On Tuesday 12 May 2026, Treasurer Jim Chalmers handed down the 2026-27 Federal Budget. The Government has called this its most ambitious budget, and if the announced measures are implemented, the impact will be felt by a wide cross-section of Australian society — individual taxpayers, investors, business owners, and employers.
Here is a plain-English breakdown of the key changes and what they mean for you.
INDIVIDUALS AND FAMILIES
Income tax cuts — from 1 July 2026
The 16% tax rate on income between $18,201 and $45,000 drops to 15% from 1 July 2026, then drops again to 14% from 1 July 2027. This was legislated in last year’s budget and is now locked in.
$1,000 instant tax deduction for workers — from 1 July 2026
Australian residents will be able to claim a standard $1,000 deduction for work-related expenses from the 2026-27 income year, without needing to substantiate expenses up to that amount. If your actual work-related expenses exceed $1,000, you can still claim the higher amount — but receipts will be required.
$250 Working Australians Tax Offset — from 1 July 2027
A new permanent offset that effectively increases the tax-free threshold for income from work by nearly $1,800.
Medicare levy thresholds increased — from 1 July 2025
The threshold for singles increases to $28,011. The family threshold increases to $47,238.
INVESTORS
Negative gearing restricted to new builds — from 1 July 2027
For residential investment properties acquired after 7:30pm AEST on 12 May 2026, losses will only be deductible against rental income or capital gains from residential properties from 1 July 2027. You can no longer use those losses to reduce your salary or other income. Properties acquired before 12 May 2026 are not affected.
CGT discount replaced by indexation and a 30% minimum tax — from 1 July 2027
The current 50% CGT discount for assets held more than 12 months will be replaced with CPI-based cost base indexation and a minimum 30% tax rate on capital gains from 1 July 2027. This applies to all asset classes — property, shares, and others. Investors will need to determine the value of their assets as at 1 July 2027 to calculate gains going forward.
Minimum 30% tax on family trust distributions — from 1 July 2028
Trustees of discretionary trusts will be required to pay a minimum 30% tax on the taxable income of the trust from 1 July 2028. The Government has signalled rollover relief will be available for three years from 1 July 2027 for those wishing to restructure into a company or fixed trust. If your business or investments use a family trust, this needs to be on your radar now.
BUSINESS AND EMPLOYERS
$20,000 instant asset write-off made permanent — from 1 July 2026
Small businesses with aggregated turnover under $10 million can now permanently claim an immediate deduction for assets costing less than $20,000. The threshold applies per asset, not in aggregate. This brings long-overdue certainty after years of temporary thresholds.
Electric car FBT exemption scaled back — from 1 April 2027
The full FBT exemption for battery electric vehicles will continue until 31 March 2027. From 1 April 2027, the full exemption applies only to EVs costing $75,000 or less. EVs above that threshold receive a 25% FBT discount. Existing lease arrangements are not affected.
Loss carry-back for companies — from 1 July 2026
Companies with global turnover under $1 billion can carry back a tax loss and offset it against tax paid up to two years earlier.
Monthly PAYG instalments — opt-in from 1 July 2027
Small and medium businesses can opt in to monthly PAYG instalment reporting using ATO-approved calculations embedded in accounting software.
WHAT YOU SHOULD DO NOW
The most urgent items are the CGT changes and the family trust minimum tax. The window to act before these changes take effect is narrowing and the restructuring opportunities are real — but they require careful planning.
If you hold investment properties, shares, or assets in a discretionary trust, we strongly recommend booking a review with us before 30 June 2026.
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This content is general commentary only and does not constitute advice. Before making any decision or taking any action, please consult your professional advisor. Liability limited by a scheme approved under professional standards legislation.
