Australia's most ambitious tax reform in a generation rewrites the rules on property, superannuation, and family trusts. Here is what clients need to understand — and act on — now.
The Landscape
A Budget Built for a World Under Pressure
Treasurer Jim Chalmers delivered this budget against a backdrop of severe global energy volatility. The closure of the Strait of Hormuz has pushed oil toward $US100 a barrel in Treasury's central scenario. The Reserve Bank has lifted the cash rate to a cycle high and inflation has not fully retreated.
This budget does two things simultaneously: it delivers income tax relief for wage earners, and begins the structural project of taxing passive asset wealth more heavily than labour income. For investors, business owners, and families with complex structures, that demands attention — and action.
Personal Taxation
Lower Rates, New Offsets, Less Paperwork
From 1 July 2026, the marginal rate for income between $18,201 and $45,000 drops to 14%, then 13% from July 2027. A new $1,000 Working Australians Tax Offset (WATO) arrives in 2027–28, and an immediate $1,000 instant deduction — claimable without receipts — provides relief this year. Combined benefit: up to $3,500 per year from 2027–28.
| Taxable Income | 2025–26 | 2026–27 | 2027–28 |
|---|---|---|---|
| Up to $18,200 | 0% | 0% | 0% |
| $18,201 – $45,000 | 16% | 14% | 13% |
| $45,001 – $135,000 | 30% | 30% | 30% |
| $135,001 – $190,000 | 37% | 37% | 37% |
| Over $190,000 | 45% | 45% | 45% |
Excludes the 2% Medicare levy.
Property Reform
The End of Established Housing as a Tax Shield
CGT Discount Abolished from 1 July 2027. The 50% discount is replaced by cost-base indexation — investors are taxed only on real gains above inflation. A minimum 15% tax on all capital gains prevents timing sales to artificially low-income years.
Negative Gearing Restricted for established properties purchased after Budget night. Losses can no longer be offset against wage income — only against other property income, with unused losses carried forward. New builds are exempt and retain full negative gearing.
Timing note: Existing portfolios are grandfathered — no urgency to sell. But the cost of entering the established market has risen materially from 12 May 2026 onwards.
Superannuation
Division 296 and the Tiered Tax Era
From 1 July 2026, a new tiered earnings tax applies to large super balances. Division 296 applies only to realised earnings — not paper gains on unsold assets.
Payday Super begins 1 July 2026, requiring employers to remit contributions each pay cycle rather than quarterly. The Low Income Superannuation Tax Offset (LISTO) expands from 1 July 2027 to support lower-income earners.
Discretionary Trusts
The Clock Is Ticking on Income-Splitting Structures
From 1 July 2028, a minimum 30% tax applies to discretionary trusts — ending the high-utility period for income-splitting strategies that distribute passive income to low-income family members. Charitable trusts and super funds are excluded. A three-year transition period allows for structured restructuring.
Your Strategy
Six Actions to Take Before the Rules Change
The following reflects Aero Accounting Group's analysis of the key actions appropriate in light of these reforms. Speak with your adviser to discuss your specific position.
Favour new builds over established stock
New builds retain the 50% CGT discount and full negative gearing. On an after-tax basis they are now structurally more attractive than established housing purchased after Budget night.
No fire sale required — grandfathering is real
Existing portfolios retain pre-Budget CGT treatment. Treasury models a decade-long wash-out. Forced sales now crystallise unnecessary tax — plan a structured transition instead.
Division 296 demands active cash-flow planning
Balances above $3M face a recurring annual tax liability. SMSF trustees must hold sufficient liquid assets to meet it without triggering forced sales of illiquid holdings.
High-growth assets outside super gain appeal
Indexation-based CGT outside super from July 2027 taxes only real gains. High-growth, low-dividend assets may now produce competitive after-tax outcomes held outside the fund.
Make the permanent stimulus work harder
The $20,000 instant asset write-off and two-year loss carry back are now permanent. A loss in 2026–27 can generate a refund from prior-year profits — build this into your capex planning.
The transition window is open — use it
Three years from 2028 to transition. For clients distributing passive income via trusts, the tax advantage has been severely curtailed — model the alternatives now.
Ready to Review Your Position?
At Aero Accounting Group we are already modelling the impact of these changes across client portfolios. Speak with your adviser for a personalised strategy review.
Disclaimer: This article is prepared by Aero Accounting Group for general informational purposes based on publicly available 2026–27 Budget papers. It does not constitute financial, tax, legal, or investment advice. Please consult your Aero Accounting Group adviser before making any decisions. Tax rates and thresholds are subject to legislative passage.
