The latest Federal Budget signals some of the most significant changes to the taxation of personal wealth and property investment in a generation. While there are some welcome wins in the form of tax cuts and simplified deductions, there are also wholesale changes to Capital Gains Tax (CGT), taxation of Trust income and negative gearing that require a thorough consideration.
At Knight, our mission is to support you as you strive for financial success. We have summarised the headlines into what matters most for you and your family.
Direct relief for workers
Before we look at the long-term changes, there are several immediate and upcoming measures designed to put more back into your pocket:
- Phased tax cuts: Relief is on the horizon. The 16% tax rate will drop to 15% on 1 July 2026, and then further to 14% on 1 July 2027.
- $250 Working Australians Tax Offset (WATO): Starting 1 July 2027, this permanent annual offset will apply to income derived from work (including sole trader income), effectively increasing your tax-free threshold.
- $1,000 instant tax deduction: From 1 July 2026, the Government is introducing a standard $1,000 tax deduction for work-related expenses. This means you can claim the thousand dollars without needing to keep every single receipt (though you can still choose to claim actual expenses if they are higher).
What’s shifted in Property & Investing
The most talked-about changes involve how investments are taxed. If you are a property investor or have a diverse portfolio, these dates are critical:
- Negative Gearing update: If you already hold a residential investment property (acquired before 7:30 pm on 12 May 2026), your current negative gearing benefits are protected. For established properties bought after this date, negative gearing will be “quarantined” from 1 July 2027. This means rental losses can only be carried forward to offset future property income or capital gains. Note: New builds are exempt from these changes to encourage housing supply.
- CGT Reform: From 1 July 2027, the familiar 50% CGT discount is being replaced with “cost base indexation” and a 30% minimum tax rate.
- Trust income will have a minimum tax rate of 30% from 1 July 2028, with certain trust types excluded. The tax will be payable by the trust with a non-refundable tax credit passed to beneficiaries receiving trust income, except for company beneficiaries.
- 1985 Pre-CGT Change: Assets held before 1985 that were previously exempt will now be subject to the new rules for any gains accrued after 1 July 2027.
A win for Superannuation
There is a silver lining for those focused on retirement: Superannuation funds (including SMSFs) are excluded from the new CGT and negative gearing changes. This reinforces super as a highly effective vehicle for long-term retirement planning. Additionally, contribution caps are set to rise on 1 July 2026, allowing you to move more into your fund.
The Knight Perspective
We understand that these changes – particularly the transitional rules for CGT – can feel overwhelming. Our role is to provide the clarity and confidence you need to navigate them.
The good news is that for many of these measures, there is a significant lead time. This allows us to sit down with you, review your current portfolio, and ensure your current strategy is still the most effective path forward.
Summary of Key Dates
| Measure | What Changes | Commencing From |
|---|---|---|
| Negative gearing – existing residential property | Existing properties held at announcement date are grandfathered | 12 May 2026 |
| $1,000 instant work‑related deduction | Workers can claim up to $1,000 deduction without receipts | 1 July 2026 |
| Payday super | Employer super guarantee must be paid on payday, not at the end of each quarter | 1 July 2026 |
| Division 296 | Additional tax of 15% on earnings on super balances over $3m (higher for balances over $10m) | 1 July 2026 |
| Company Loss Carry Back | Offset losses against tax paid in prior two years | 1 July 2026 |
| Personal tax rate cut (16% → 15%) | Applies to income $18,201–$45,000 | 1 July 2026 |
| Capital gains tax reform | 50% discount replaced with cost‑base indexation plus minimum CGT | 1 July 2027 |
| Capital gains tax on pre-1985 Assets | Gains accrued to 30 June 2027 remain exempt. Gains accruing after that date are now taxable | 1 July 2027 |
| Minimum CGT of 30% | Applies to post‑1 July 2027 gains of individuals, trusts & partnerships | 1 July 2027 |
| Negative gearing – loss quarantining | Losses on established properties, acquired after 12 May 2026 quarantined to property income/CGT | 1 July 2027 |
| Second personal tax rate cut (15% → 14%) | Further reduction for income $18,201–$45,000 | 1 July 2027 |
| Working Australians Tax Offset (WATO) | $250 permanent annual tax offset for income from work | 1 July 2027 |
| Restructure Rollover Relief – 3 Year Period | Expanded tax relief measures available to business restructuring out of Trusts | 1 July 2027 |
| Discretionary trust minimum tax | Trustees pay 30% minimum tax; non‑refundable credits to beneficiaries (other than companies) | 1 July 2028 |
| Loss Refunds for Small Start Up Companies | For companies with turnover <$10m, losses within first 2 years can be refunded, capped at employee related taxes | 1 July 2028 |
Explore the technical details
For the full breakdown on Medicare threshold increases, Division 296 high-balance super tax, and the new CGT apportionment formulas, read the detailed report from our national partners at Bentleys:
Budget 2026: Families & Individuals Insights – Read the Full Report