Federal Budget 2026 Update
On Tuesday, 12 May 2026, Treasurer Jim Chalmers handed down the 2026–27 Federal Budget.
The 2026–27 Budget introduces some of the most significant changes to the Australian tax system this century. The key measures include reforms to Capital Gains Tax, negative gearing and the taxation of discretionary trusts, the introduction of a new tax offset for individual taxpayers and structural changes to business tax concessions including the instant asset write-off, loss carry-back and the R&D incentive regime.
The Budget is set against a challenging global backdrop, with a Middle East conflict and the closure of the Strait of Hormuz having disrupted global oil supply and placed upward pressure on prices. Treasury is forecasting inflation to peak at around 5 per cent in the middle of the year, with GDP growth expected to come in at 1.75 per cent in 2026–27. Unemployment is expected to remain around the mid 4 per cent range, and nominal wages growth is forecast to remain above 3 per cent.
Just want the key measures? We’ve broken down the budget into the big news stories below if you’re reading this on the run!
Budget 2026 Key Measures
- The 50 per cent Capital Gains Tax discount for individuals, trusts and partnerships will be replaced from 1 July 2027 with cost base indexation and a 30 per cent minimum tax rate, including for pre-CGT assets
- Negative gearing for residential property will be limited to new builds from 1 July 2027, with properties held at Budget night quarantined from the changes
- From 1 July 2028, discretionary trusts will be subject to a minimum 30 per cent tax rate paid by the trustee
- A new tax cut of up to $268 for every Australian taxpayer from 1 July 2026, rising to up to $536 per year from 1 July 2027
- A new $250 Working Australians Tax Offset from 2027–28, benefiting over 13 million workers
- A new $1,000 instant tax deduction for work-related expenses available from 2026–27
- The $20,000 instant asset write-off for small businesses made permanent from 1 July 2026
- Loss carry-back reintroduced from 2026–27, allowing eligible companies to offset losses against tax paid in the prior two income years
- Changes to the R&D Tax Incentive from 1 July 2028, including higher offsets for core R&D and an increased expenditure cap of $200 million
- The ban on foreign buyers purchasing established homes extended until mid-2029
If you would like to know how to 2026 – 2027 Federal Budget will impact you and your business, please do not hesitate to contact us on (03) 9069 7700 or info@mgidc.com.au
MGI Australasia
MGI Australasia is part of an international network of independent audit, tax and accounting firms with expertise in audit and assurance, corporate advisory, outsourced CFO and financial management services, IT support, superannuation, wealth and risk management, taxation advice and grants. Our advisors work with SMEs, family businesses, listed entities, professionals, individuals and government.
