The Federal Government handed down the 2026 Budget on 12 May, and it wasn’t a quiet one. Whether you’re an employee, a property investor, a business owner, or running a trust, something in this Budget is likely to affect you.
We’ve cut through the jargon so you know exactly what’s changing, when, and what (if anything) you need to do about it.
What has the Federal Budget Changed For Employees? A Little More in Your Pocket
The Working Australians Tax Offset (WATO)
From the 2027/28 income year, eligible Australian workers will receive a permanent $250 tax offset each year. It’s not life-changing money, but it’s $250 you didn’t have before, and it’s ongoing.
The $1,000 Instant Tax Deduction
This one kicks in sooner. From 1 July 2026, you can claim up to $1,000 in work-related expenses without keeping a single receipt. If you’ve ever lost a parking docket or forgotten to log a tool purchase, this is the ATO giving you a little breathing room.
Important: this is a deduction, not a rebate. It reduces your taxable income, not your tax bill directly. But for most people in a standard tax bracket, it’s still a worthwhile win.
What’s has the Federal Budget Changed For Investors: Read This Carefully
Two big changes here, and they work very differently depending on when you bought it.Â
Negative Gearing: New Rules, New Builds Only
From the 2027/28 income year, negative gearing on residential property will be limited to new builds. If you already own an investment property and settled before 7:30pm AEST on 12 May 2026, nothing changes for you. Your existing arrangements are locked in.
If you’re planning a new investment, the message is clear: new builds are the play going forward.
Capital Gains Tax: Goodbye 50% Discount, Hello Indexation
This is the bigger one. From 1 July 2027, the 50% CGT discount is being replaced with inflation-adjusted indexation, and a minimum 30% tax rate will apply to realised gains.
Here’s what that means in plain language: instead of simply halving your capital gain, the government will adjust your cost base for inflation, then tax the real gain at a minimum of 30%.
For gains you’ve already been building on existing investments, there’s a transition arrangement: gains accrued before the start date will still be eligible for the 50% discount. From the start date forward, the new rules apply.
New residential builds are the exception. For those, you’ll be able to choose between the old or new CGT rules, whichever works better for you.
This is one to model carefully before making any asset decisions. A conversation with your accountant before 1 July 2027 is not optional.
What has the Federal Budget Changed For Trusts: A Minimum 30% Tax Rate Is Coming
From the 2028/29 income year, discretionary trusts will be subject to a minimum 30% tax rate. The government’s stated aim is to bring trust tax outcomes closer to what most workers pay.
If you use a trust structure for income splitting or asset protection, this is significant. It doesn’t mean trusts stop being useful, but it does mean the maths changes. The time to review your structure is now, not when the rules are already live.
What has the Federal Budget Changed For Business Owners: Some Good News
Not everything in this Budget was tightened. A few genuine wins for business:
$20,000 Instant Asset Write-Off : Now Permanent
The instant asset write-off threshold of $20,000 has been made permanent. If your business purchases an asset worth up to $20,000, you can write off the full cost immediately rather than depreciating it over years. This gives you more certainty when planning equipment or tech purchases.
Loss Carry-Back for Companies : Now Ongoing
From the 2026/27 tax year, companies with a turnover of up to $1 billion can carry back losses for two years, subject to franking account limits.. If your company had a rough year, you can offset those losses against prior years’ profits and potentially get a tax refund. A meaningful safety net for businesses going through a tough patch.
EV FBT Exemption Changes 2027: What the $75,000 Threshold Means for You
From 1 July 2027 eligible EVs costing under $75,000 would continue to receive a full FBT exemption, while eligible EVs costing over $75,000 would move to permanent 25% FBT discount.Â
This represents a gradual removal of the full FBT exemption from 1 July 2029.Â
Loss Refundability for Start-Ups
From 1 July 2028, eligible start-ups will be able to get a refund on tax losses in their first two years. If you’re building something new and investing heavily before revenue arrives, this could meaningfully improve your cash position early on.
So, What Should You Do?
A lot of these changes are still proposals, meaning they need to pass through Parliament before becoming law. Most of these laws are also still being worked on, so they are still subject to change. However, the direction is clear, and the lead times are short.
Here’s a simple priority list:
- Own an investment property? Get clear on whether your existing arrangements are grandfathered, and understand how the CGT changes will affect any future sale.
- Using a trust structure? Review it before 2028/29. The minimum 30% rate changes the income splitting conversation significantly.
- Running a business? Lock in the $20,000 instant write-off and look at whether loss carry-back applies to your situation.
- An employee? Start tracking work-related expenses from 1 July 2026, even though you won’t need receipts up to $1,000. Good habits don’t hurt.
These aren’t set-and-forget changes. They’re the kind of thing that rewards people who act early and penalises those who don’t.
Talk to the Nexis team before the rules hitÂ
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Important: this article is general in nature and does not constitute financial advice. Please speak with a qualified adviser before making decisions based on these changes.
