2026 May Budget Changes

The 2026-27 budget was released last week. Here is what’s changing.

​Tax Cuts

• Working Australians may receive a $250 Working Australians Tax Offset (WATO) from 2027-28
• From 2026-27, a new instant tax deduction of up to $1,000 will be available to some workers.
• From 1 July 2026, the 16 per cent tax rate on taxable income between $18,201 and $45,000 will drop to 15 per cent.
• From 1 July 2026, it will drop to 14 per cent.

Capital Gains Tax

• The 50 per cent CGT discount will be scrapped and replaced by an inflation-based discount.
• A minimum of 30 per cent tax on gains from 1 July 2027.
• These reforms will only apply to gains arising after 1 July 2027.
• Investors who purchase new builds will have the choice to remain on the 50 per cent CGT discount or move to the new inflation-based system.

Negative Gearing

• Negative gearing will be limited to new builds from 1 July 2027.
• Existing arrangements will remain unchanged.
• Investors who purchase established buildings after 12 May 2026 will still be able to deduct losses against residential property income. They may also carry forward unused losses to future years, but can not deduct them against other income, such as wages.

Discretionary Trusts (such as Family Trusts)

• A minimum tax of 30 per cent on discretionary trusts from 1 July 2028 (with some exceptions).
• Rollover relief will be made available for three years from 1 July 2027 to facilitate the transition for small businesses and others who want to restructure.

Loss Carry Back

• From 2026-27, some companies may be able to use losses from the current income year to get a refund against tax paid in the prior two years.

Loss Refundability

• From 2028-29, small start-ups in their first two years of operation may be able to refund tax losses up to the value of fringe benefits tax (FBT) and withholding tax paid on employee wages.

Extended Instant Asset Write-Off

• Small businesses with a turnover of up to $10 million may be able to immediately deduct eligible assets costing less than $20,000.

Electric Cars

• Transition to support electric cars to a permanent 25 per cent fringe benefits tax (FBT) discount, for eligible electric cars over $75,000 from 1 April 2027 and for all eligible electric cars from 1 April 2029.
• Electric cars costing up to $75,000 will continue to receive a full FBT exemption provided the fringe benefit arrangement commences before 1 April 2029.

If you have any questions about how the budget will impact your financial situation, feel free to reach out to us [email protected] or call on 07 4766 9688.

Note: Do not rely on this for tax advice. Engage an accountant if you are unsure what will apply to you.