2026-27 Federal Budget includes some of the most significant proposed structural changes to investment taxation that Australian private groups have seen in years.
Negative gearing is being reshaped. The CGT discount is being replaced. Discretionary trusts will face a minimum tax rate. And rollover relief is being offered for a limited time, to help businesses restructure before the new settings take effect.These changes do not affect every business owner in the same way. But if you hold investment properties, shares, assets through a family trust, or wealth structures outside the trading business, now is the time to understand what is proposed and what the timing means.
For cash-flow measures from the same Budget — including the instant asset write-off and loss carry-back, see our blog on SME cash flow and tax planning. For employer obligations and EV FBT changes, see our blog on FBT and employer compliance.
Negative Gearing: New Builds Only From 1 July 2027
The Government proposes to limit the scope of negative gearing for residential property investments to new builds from 1 July 2027.Negative gearing is not being abolished. The proposal is targeted: tax support for rental losses will be directed towards new housing supply rather than established residential properties.
What investors should understand
Key Investment Considerations
- The proposed change applies to residential property investments.
- Established residential properties acquired from 1 July 2027 may have a different tax treatment compared with new builds.
- Commercial property and other investment asset types may not be affected in the same way.
- The Budget confirms the changes are prospective — timing and transitional rules will matter.
- Investors in new builds may retain access to the existing CGT discount rules.
The planning impact for business owners
Many SME owners build personal wealth alongside the business through property. The proposed negative gearing changes may affect:
Key Property Investment Review Areas
- Whether a proposed property purchase makes financial sense on a post-tax basis.
- How rental losses interact with other taxable income, including salary, business income and trust distributions.
- Borrowing and serviceability decisions.
- Whether the property should be held in a personal name, trust or company.
- Long-term exit and CGT planning.
A property that relies on rental losses to service the loan needs to be stress-tested under the proposed rules, not just under current law.
Capital Gains Tax: The 50% Discount Is Changing From 1 July 2027
The current 50% CGT discount available to individuals and trusts on assets held for more than 12 months, is proposed to be replaced with a new model from 1 July 2027.Under the proposal, the discount will be based on inflation rather than a flat 50% reduction. A 30% minimum tax on real capital gains is also proposed.
What the Budget Confirms
- The CGT reforms will apply to gains arising after 1 July 2027.
- The current 50% discount model will no longer apply to future gains under the new framework.
- A 30% minimum tax is proposed on real capital gains from 1 July 2027.
- Investors in new builds may be able to choose between the existing 50% CGT discount rules and the new arrangements.
Asset Types That May Be Affected
- Investment properties, including residential and commercial properties.
- Shares held personally.
- Managed fund investments.
- Cryptocurrency assets.
- Business assets.
- Assets held through family trusts.
- Assets intended to fund retirement or business succession.
The timing question
The most important question for many business owners will be: how much of the unrealised gain relates to the period before 1 July 2027, and how much relates to after?For long-held assets, this may require a market valuation around the key date. For assets being considered for sale, the question is whether completing the transaction before 1 July 2027 produces a materially better tax outcome, and whether that matters enough to affect the timing decision.
Before selling or restructuring investment assets:
Key Asset Review Steps
- Identify which entity holds the asset and when it was acquired.
- Estimate the unrealised gain and how it may be split between pre and post-commencement periods.
- Assess whether the current 50% discount or the proposed inflation-based model produces the better outcome.
- Review whether the 30% minimum tax may apply.
- Determine whether a valuation is needed before or after 1 July 2027.
- Consider the effect on trust distributions and beneficiary tax positions.
- Review whether the ownership structure should change before any sale.
The sale price is what attracts attention. The after-tax result is what the business owner actually keeps.
Discretionary Trusts: A 30% Minimum Tax From 1 July 2028
For private groups, family businesses and investment structures using discretionary trusts, this may be the most significant structural proposal in the Budget.The Government proposes to introduce a 30% minimum tax on the taxable income of discretionary trusts from 1 July 2028. Under the proposal:
Key Trust Tax Considerations
- The tax will be paid by the trustee.
- Beneficiaries will still need to declare trust income in their own tax returns.
- Beneficiaries other than corporate beneficiaries may receive non-refundable credits for tax paid by the trustee.
- Corporate beneficiaries, including bucket company arrangements, will need separate review.
The restructure window
The Budget also proposes expanded rollover relief for a three-year period from 1 July 2027 to assist eligible small businesses and other taxpayers to restructure out of discretionary trusts into companies or fixed trusts where appropriate.This window is useful, but it should not drive a rushed decision.
Why trusts are used and why that still matters
Discretionary trusts have been a standard structure in Australian private business and investment planning for good reasons: asset protection, flexibility in income distribution, succession planning, and separation of business risk from personal assets.A 30% minimum tax changes the tax rate calculation. It does not change the asset protection, commercial or succession reasons a trust may have been established.
Before making any structural change:
Key Trust Restructuring Review Areas
- Understand why the trust was originally established.
- Identify whether the trust carries on a business or holds passive investments.
- Map who the beneficiaries are and how income is currently distributed.
- Review whether bucket company arrangements are in use and how they may be affected.
- Check whether there are unpaid present entitlements or inter-entity loan balances.
- Identify whether the trust holds assets with unrealised capital gains that could be triggered by restructuring.
- Assess whether a company or fixed trust structure would genuinely serve the business and family better.
- Consider whether the proposed rollover relief may be available and worthwhile.
- Review whether restructuring could trigger stamp duty, finance, legal or other costs.
A trust should not be restructured because a Budget headline sounds uncomfortable. The wrong restructure, done in a rush, can create CGT events, stamp duty liability, loan reclassification issues and family governance problems that cost far more than the tax change was designed to address.The right approach: review first, model carefully, then decide, with enough time before the 1 July 2028 start date to make the change properly if it is the right one.
Putting It Together
The Budget’s proposed changes to negative gearing, CGT and discretionary trusts do not operate in isolation. A business owner selling an investment property held in a family trust needs to consider all three simultaneously: the CGT outcome, the trust tax position and the property’s negative gearing history.
That is the kind of connected review that takes time to do properly — and the window before 1 July 2027 is shorter than it appears.
For cash-flow and tax measures from the same Budget including the instant asset write-off, loss carry-back and PAYG instalments, see our blog on SME cash flow and tax planning.For employer obligations including EV FBT changes and ATO compliance monitoring, see our blog on FBT and employer compliance.
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