The 2026–27 Australian Federal Budget delivered one of the most significant tax reform packages in recent years, with major implications for individuals, investors, trusts, and small businesses.
Outlined below are the key tax measures and what they mean for you.
Personal Income Tax Cuts Continue
Personal income tax cuts from 1 July 2026 and again from 1 July 2027.
What’s changing?
The 16% tax bracket (for income between $18,201 and $45,000) will reduce:
- to 15% from 1 July 2026
- to 14% from 1 July 2027
This could deliver tax savings of:
- up to $268 annually from 2026–27
- up to $536 annually from 2027–28 compared to 2024–25
New $250 Working Australians Tax Offset
From the 2027–28 financial year, eligible workers will also receive a new annual $250 Working Australians Tax Offset (WATO).
$1,000 Instant Tax Deduction for Employees – Proposed
A new simplified deduction allowing eligible taxpayers to claim up to $1,000 in work-related expenses without needing receipts or detailed substantiation.
Deductions above $1,000 will continue to use the traditional method.
$20,000 Instant Asset Write-Off for Small Business – Permanent
The permanent extension of the $20,000 instant asset write-off.
Eligibility
Businesses with turnover under $10 million will continue to immediately deduct:
- new and second-hand assets
- costing less than $20,000
- first used or installed ready for use from 1 July 2026.
Carry-Back Rules – Tax Loss
Tax loss carry-back provisions for eligible companies. These measure only applies to incorporated entities — not sole traders or trusts.
How it works?
Companies may:
- offset current year tax losses
- against profits from prior years
- and receive a refundable tax offset
Major Changes for Trusts – Proposed
One of the most controversial Budget announcements was the proposed introduction of a minimum 30% tax on discretionary trust distributions.
The rules are expected to apply from 1 July 2028 with transitional restructuring relief from 1 July 2027.
Discretionary trusts are widely used by:
- family businesses
- professional practices
- property investors
- succession planning structures
Business owners operating through trusts should seek advice early, particularly where “bucket companies” or family distribution arrangements are involved.
Capital Gains Tax (CGT) changes – Proposed
The Budget also announced significant proposed changes to Capital Gains Tax concessions.
Proposed changes:
- removing the 50% CGT discount
- replacing it with an inflation indexation method
- introducing a 30% minimum tax framework in some cases
These changes could affect:
- property investors
- business owners selling assets
- start-ups and founders
- high-growth investment structures
Many details are still under consultation, so further refinement is likely.
Do I need to act now?
Many of these measures are still proposed legislation, this Budget clearly signals a shift toward broader tax reform.
Business owners should consider:
- reviewing business structures
- reassessing trust arrangements
- planning future asset purchases
- reviewing succession strategies
- considering CGT implications before future transactions
The earlier you plan, the more flexibility you may have.
If you would like help understanding how the Budget changes may affect your business or investment structures, speak to your contact at GM Tax to discuss how these changes may impact you.
