There’s been a lot of media attention following last night’s Federal Budget announcement — particularly around Capital Gains Tax, Negative Gearing and Discretionary Trusts.

And understandably, many people are wondering what this could mean for their investments, retirement plans and long-term financial position.

Before reacting to headlines, it’s important to remember that these announcements still need to go through the legislative process before becoming law. While many of the measures are likely to proceed in some form, there is still important detail to work through.

Capital Gains Tax (CGT)

The Government has proposed changes to how investment gains are taxed from 1 July 2027.

At the moment, individuals who hold an investment asset for more than 12 months generally receive a 50% Capital Gains Tax discount when they sell.

Under the proposed changes, gains accrued before 1 July 2027 are expected to continue being assessed under the current rules, while gains accrued after that date may instead fall under the proposed new indexed system.

What could this look like in practice?

For example, imagine someone purchased an investment property in 2015 for $800,000.

If the property was valued at $1.4 million on 1 July 2027, the growth up until that date may still be eligible for the current 50% CGT discount rules.

Then, if the property was later sold in future for $1.6 million, only the additional growth from $1.4 million to $1.6 million may be assessed under the proposed new rules.

In practice, this means the Government is proposing a transition approach rather than simply removing the existing CGT discount on the entire investment gain.

Negative Gearing

The biggest shift affects negative gearing.

From 1 July 2027, the Government is proposing to limit negative gearing benefits for residential investment properties purchased after 7:30pm on 12 May 2026, unless the property is a new build.

Importantly, existing investment properties and arrangements already in place before this date are expected to continue under the current rules.

Under the proposed changes, investors purchasing established residential properties after this date would no longer be able to offset rental losses against their other income, such as salary or wages.

Instead, those losses could generally only be carried forward and used against future property income or capital gains.

New builds are expected to remain exempt, meaning negative gearing concessions would continue to apply for investors purchasing newly constructed properties.

Superannuation Remains A Key Long-term Structure

One of the more notable outcomes from this year’s Budget was actually what wasn’t announced.

Outside of the already legislated Division 296 changes for very large super balances, there were no additional changes announced to superannuation.

This continues to reinforce super as one of the most tax-effective structures available for long-term retirement planning.

Electric Vehicle Tax Changes

Electric vehicles have also lost some of their tax appeal.

The fringe benefits tax exemption that made novated leases on EVs particularly attractive to employees is being phased out.

If you were considering an EV through a salary packaging arrangement, the numbers may look different going forward, and it’s worth reviewing the strategy again before committing.

Discretionary Trusts

Changes have also been proposed for discretionary trusts from 1 July 2028.

Under the proposed rules, trustees would pay a minimum 30% tax on taxable income distributed from discretionary trusts, with beneficiaries generally receiving non-refundable tax credits for the tax already paid.

At a high level, these changes would significantly reduce some of the flexibility discretionary trusts currently provide, particularly around income distribution and tax planning strategies.

For families and business owners who use discretionary trusts as part of their investment, business or estate planning structures, the long-term implications could be meaningful depending on how the trust is currently being used.

The Government has proposed a transition period and restructuring relief for some arrangements. However, in practice, restructuring may not be simple or practical for all families or business structures.

This is likely to become an important area for review over the coming years for anyone currently using a discretionary trust structure.

Personal Income Tax Changes

There were also a number of smaller personal tax measures announced.

These include:

• a reduction in the bottom personal income tax rate
• a proposed $1,000 standard tax deduction
• a new $250 Working Australians Tax Offset from 2027–28 for eligible work-related income

While individually modest, these changes are intended to provide some broader cost-of-living relief.

Budgets like this can understandably create uncertainty. As always, we’ll continue monitoring developments closely and will communicate any confirmed changes that may meaningfully impact your strategy.