May 2026 Newsletter
This is a Federal Budget Edition. Summary from the Budget Night on 12th May 2026.
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2026 Federal Budget – Tax Announcements
1. Negative gearing
· Start date: 12 May 2026 (AEST 7:30 pm) (already started)
· Negative gearing rules are changing for only one type of asset – ie residential properties, acquired after 12 May 2026 (7:30 pm AEST) (which are not new builds) - as follows:
Key dates Impact
12 May 2026 to 30 June 2027 Negative gearing allowed only until 30 June 2027
On or from 1 July 2027 Quarantining will apply from 1 July 2027. That is, it
will only be possible to offset rental losses against
rental income or capital gains from sale of
residential properties.
It may be possible to carry forward rental losses into future years.
· For all other types of assets, negative gearing will continue to apply, in exactly the same way as in the past. That is, negative gearing is not changing in any way for residential properties acquired under contracts exchanged up to 12 May 2026, all commercial properties, shares or other CGT assets.
· New changes will apply to individuals, companies and trusts (but not superannuation funds).
2. Capital gains tax
· 50% general discount, for assets held for at least 12 months, to end on 30 June 2027 (not this 30 June, but next year). Exemptions for pre-CGT assets will also end, for the most part.
· Changes apply to individuals, trusts and partnerships (but not companies or superannuation funds – capital gains of superannuation funds will still be taxed at 15%, 10% or even 0%).
· CGT discount to be replaced by cost base indexation, for all assets (including residential property, commercial property and/or any other CGT assets, such as shares in private companies and/or public companies).
Key dates Impact
Assets bought or sold No change
before 1 July 2027
Assets already owned, CGT discount will apply to capital gains up to 30
sold after 1 July 2027 June 2027.
CGT discount will not apply to gains on and from 1 July 2027.
Indexation only will apply to gains on or after 1 July 2027.
Minimum tax of 30% (even where taxpayer’s tax rate would otherwise be lower).
Taxpayers will no longer benefit from lower marginal tax rates on capital gains.
The only exceptions will be Age Pension and other welfare payment recipients.
Assets bought and sold Indexation only will apply.
after 1 July 2027 Minimum tax of 30%.
3. Discretionary trust distributions
· 30% minimum tax to be paid by trustee of a discretionary trust (on most types of income). Most beneficiaries will receive a credit for the 30% tax already paid by the trustee.
· If the beneficiary’s tax rate is below 30%, they cannot obtain a refund.
· Minimum tax rate applicable to all trustees and beneficiaries of discretionary trusts to be 30%.
· Company beneficiaries (eg bucket companies) will not receive any credits, resulting in double taxation. In fact, the tax rate applicable to bucket companies could be as high as 60%.
· Changes donot apply to other types of trusts(eg widely heldtrusts, fixedtrusts, discretionary testamentary trusts (existing as at 12 May 2026), charitable trusts and special disability trusts).
· New relief for roll-over to other structures to apply in certain instances, for about 3 years.