Newsletter; 2026/2027 Budget Update (your five minute guide)
Please find below a summary of the some of the more relevant budget announcements that affect taxation.
2026/2027 individual tax rates
Taxable income range Marginal tax rate
$ 0 - $18,200 0%
$ 18,201 - $45,000 15%
$ 45,001 - $135,000 30%
$135,001 - $190,000 37%
$190,001+ 45%
These rates exclude the 2% Medicare Levy.
The effective top personal marginal tax rate is 47% including the Medicare Levy.
From 1 July 2026, the Government will introduce a standard tax deduction of up to $1,000 for work-related expenses (this replaces the current $300 no-receipt threshold).
From 1 July 2027, the Government will introduce a $250 Working Australians Tax Offset.
Small business asset deductions
From 6 October 2020 to 30 June 2023, small business entities were able to immediately write off each eligible business asset they buy (uncapped limit).
From 1 July 2023, the threshold was reduced to $20,000 and available to all business entities with turnover less than ten million dollars. This will be permanently legislated from 1 July 2026.
Small businesses can also deduct the value of their simplified depreciation pools at the end of the income year where the balance falls under the relevant threshold.
Company loss carry-back
From 1 July 2026, the Government will re-introduce the loss carry-back rules. Companies with turnover less than $1 billion will be able to carry back a tax loss and offset it against tax paid up to two years earlier (limited to the company franking account balance).
Capital Gains Tax (CGT) discount
From 1 July 2027, it is proposed that the 50% CGT discount will be replaced by cost base indexation for assets held for more than twelve months with a 30% minimum tax on net capital gains.
Investors in new residential properties will be able to choose either:
- 50% CGT discount; or
- cost base indexation and the 30% minimum tax.
The 50% CGT discount and 1985 pre-CGT exemption will continue to apply to gains that accrue before 1 July 2027.
Negative gearing on residential properties
From 1 July 2027, for established properties purchased from 12 May 2026, losses from established residential properties will only be deductible against rental income or the capital gains from residential properties. Excess losses will be carried forward and are able to be offset against residential property income in future years.
Properties acquired between 12 May 2026 and 30 June 2027 will be able to be negatively geared during this period but not from 1 July 2027.
Eligible new builds and properties in superannuation funds will be exempt from the changes.
Discretionary trust taxation
From 1 July 2028, trustees will pay a minimum tax of 30% on the taxable income of discretionary trusts. Beneficiaries (other than corporate beneficiaries) will receive non-refundable credits for the tax payable by the trustee. Corporate beneficiaries will not be able to claim credits for tax payable by the trustee.
The minimum tax will not apply to fixed trusts, superannuation funds or deceased estates.
The government will provide expanded rollover relief for three years from 1 July 2027 for those who wish to restructure out of discretionary trusts and into another type of entity such as a company or a fixed trust.
Employee superannuation
From 1 July 2025, the employee super guarantee rate increased to 12.0%.
From 1 July 2026, employers will be required to pay their employee’s superannuation guarantee on the same day that they pay salary and wages.
Tax rates for earnings on superannuation balances above $3 million (Div 296)
Currently, all superannuation earnings are generally subject to 15% tax.
From 1 July 2026, if an individual’s total superannuation balance exceeds:
- $3 million: then the proportion of earnings relating to the excess balance are subject to an additional 15% tax;
- $10 million: then the proportion of earnings relating to the excess balance are subject to an additional 10% tax.
