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What the 2026–27 Federal Budget Means for Individual Taxpayers and Investors
On Tuesday 12 May 2026, Treasurer Jim Chalmers handed down the Albotross Government Budget that, if legislated, will be the most significant shake-up of the tax treatment of investments in our lifetime. Three measures sit at the heart of it: a wind-back of negative gearing on residential property, the replacement of the 50% capital gains tax (CGT) discount with indexation PLUS a 30% minimum tax on CGT, and a brand-new 30% “minimum tax” on the taxable income of discretionary (family) trusts.
Is your holiday home / rental property going to cost you more now!
ATO has issued a new draft tax ruling set to start 1 July 2026. If you have a holiday home / rental property that your family and or friends use regularly during Easter, Christmas or the school holidays (peak rental periods) or you only rent it out intermittently you could face some changes to your rental property deductions.
Why Keep the 50% Capital Gains Tax Discount?
There’s been a lot of talk lately about reducing Australia’s 50% capital gains tax (CGT) discount, with some arguing it mostly helps the wealthy. However, it’s important to consider the other side: hundreds of thousands of everyday Australians benefit from this discount – not just billionaires. And historically, Australia didn’t tax capital gains at all until 1985. So before jumping to cut the CGT discount, let’s look at why it exists and who it helps.
Understanding the Main Residence Exemption
The capital gain tax exemption (CGT) on your principal place of residence (PPR) is one of the most valuable CGT concessions available to Australian homeowners. It can allow you to completely disregard a capital gain made on the sale of your family home. But what happens if you move out your PPR and rent it out or leave it vacant?