Since the federal budget announcements last month, it’s been the hot topic at dinner tables and barbecues across the country. Fair enough too. When the three big rocks of Aussie tax planning all get a touch-up in one night, people talk.
And emotions are running high. A lot of folks who’ve worked hard to build their wealth suddenly feel like they’re being penalised for it.
One client rang us not long after Budget night and used some very colourful words to describe how he felt about the government. We won’t be printing those. This is a family newsletter.
The proposed reforms have raised a lot of questions. Does this change our plan? Do we need to sell our investments? Should we still buy that investment property?
The honest answer to all of them: right now, you’re in limbo.
The 2026 Budget tax reforms are still proposals, not law. And in the few weeks since our last update, the Government has already walked back two of them. Small businesses got a bigger capital gains tax break, and the trust “death tax” everyone was panicking about got scrapped for testamentary trusts.
Yes, it’s frustrating. It is hard to plan when the rules keep shifting. But in times like these, when things are a bit up in the air, it’s important to focus on what you can control.
First, a quick recap
Last month we broke down the whole lot: negative gearing, capital gains tax, family trusts, and what it means for families, employees, business owners, retirees and investors. If you missed it, start here with our full Budget breakdown.
The short version of the three big ones:
- Negative gearing. From 1 July 2027, only new builds can be negatively geared. Anything you owned before 7:30pm on 12 May 2026 is grandfathered, so no change for you.
- Capital gains tax. The 50% discount gets replaced with cost base indexation and a 30% minimum tax rate from 1 July 2027.
- Discretionary trusts. A 30% minimum tax on income retained in family trusts from 1 July 2028.
Big shifts. We didn’t sugar-coat it then and we won’t now. But here’s the thing we kept banging on about: none of it is law yet. It still has to pass parliament, and that means consultation, amendments and political horse-trading.
And right on cue, the goalposts have already moved.
Two things have changed since Budget night
On 18 June, Anthony Albanese and Jim Chalmers fronted up and softened two of the scariest bits of the package, after a month of pushback from small business and investors. (You can read the Government’s own announcement here.)
This matters, because it’s living proof of exactly why you don’t rebuild your whole financial setup around a proposal.
1. Small businesses got a much bigger CGT break
The 50% active asset discount used to apply to small businesses with turnover of up to $2 million a year. That threshold is being lifted to $10 million.
In plain English, around 2.7 million small businesses will now get access to generous capital gains tax concessions when they sell active business assets. If you’ve built a business and you’re eyeing off a sale down the track, this is a meaningful improvement on what was announced on Budget night.
The Government also flagged a brand new concession for start-ups and innovative businesses, though the detail there is still being worked through.
2. The trust “death tax” got dumped
The Opposition spent a month calling the trust changes a death tax. The Government has now confirmed that income from testamentary trusts (the kind written into a will that only kick in after someone passes away) will be exempt from the 30% minimum trust tax.
If your estate planning leans on a testamentary trust to look after the kids or protect family wealth, that’s a big sigh of relief.
What’s changed since Budget night
A bigger capital gains tax break
The 50% active asset discount has been extended to businesses turning over up to $10m. Around 2.7 million small businesses are covered.
The “death tax” got dumped
Testamentary trusts (the kind set up in a will) are exempt from the 30% minimum trust tax.
Budget limbo land: the do’s and don’ts
While the tax reforms are up in the air, the trick is keeping emotion out of the driver’s seat.
Do
- Know your ‘enough’. When you’re clear on how much you actually need and you’ve got a plan to get there, a curveball like a tax change doesn’t knock you off course. It’s a detour, not a dead end.
- Pressure-test your investments. Strip out the tax break. If it still earns its keep on income and growth, you’ve lost a perk, not a good investment.
- Be prepared. The tax reforms changes don’t all land at the same time; some are sooner than others. Sit down with your adviser and accountant, run the scenarios, model your options and have a restructure ready to go if and when it’ll soften the blow. Be prepared, not reactive.
Keep things in perspective
Some people will be a bit worse off as a result of the proposed tax reforms, and we’re not pretending otherwise. But a bit worse off still beats no progress at all. We’d rather you make money and send a touch extra to the ATO than make nothing and send them nothing.
Organise, grow and spend your money with confidence
Don’t
- Don’t freeze. Sitting on the sidelines and not investing is not a strategy. The alternative to investing isn’t safety; it’s getting slowly taxed by inflation while you wait.
- Don’t restructure around a law that doesn’t exist yet. Until legislation passes, the current rules still apply. Tearing up your structure based on a proposal that might get softened (see above) is how you create expensive problems.
- Don’t make a decision purely to dodge tax. This is the big one. You should never make an investment move just for the tax outcome. That’s always a secondary reason, never the main event.
Budget limbo land
Know your ‘enough’
Clear on your number, a tax change is a detour, not a dead end.
Pressure-test your investments
Strip out the tax break. If it still earns its keep, it’s a good investment.
Be prepared
Model your options with your adviser and accountant, ready to move when it’s law.
Don’t freeze
Sitting on the sidelines isn’t safety. It’s inflation eating your cash while you wait.
Don’t restructure around a law that doesn’t exist yet
Today’s rules apply until it passes. Rushing a proposal creates expensive problems.
Don’t decide just to dodge tax
Tax is always a secondary reason, never the main event.
The bottom line
The reforms moved a lot of furniture, and they’re still being shuffled around as we speak. That’s unsettling.
It’s also exactly why the calm move is to plan around what you can control and ignore the rest.
If you’d like to chat through what all this means for your specific situation, book a free 15 minute intro chat here.
Stay Beautiful!
John Manserra Certified Financial Planner®, Director
Apex Advice – Geelong Financial Advisers and Geelong Mortgage Brokers for business owners and professionals who want to make work a choice before you’re 67. Book a 15 minute chat here.
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Frequently asked questions
No. As at the time of writing, they’re still proposals. They have to pass both houses of parliament, and the Government is aiming to get the core legislation through before the winter break. Until then, the current rules apply.
Almost everything, not just property. The new capital gains tax rules cover shares, managed funds and ETFs, investment properties, business assets, collectibles and even crypto. The big exceptions are super (including an SMSF), which has its own rules, and your family home, which stays CGT-free under the main residence exemption.
Not automatically. The 50% discount only applies to gains up to 1 July 2027, so for some assets it’s worth a look, especially if you were planning to sell soon anyway. But for property and businesses, the maths is more layered once you factor in transaction costs, growth potential and whether you actually need the cash. We run the numbers both ways before making any call.
Yes, as long as it stacks up on its own and it’s the right fit for your situation. Negative gearing was always a tax break for running a property at a loss, never the reason to buy. A good investment property earns its keep through rent and growth, with the tax a bonus on top. Property isn’t the right move for everyone though, so it comes down to your goals, your cash flow and where it fits in your wider plan. New builds keep negative gearing anyway, and anything you already own is grandfathered.
No. If you owned it before 7:30pm on 12 May 2026, you’re fully grandfathered and can keep negatively gearing it indefinitely. The change only hits established residential properties bought after Budget night.
Yes. The 50% active asset discount is being expanded from businesses turning over up to $2 million to up to $10 million, which will impact around 2.7 million small businesses. If a sale is on your horizon, it’s worth modelling now rather than guessing later.
Whether you need to make any changes to your family trusts depends on what your trust holds and why it exists. And you have time. The 30% minimum trust tax doesn’t start until 1 July 2028, and there’s a three-year rollover window to restructure without triggering CGT if you do need to make a change. Testamentary trusts have now been removed from the reforms entirely. It’s worth talking to your accountant and financial adviser.
Quite possibly. The Government has already softened two measures since the Budget, so further tweaks during consultation wouldn’t be a surprise. That’s the whole reason we’re telling people not to over-commit to a proposal.
Important:
This is not tax advice. The information contained in this update has been provided as general advice only. The contents have been prepared without taking account of your personal objectives, financial situation or needs.
You should seek advice before making any decision regarding any information, strategies or products mentioned to consider whether that is appropriate to your own objectives, financial situation and needs.
Current at 25 June 2026