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Nick Plataniotis, Managing Partner
The 2026–27 Federal Budget includes a broad package of proposed tax and economic measures aimed at housing, investment, business growth and tax system reform. For business owners, investors and high-net-worth individuals, several of the announced changes may have meaningful planning implications over the next two years.
While many of these measures are still proposals and will require legislation, the direction of travel is already becoming clearer. For clients of LHP Partners, the areas most worth watching are capital gains tax, negative gearing, discretionary trusts, small business concessions, tax losses and compliance administration.
Two of the headline proposals relate to residential property and capital gains tax.
The government has announced that negative gearing for residential property would be limited to new builds from 1 July 2027. Existing investment arrangements entered into before 7:30pm AEST on 12 May 2026 are proposed to be grandfathered, which means current holdings would not be affected under the announced framework.
The Budget also proposes a significant change to capital gains tax. From 1 July 2027, the current 50% CGT discount would be replaced by cost base indexation, together with a minimum 30% tax rate on realised gains. The announcement indicates that gains accrued before 1 July 2027 on existing investments would retain access to the current discount, while the new rules would apply prospectively.
For investors and asset owners, this is the kind of measure that may influence the timing of transactions, entity choice and long-term planning. It also reinforces the value of reviewing asset registers, acquisition history and likely future exit events well before the proposed start date.
Another major announcement is the proposal for trustees of discretionary trusts to be taxed at a minimum rate of 30% from 1 July 2028.
This would represent a material shift for many family groups and business structures that currently rely on discretionary trust flexibility as part of broader tax and asset protection planning. If enacted in its current form, the change may affect distribution strategies, group structuring and the overall suitability of existing trust arrangements.
For clients operating through trust structures, this is likely to be one of the most important Budget measures to monitor closely over the coming year.
Not all of the announced measures are restrictive. Several proposals are designed to support business investment, cash flow and innovation.
The instant asset write-off of $20,000 for eligible small businesses using simplified depreciation rules is proposed to be extended permanently. That gives more certainty for businesses making smaller capital purchases and looking to manage equipment upgrades without waiting for short-term extensions.
Companies with turnover of up to $1 billion are also proposed to gain access to a two-year tax loss carry-back from 1 July 2026. For some businesses, this could provide more flexibility where earnings are uneven across years or where current investment depresses short-term profitability.
The Budget also includes proposed support for start-ups, updates to the R&D tax incentive from 1 July 2028, and an expansion of venture capital tax incentives from 1 July 2027.
For businesses offering electric vehicles to employees, the current FBT concession is proposed to transition gradually to a permanent 25% discount.
There is also a proposed Working Australians Tax Offset of $250 from the 2027–28 income tax year, as well as changes to certain superannuation, pension and health-related settings. These may not be the primary Budget drivers for most business owners, but they still form part of the broader tax and remuneration picture.
Beyond tax rates and concessions, the Budget continues the trend toward tighter reporting, stronger system controls and more digital compliance.
The government has announced an expansion of monthly reporting and dynamic PAYG instalment calculations for small and medium businesses from 1 July 2027. There is also further funding for fraud prevention, Digital ID commitments, regulatory streamlining and data integrity measures.
For many businesses, the practical takeaway is simple: clean records, timely lodgments and reliable internal processes will continue to matter more, not less.
At this stage, these measures are proposals announced in the Budget. They are not all law yet, and the final legislation may differ from the initial announcement.
That said, this Budget gives business owners, investors and trustees a useful early signal about the policy environment ahead. If the announced measures proceed, some clients may need to revisit investment timelines, review trust structures, reconsider future asset sales or plan earlier for tax and cash-flow impacts.
For many clients, the next step is not immediate action. It is a structured review.
That may include:
Because the impact will depend on your circumstances, any response should be considered carefully and with tailored advice.
If you would like to understand how the 2026–27 Federal Budget may affect your position, speak with your LHP Advisor about a tailored review.
