Ask your Aspen advisor:
“Do the proposed Budget tax changes affect my property, trust or investment plans, and should I be doing anything now?”
The 2026-27 Federal Budget has sparked more conversation than most, and it is easy to see why. Proposed changes to negative gearing, the CGT discount and discretionary trust taxation go well beyond a routine tidy-up. If they proceed, they could materially change the way many investors, business owners and families plan.
The first thing to remember is this: these are still proposals, not settled law. Some legislation has been introduced, but there is no guarantee everything will pass in its current form. That said, there is already enough on the table to make a review worthwhile.
Negative Gearing
From 1 July 2027, the Government wants to tighten negative gearing for established residential properties acquired after Budget night on 12 May 2026. Under the proposal, rental losses from those properties would only be able to offset rental income or capital gains from other residential properties. If there is still a loss left over, it would be carried forward for future residential property income.
If you already owned the property before Budget night, or had exchanged contracts beforehand, the current rules are proposed to keep applying. New builds are also expected to stay fully eligible, although the final definition of what counts as a “new build” is still not completely settled.
CGT Discount
From 1 July 2027, the current 50% CGT discount for individuals and trusts is proposed to be replaced with:
- cost base indexation
- plus a 30% minimum tax on capital gains
This would apply across a wide range of assets, including shares, business assets and property. Importantly, the gain that builds up before 1 July 2027 is still intended to get the existing treatment. That means valuations around that date may become very important.
Discretionary Trusts
From 1 July 2028, the Budget proposes a 30% minimum tax on discretionary trust income, paid initially by the trustee. Non-corporate beneficiaries would receive a non-refundable credit for the tax already paid. Corporate beneficiaries would not. That points pretty clearly at bucket company arrangements as a target.
Some exemptions are proposed, and there is talk of transitional rollover relief for restructures, but this is still an area where the detail will matter enormously.
What to do now
No one needs to panic. But if you have:
- residential investment property
- assets you may sell in the next few years
- or discretionary trust structures
Then this is a good time to model a few scenarios and understand the possible impact if these measures go ahead.
Final thought
Even though the law is not settled, the direction of travel is clear. If your wealth strategy leans on property, trusts or future CGT concessions, now is the right time to understand your position and your options.
