The latest Federal Budget announcement has delivered a mixture of tax cuts, business incentives, investment changes, and proposed reforms that could affect many Australians over the next few years.
At Hills Accounting Hobart, we know budget announcements can sometimes feel overwhelming — especially when the changes involve multiple future dates and different rules depending on your situation. The good news is that understanding the broad direction early gives individuals and business owners time to prepare.
Here’s a simplified overview of some of the major proposed measures announced in the 2026 Federal Budget.
Salary and Wage Earners
Working Australians are set to receive some additional tax relief over the coming years.
The Budget includes:
- Small income tax cuts for taxable incomes over $45,000 from 1 July 2026;
- Additional tax reductions planned from the July 2027 financial year;
- Proposed changes to work-related deduction rules from the 2027 financial year.
While the immediate tax savings may not be huge for most people, even modest reductions can help ease pressure from rising living costs over time.
Small Business Measures
There were several announcements aimed at supporting Australian small businesses.
One of the most important is the proposal to make the $20,000 instant asset write-off permanent for businesses with turnover up to $10 million. This may continue to provide valuable opportunities for eligible businesses to immediately deduct qualifying equipment and asset purchases.
The Budget also proposes:
- A two-year company loss carry-back measure for companies with turnover up to $1 billion;
- Changes to Fringe Benefits Tax (FBT) treatment for electric vehicles from 1 April 2027.
For many small business owners, these changes may influence future purchasing and investment decisions.
Discretionary Trust Changes
One of the more significant long-term proposals involves discretionary trusts.
From 1 July 2028, discretionary trusts may face a minimum tax rate of 30%. Beneficiaries would still declare their share of trust income in their personal tax returns but would receive a non-refundable credit for the tax already paid.
Importantly, small businesses are expected to receive a three-year transition period if they choose to restructure into another entity type.
This area could become quite complex, particularly for family businesses and investment structures, so obtaining professional advice early may become increasingly important.
Property Investors Face Major Changes
Property investment rules are also set for significant changes.
The Budget proposes limiting negative gearing on properties purchased from July 2027 to new builds only. Established properties purchased after 7:30pm on 12 May 2026 may only qualify for negative gearing deductions until 30 June 2027.
Other proposed changes include:
- Replacing the 50% capital gains discount for many established properties with CPI indexation from July 2027;
- A minimum 30% CGT rate on taxable gains from July 2027;
- Continued CGT exemption for principal places of residence;
- Foreign investors being banned from purchasing established homes until 30 June 2029.
These proposed reforms could substantially change the investment property landscape over the next few years.
Other Investors
The proposed new CGT framework is also expected to apply to shares, cryptocurrencies, artwork, and other investment assets from July 2027.
Investors with diversified portfolios may wish to review long-term strategies well before the new rules take effect.
Changes for Older Australians
The Budget also included changes to Private Health Insurance subsidies for older Australians, with the removal of the age-based uplift reducing support for some over-65s.
For retirees and older Australians already managing rising living costs, this may place additional pressure on household budgets.
What Happens Next?
It’s important to remember that Budget announcements are proposals until legislation is passed. Some measures may change before becoming law, while others may face delays or amendments.
However, the direction of the Budget does provide useful insight into where taxation and investment policy may be heading.
At Hills Accounting Hobart, we’ll continue monitoring these developments and helping clients understand how future changes could affect their personal finances, investments, and business structures.
For official Budget information and updates, you can also visit Australian Federal Budget Information.
Remember, this article is general in nature and doesn’t take into account your specific objectives, financial situation, or needs.
For advice tailored to your circumstances, have a chat with us at Hills Accounting Hobart.
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Call 📞 03 6273 7800, or email admin@hillsaccounting.com.au.
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