levy simply
because their income has risen with inflation.
Property investment changes
Property taxation is one of the Budget’s most significant areas of
proposed reform.
Negative
gearing to focus on new housing supply
From 1 July 2027, the Government proposes limiting negative-gearing
concessions for residential property to qualifying new builds.
Under the announced transitional arrangements, established
residential property acquired before 7.30 pm AEST on 12 May 2026 would
retain its existing treatment. For established properties acquired after
that time, rental losses would generally be available against
residential rental income and residential-property capital gains, with
unused losses carried forward, rather than deducted against salary and
wages.
The policy is designed to direct more investor capital towards
additional housing supply. Its effect on an individual investor will
depend on acquisition timing, property type, debt, cash flow and the
final legislation.
Capital gains tax reform
The Government also proposes replacing the existing capital gains tax
discount with a CPI-based indexation approach from 1 July 2027, together
with other changes including a minimum tax treatment for certain
gains.
Transitional arrangements are intended to preserve the existing
treatment for gains accrued before commencement. That makes reliable
purchase records, improvement costs and future valuation evidence
increasingly important.
These are complex proposals with potentially different outcomes
across property, shares, trusts and other investments. No transaction
should be accelerated solely because of a Budget announcement. The final
legislation and a person’s complete tax position matter.
Family trusts
From 1 July 2028, the Government proposes a minimum 30% tax on
taxable income distributed through discretionary trusts, subject to
exclusions and transitional provisions.
Trusts remain valuable structures in appropriate circumstances, but
the proposed change may affect how income distributions are assessed.
Restructuring can itself create capital gains tax, duty,
asset-protection and estate-planning consequences. A review should
therefore consider the whole structure, not tax in isolation.
Housing, health and
cost-of-living measures
Other Budget announcements include:
- $2 billion to assist local government and state utilities with
infrastructure supporting new housing; - an extension of the temporary restriction on foreign purchases of
established dwellings to 30 June 2029; - further funding for Medicare Urgent Care Clinics and public
hospitals; - funding for additional medicines through the Pharmaceutical Benefits
Scheme; - changes to disability, aged-care and private-health funding;
and - a temporary continuation of reduced fuel excise and the
heavy-vehicle road-user charge.
These measures may affect household expenses and services, although
the impact will vary by age, location, health needs and eligibility.
Measures affecting
businesses and employers
The Budget includes changes affecting electric-vehicle fringe
benefits tax concessions, small-business tax administration, PAYG
instalments, research and development incentives, and measures intended
to prevent tax fraud.
Business owners should review these announcements with their
accountant once the commencement dates and final legislative form are
clear.
What should investors do now?
Separate announcements from
law
Budget night begins a process. Some measures are already legislated,
while others require bills to pass Parliament and may be amended.
Keep complete records
Property and investment purchase documents, legal costs, stamp duty,
improvement expenditure and valuations may become particularly important
under transitional capital gains tax rules.
Review structure
before making transactions
Property ownership, trusts, superannuation and personal investments
should be considered together. A change that appears tax-effective in
isolation may conflict with liquidity, retirement, estate-planning or
risk objectives.
Avoid urgency created by
headlines
Material reforms deserve attention, but not haste. A disciplined
review based on confirmed rules is more dependable than acting on
speculation.
Clarity before action
The Budget may change some of the settings, but sound decision-making
remains the same: understand what applies, consider it in the context of
your complete financial position and act only when the evidence supports
it.
If you would like to understand how the Budget announcements may
affect your investment, retirement or property strategy, contact Acquira
Wealth Partners for advice based on your circumstances.
Official sources
Important information
This article has been prepared by Acquira Wealth Partners for general
information and educational purposes only. It does not constitute
financial product advice, tax advice or legal advice and has not been
prepared taking into account your objectives, financial situation or
needs. Budget measures described as proposed or announced may change and
may not become law. Before acting, confirm the current law and seek
appropriate professional advice.
Reine Clemow is an Authorised Representative (No. 461670) of Acquira Wealth / Acquira Wealth Pty Ltd is a Corporate Authorised Representative (No. 001319892) of GPS Wealth Ltd | AFSL 254 544 | ABN 17 005 482 726 | www.gpswealth.com.au | Email Disclaimer Acquira Wealth Pty Ltd is a Corporate Authorised Representative (No. 001319892) of GPS Wealth Ltd, AFSL 254 544, ABN 17 005 482 726.
