Federal Budget 2026–27: The Tax Shake-Up Property Investors, Trusts and Small Businesses Can’t Ignore

The Federal Budget 2026–27 has introduced a number of significant tax measures that may affect Australian workers, property investors, trust st

ructures and small businesses.

While many of these announcements still need to pass through Parliament before becoming law, they signal a major shift in the Government’s approach to tax reform, housing affordability, business investment and household cost-of-living relief.

Below is a summary of the key measures and what they may mean for you.

1. Changes for individual taxpayers

New Working Australians Tax Offset

The Government has announced a new Working Australians Tax Offset, providing eligible workers with an annual tax offset of up to $250 from the 2027–28 income year.

This offset is intended to provide additional tax relief for working Australians and will sit alongside previously announced tax cuts. The Government estimates that more than 13 million Australian workers will benefit, with most eligible workers expected to receive the full $250 offset.

Further tax cuts from 1 July 2026

From 1 July 2026, the tax rate applying to income between $18,201 and $45,000 is expected to reduce from 16% to 15%.

From 1 July 2027, that rate is expected to reduce further to 14%.

$1,000 instant work-related deduction

The Budget also confirms a proposed $1,000 instant deduction for work-related expenses, starting from the 2026–27 income year.

This is designed to simplify tax time for many employees by allowing eligible workers to claim up to $1,000 without keeping receipts. However, taxpayers with higher work-related expenses may still need to keep records if they wish to claim more than this amount.

Incentum comment:This may simplify tax returns for many salary and wage earners, but it does not mean record-keeping is no longer important. Where your actual deductions exceed $1,000, proper documentation will still be essential.

2. Major changes for property investors

Negative gearing to be limited to new builds

One of the most significant Budget announcements is the proposed change to negative gearing.

From 1 July 2027, negative gearing benefits are expected to be limited to new builds. Existing investment properties held before the relevant start date are expected to be grandfathered.

This means investors who acquire established residential property after the change may no longer be able to offset rental losses against salary, business income or other non-property income in the same way.

Incentum comment:This could materially change the after-tax cash flow of future property investments, particularly for highly leveraged investors purchasing established residential property.

Before entering into new property contracts, investors should carefully model:

• expected rental income;

• interest costs;

• land tax;

• depreciation;

• cash flow shortfall;

• ownership structure; and

• long-term capital gains tax outcomes.

Capital gains tax discount changes

The Budget also proposes replacing the current 50% CGT discount with an inflation-based discount, together with a minimum 30% tax on gains, from 1 July 2027.

The Government has stated that the reform will only apply to gains arising after 1 July 2027. Investors in new builds may be able to choose between the existing 50% CGT discount and the new rules.

Incentum comment:This is a major change for long-term investors. The after-tax outcome on the sale of investment assets may look very different depending on when the asset was acquired, whether it is a new build, how long it is held, and the investor’s marginal tax rate.

Property investors should not assume that historical CGT planning rules will continue to produce the same outcome going forward.

3. Discretionary trusts: proposed minimum 30% tax

The Government has announced a proposed minimum 30% tax on discretionary trusts from 1 July 2028, with some exceptions.

The Budget also proposes three years of rollover relief from 1 July 2027 to assist small businesses and others that may wish to restructure.

Incentum comment:This is a particularly important announcement for family groups, business owners and property investors using discretionary trusts.

Discretionary trusts are commonly used for asset protection, estate planning, succession planning and flexibility in distributing income. However, the proposed minimum tax may change the tax effectiveness of some structures.

This does not necessarily mean discretionary trusts are no longer appropriate. It does mean existing structures should be reviewed carefully.

Key areas to consider include:

• whether the trust still achieves its commercial and asset protection objectives;

• whether income distribution strategies remain tax effective;

• whether a company, unit trust, fixed trust or SMSF structure may be more appropriate in future;

• whether restructuring is available or desirable; and

• whether rollover relief may assist.

  
  

4. Small business measures

Permanent $20,000 instant asset write-off

The Budget proposes making the $20,000 instant asset write-off permanent from 1 July 2026.

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

Incentum comment:This provides welcome certainty for small businesses planning equipment, technology, fit-out or operational upgrades.

However, the asset must still be used or installed ready for use, and the deduction should align with genuine business needs. A tax deduction should not be the only reason to spend money.

Loss carry-back for companies

The Government has also announced that from 2026–27, eligible companies that make a tax loss may be able to carry that loss back against tax paid in the previous two income years.

Incentum comment: This may provide cash flow relief for companies experiencing a difficult trading year after previously paying tax.

Loss refundability for start-ups

From 2028–29, small start-ups in their first two years may be able to receive a refund for tax losses, up to the value of fringe benefits tax and PAYG withholding paid on employee wages.

Incentum comment:These measures may be useful for growing businesses, particularly those investing heavily in staff, systems, technology or expansion.

5. What should you do now?

Although many Budget announcements still need to become law, now is the time to start planning.

For property investors, future acquisitions should be modelled carefully, particularly where negative gearing and CGT assumptions have historically driven the investment case.

For family groups and trust clients, discretionary trust structures should be reviewed before the proposed changes commence.

For small businesses, the permanent instant asset write-off and loss carry-back rules may provide opportunities to improve cash flow and support investment.

For individual taxpayers, the new tax offset and instant deduction may simplify tax time, but good record-keeping remains important.

Final thoughts

The 2026–27 Federal Budget contains some of the most significant proposed tax changes in recent years.

The key message is simple: tax planning should not be left until year-end.

Changes to negative gearing, capital gains tax and discretionary trusts may have long-term consequences for investors, business owners and family groups. The right structure will depend on your income, assets, investment strategy, risk profile and long-term goals.

At Incentum Group, we work with property investors, business owners and family groups to help them make informed, strategic decisions.

If you would like to understand how the Federal Budget may affect your tax position or investment structure, please contact our team at info@incentum.au

Incentum Group

Chartered Accountants & Business Advisors

Where Strategy Meets Success