Federal Budget 2026: What It Means for WA Investors, Families, Employees, Business Owners & Retirees
Treasurer Jim Chalmers didn't muck around on Budget night, announcing major reforms, predominantly targeting housing and taxation.
Three of the biggest pillars of Australian tax planning (negative gearing, the capital gains tax discount, and family trusts) have all been rewritten. It's sparked heated debate across dinner tables, smoko sheds and workplaces all over WA.
Before anyone makes a rushed decision, two things are worth flagging up front:
These reforms are proposals, not law. They still need to pass both houses of parliament, and there's almost certainly going to be consultation, amendment and political horse-trading before any of it becomes legislation.
The timelines built into these changes give us breathing room. It's enough time to look at your situation properly, work out which (if any) of the changes affect you, and how any downsides can be offset.
The three big tax reforms
1. Negative gearing for residential property. From 1 July 2027, you can only negatively gear new builds. Properties you already own as at 7:30pm AEST on 12 May 2026 are fully grandfathered. You can keep negatively gearing them forever. Commercial properties are unaffected by the reform.
2. Capital Gains Tax. From 1 July 2027, the 50% CGT discount will no longer apply. It's being replaced with cost base indexation (your purchase price is adjusted for inflation) and a 30% minimum tax rate on gains.
3. Discretionary trusts. From 1 July 2028, a minimum 30% tax will apply to taxable income retained in family trusts.
Yes, these are big shifts. We're not going to sugar-coat that. But there's an 18-month runway to plan, talk things through, and make moves with your eyes open. That's exactly what we're here for.
What it means for investors
Two big changes in this Budget hit investors. The first (negative gearing) applies only to residential property. The second (the new CGT rules) is much broader. It applies to almost everything you might invest in outside super: shares, managed funds, investment properties, business assets, collectibles, even pre-1985 assets you've been holding for decades.
Negative gearing for residential properties
From 1 July 2027, losses from established residential investment properties bought after 12 May 2026 (7:30pm AEST) can only be deducted against rental income or capital gains from residential property. They won't offset your salary or other income anymore.
Here's how the grandfathering works:
Already own the property as at 12 May 2026? No change. You can keep negatively gearing it forever.
Bought it between 13 May 2026 and 30 June 2027? You can negatively gear during that window, but not from 1 July 2027.
Buying from 1 July 2027 onwards? No negative gearing on established homes.
Buying a brand new build? Fully exempt. Negative gearing will continue to apply both before and after July 2027.
SMSF-held properties and properties in widely-held trusts are also exempt
Capital Gains Tax
The new CGT rules apply to all investment assets held by individuals, trusts and partnerships. That covers:
Shares (Australian and international)
Managed funds and ETFs
Investment properties (residential and commercial)
Holiday houses and second homes
Business assets, including the sale of a small business
Collectibles like art, classic cars and jewellery
Cryptocurrency
Pre-1985 assets (previously CGT-exempt, now caught for gains accruing from 1 July 2027)
What's changing from 1 July 2027:
The 50% CGT discount disappears (for individuals, trusts and partnerships)
Cost base indexation kicks in: your purchase price is lifted by inflation, so you're only taxed on the real, post-inflation gain
A 30% minimum tax rate applies on net capital gains up to your marginal tax rate
A few important details:
Gains accrued before 1 July 2027 still get the 50% discount. You'll need a valuation of each asset at 1 July 2027 to work out how much.
New residential builds can choose either the 50% discount or the new indexation method.
Age Pension recipients are exempt from the 30% minimum tax.
What's NOT affected by these changes:
Super funds, including SMSFs. Super has its own tax rules and they're not changing here. Your super is not affected.
Your family home. The main residence exemption still applies. Selling your principal place of residence remains CGT-free.
What it means for retirees and pre-retirees
If you're already retired and on the Age Pension, you've largely been protected. If you're 3 to 10 years out from retirement, there are some things worth being aware of.
Age Pension recipients get a free pass on the new CGT rules. If you receive any means-tested income support payment (including the Age Pension, even a part pension) in the year you realise a capital gain, the new 30% minimum tax doesn't apply to you. That's a meaningful exemption for retirees selling down assets to fund retirement.
Aged care gets a funding boost. The Government is putting significant new money into aged care, including $606.5 million for residential aged care and $1.4 billion for the Support at Home program. Personal care services (showering, dressing) are now fully government-funded for all care recipients. Welcome news, especially given the November 2024 reforms made aged care more expensive for self-funded retirees (we covered that in our February newsletter).
Private Health Insurance Rebate uplift removed. From 1 April 2027, the age-based uplift on the private health insurance rebate disappears. If you're over 65 and holding private health cover, your premiums are likely to rise.
Division 296 super tax is still coming. Not strictly a Budget 2026 announcement, but worth a reminder. From the 2026-27 income year, super balances above $3 million attract an extra 15% tax on earnings (taking it to 30% total). Balances above $10 million attract a further 10%.
What it means for families
Beyond the property and trust changes, there's some real cost-of-living relief in this Budget.
Personal tax cuts already locked in. The 16% rate drops to 15% from 1 July 2026, then to 14% from 1 July 2027. (This was legislated back in March 2025, but it's about to start landing in your pay.)
A new $250 Working Australians Tax Offset kicks in from the 2027-28 income year. The effective tax-free threshold lifts to around $19,985.
Medicare levy low-income thresholds went up from 1 July 2025. Singles can earn up to $28,011 before paying any Medicare levy. Families, up to $47,238.
If you've got adult kids you're helping out, the tax cuts will give them a bit more breathing room. Every little bit helps.
What it means for employees
If you're still working, whether full-time, part-time, or doing a few hours here and there in semi-retirement:
$1,000 instant tax deduction. From the 2026-27 income year, if your work-related expenses are under $1,000, you can claim a flat $1,000 without keeping receipts. If your expenses are higher, claim them the usual way.
Tax-free threshold lifts thanks to the rate cuts and the new $250 offset.
Electric vehicle FBT changes. Salary-packaging an EV under $75,000? The 100% FBT discount stays until 1 April 2029, then becomes a permanent 25% discount.
What it means for family trust users
For clients who run a family discretionary trust, this is the one to watch.
From 1 July 2028, trustees will pay a minimum 30% tax on the taxable income of discretionary trusts up to their marginal tax rate.
There's a three-year rollover window from 1 July 2027 to restructure out of a trust without triggering CGT. Primary production income, certain minors' income, and existing testamentary trusts are excluded.
If you've got a family trust, this is a conversation we need to have over the next 12 to 18 months. Not panicked, but thoughtful.
Reforms that affect everyone
Concessional super contributions cap increased to 32,500 from 1 July 2026
Non-concessional super contributions cap increased to $130,000 from 1 July 2026 (Bring forward up to $390,000)
Fuel excise cut. Petrol and diesel excise was halved on 1 April 2026 (a 32 cent-per-litre saving) for three months. The heavy vehicle road user charge dropped to zero for the same period.
Cheaper medicines. $5.9 billion over five years for new and amended PBS listings.
Tax fraud protection. $86.3 million to modernise fraud detection in the tax and super systems.
Digital ID system. $654 million over four years to maintain and expand Australia's Digital ID infrastructure.
Key Federal Budget reform dates
What you should be doing right now
This Budget moved a lot of the financial furniture. While the reforms still need to pass through parliament, the smart move is to get on the front foot, especially if any of these sound like you:
You've got investments with significant unrealised gains (shares, an investment property, a business you're planning to sell)
Your super balance is approaching $3 million
You've got a family discretionary trust
You're thinking about buying an investment property
If you’d like to chat through what this Budget means for your specific situation, get in touch.
Frequently Asked Questions
-
The honest answer: it depends on the asset. For shares and managed funds with significant unrealised gains, selling pre-July 2027 to lock in the 50% discount is worth a serious look, especially if you were planning to sell within the next few years anyway.
For investment property, the picture is more nuanced. Locking in the discount needs to be weighed against the loss of long-term capital growth, the transaction costs (stamp duty if you re-buy, agent fees, the CGT itself), and whether the property is grandfathered for negative gearing.
For a business you're planning to sell at retirement, the timing matters a lot. The small business CGT concessions still apply, but combined with the new minimum rate, it's worth modelling now rather than waiting.
-
They apply to almost everything. The new CGT rules cover shares, managed funds, ETFs, investment properties, business assets, collectibles, cryptocurrency, and even pre-1985 assets. The main things NOT affected are super (including SMSFs), widely-held trusts like most managed investment trusts, and your family home (the main residence exemption still applies).
-
Not automatically. The 50% discount only applies to gains accrued before 1 July 2027. Gains after that date get the new indexation and 30% minimum rate. Whether selling makes sense depends on your other income, your retirement timeline, the property's growth potential, transaction costs, and whether you'd actually need the money. We run the numbers both ways before making a call.
-
No. If you owned the property at 7:30pm on 12 May 2026, you're fully grandfathered. You can keep negatively gearing it indefinitely. The change only affects established residential properties bought after Budget night.
-
No. If you receive any means-tested income support (including a part Age Pension) in the year you realise the gain, you're exempt from the 30% minimum tax. This is a meaningful protection for retirees.
-
From the 2026-27 income year, earnings on the portion of your balance above $3 million attract an extra 15% tax (taking it to 30% total). Balances above $10 million attract a further 10%. The thresholds are indexed, but it's something we need to model for your specific situation, especially around your retirement timing.
-
Probably less than you think, but a few things matter. Tax cuts coming through will help your last few years of earnings. The new pensioner CGT exemption could shape how you draw down assets in retirement. And depending on your investment property situation, the timing of any sale matters. Worth a sit-down to look at the whole picture.
-
Possibly. From 1 July 2028, a 30% minimum tax applies to taxable income retained in discretionary trusts. There's a three-year rollover window from 1 July 2027 to restructure without triggering CGT. Whether to restructure depends on what the trust holds and why it exists. We'd want to talk this through with you and your accountant.
-
Yes, the small business CGT concessions (15-year exemption, 50% active asset reduction, retirement exemption, rollover) still apply. But combined with the new 30% minimum tax rate and the indexation method, the maths is different from what it used to be. The timing of your sale matters more than ever. Worth modelling now.
-
If you're over 65, yes. The age-based rebate uplift is being removed from 1 April 2027. The savings are being redirected to fund aged care. Whether to keep, change or drop your cover is worth reviewing as you get closer to that date.
Sources and useful links
Budget 2026-27, Tax Reform, official Treasury explainers
Join Frankly Speaking
Sign up to receive our monthly newsletter - where the team at Firefly Financial tells it like it is about all things money, life and everything in between.
This information is current as at 1 May 2026.
Kalfocus Pty Ltd AR No. 463978 is a Corporate Authorised Representative of Firefly Financial Pty Ltd AFSL No. 700033, ABN 88 687 477 612. General Advice Warning: Any advice in this article is general advice only and does not take into account the objectives, financial situation or needs of any particular person. It does not represent legal, tax, or personal advice and should not be relied on as such. You should obtain financial advice relevant to your circumstances before making any decisions.