The Treasurer, Jim Chalmers presented the Albanese Government’s third Budget on 12 May 2026. Let’s look through the noise in the aftermath to focus on what matters most for you, your business and investments.
Some changes will benefit a number of people. For many, a comprehensive strategy rethink may be necessary over the next two years. The detail of actual legislation will be important to underpin any restructuring – so we will wait for clarity surrounding the initiatives announced
Business Owners
The $20,000 Instant Asset Write-Off is Now Permanent
Most businesses in Australia generate annual revenue (income) under $10 million. The announcement entitles the business to instantly deduct assets costing up to $20,000.
For you this means: Where purchasing equipment, technology, or tools you can do so with confidence these will be immediately tax deductible
New $1,000 Instant Tax Deduction
From the 2027-28 income year, there’s an instant personal tax deduction of up to $1,000 available. This is little insight to how this will work, and for whom, but it is a meaningful uplift from current deduction amounts available.
R&D Tax Incentive Threshold Lifted
Where a business invests in research and development, incentives via aggregated thresholds have been increased. From 1 July 2028, the aggregated turnover threshold for the R&D tax incentive increases from $150 million to $200 million.
For businesses approaching that $150 million mark, there will be more scope to access these incentives as revenue scales.
Fuel Excise (Temporary) Cut
The government is cutting fuel excise for three months, costing the Budget $2.9 billion.
For businesses running substantial vehicle or transport operations, there’ll be short-term relief at the fuel pump. Whilst, a band-aid and not a solution, it is some relief.
Investors
Negative Gearing: But Not as You Know It
From the headlines, you will think negative gearing has been entirely abolished. The truth is that a delineation has been drawn between new housing supply and existing investment properties.
From 1 July 2027, negative gearing for residential property will generally be limited to newly built homes. An established property purchased after 7:30pm on Budget night (25 March 2025), will no longer be able to offset rental losses against the purchasers wages or other income.
The concept of ‘grandfathering’ will apply. That is, where you already hold an investment property as at Budget night, you’re not affected – the current negative gearing rules will continue to apply for as long as you own that property.
The policy intent is clear: shift investor demand toward new housing construction, while winding back the tax incentives for purchasing existing homes.
The 50% CGT Discount Is Being Replaced - Not Scrapped
From 1 July 2027, the long-standing 50% Capital Gains Tax (CGT) discount will be replaced with a return to cost-base indexation. This means your capital gain will first be adjusted for inflation. After that adjustment, a new 30% minimum tax rate will apply to the remaining “real” gain.
Here’s the need-to-know elements:
- It applies to all CGT assets, not just property. Shares and business assets are included.
- It only affects gains accruing from 1 July 2027 onwards.
- Earlier gains are protected under transitional rules.
There’s no retrospective hit, but the tax outcome on future gains will look very different to what investors have been used to over the past 25 years.
What this really means in practice is when taken together, these changes don’t eliminate property investment, but they do reshape the tax logic behind it.
High-growth, negatively geared strategies that rely on tax refunds will become less attractive for established properties. At the same time, new builds, business structures, and longer-term planning decisions become more important than ever.
For investors, business owners, and developers, this Budget isn’t about panic; it’s about reviewing your structures, timing, and strategy before the new rules take effect.
30% Minimum Tax on Discretionary Trusts
From 1 July 2028, discretionary trusts will face a minimum tax rate of 30% on distributions.
This is a significant change. For years, trusts have been a legitimate and effective way to distribute income to beneficiaries at lower tax rates. That flexibility is being curtailed.
If you’re using a discretionary trust as part of your investment or business structure, we need to review it. There may be better options depending on your circumstances.
The government expects to raise $4.5 billion over five years from this measure. That’s coming from somewhere – let’s work to make it not you.
Cost of Living (& Business) Measures
The Budget includes a $250 tax cut per worker from the 2027-28 income year.
While this doesn’t directly hit business, it does put more money in employees’ pockets. That may affect salary negotiations, retention, and overall workforce sentiment.
There’s also $1.8 billion in electricity bill relief and the temporary fuel excise cut. Where a business carries significant energy or fuel costs, you’ll see some short-term benefit.
Commonwealth Bank’s analysis says this Budget is “neutral-to-mildly expansionary” and “does little to help in the fight against inflation.” Interest rates may not come down as quickly as we’d all like.
The government is forecasting a $31.5 billion underlying cash deficit for 2026-27.
They’re also projecting $44.9 billion in improvements over five years, with a balanced budget expected by 2034-35.
Translation? The government is spending now and hoping for growth later. The housing tax changes alone are expected to raise $77.2 billion over the decade.
What is clear from the budget is that a clear plan of action is required for business owners and investors. So. What should you do now?
Action Plan
1 | Review Trust Structures | The 30% minimum tax is coming. We need to review whether this remains the right structure for you. There may be better options, but only if we act before the changes take effect. |
2. | Reassess a property investment strategy | Changes to negative gearing and the new CGT rules will affect net returns. You can assume past strategies will not work going forward. |
3. | Use the Instant Asset Write-Off Strategically | It’s permanent now. Plan equipment purchases to maximise deductions. Think about timing across financial years. |
4. | Model the new CGT indexation rules | Depending on your portfolio, this could be good or bad news. Let us evaluate the possible outcomes. |
5. | Claim Your Fuel Tax Credits | Be sure to access business entitlments diesel use. The temporary excise cut is nice, but your fuel tax credits are worth more in the long run. |
6. | Budget Conservatively | What is clear – this budget does nothing to bring costs down. Interest rates aren’t dropping in the near future and infact, with the proposed government handouts and spending, rates will increase. Build realistic cash flow budgets that account for ongoing pressure. |
7. | Be Smart. Keep Good Records | Good record keeping protects you and ensures you claim every deduction you’re entitled to. |
If you want to understand exactly how this Budget affects your business, your family, and your future, let’s discuss it. We’ll review your strategy, your numbers and explain your options in plain English. We will help you create a plan that works.
This article provides general information only and does not constitute financial, tax, or legal advice. The 2026-27 Budget measures discussed are subject to passing legislation. Please seek professional advice tailored to your specific circumstances before making any decisions.