The 2026 Federal Budget is making news, but if you run a trade business, gym, construction company or service firm, here’s what actually affects you — and what you need to plan for.
TL;DR
- Negative gearing on new residential purchases limited to new builds from 1 July 2027 (existing properties grandfathered)
- The 50% CGT discount replaced with an inflation-linked model and 30% minimum tax from 1 July 2027
- Discretionary trust distributions face a 30% minimum tax from 1 July 2028 — restructuring window opens 1 July 2027
- The $20,000 instant asset write-off is now permanent from 1 July 2026
Rental Properties, CGT and Negative Gearing — What Does the Future Look Like for Property Investors?
The rules around investment property, capital gains and trust structures are all shifting. The decisions you make in the next 12-24 months will have long-term consequences.
Negative Gearing: What’s Changing and Who’s Protected
Existing Investment Properties Are Grandfathered
If you already own a residential investment property, you’re protected. Properties owned before the Federal Budget 2026 are grandfathered under the existing rules.
What Changes for New Property Purchases
From 1 July 2027, negative gearing on new residential purchases only applies to new builds. If you buy after Budget night, you can still carry forward losses or use them against the capital gain when you sell.
What changes is the ability to offset losses against wages and other income each year. This is a big shift if you’ve used negative gearing to cut your annual tax bill.
Investing in Property After 1 July 2027
Before you buy, consider how each option stacks up for tax:
- New residential builds — full negative gearing is retained, making these the most tax-effective entry point for new property investors from 2027
- Established residential property — losses will no longer offset wages or other income from 2027; they carry forward or apply at sale
- Commercial property remains unaffected by the negative gearing changes; worth modelling if you’re open to diversifying beyond residential
Every option has trade-offs. Run the numbers on after-tax returns before you commit, and if you’re unsure, speak with your advisor.
CGT Changes: What Australian Investors and Business Owners Need to Know
From 1 July 2027, the 50% CGT discount ends. Instead, you get an inflation-linked discount and a 30% minimum tax on real capital gains.
This covers all CGT assets: shares, crypto, managed funds, investment properties, and business assets like goodwill. Even pre-1985 assets are included for gains from 1 July 2027.
Exemptions from the New CGT Rules
- The family home
- CGT inside superannuation
- Gains accrued before 1 July 2027 keep the existing 50% discount
- Small business CGT concessions are preserved — critical if you’re planning a business exit
CGT Valuation
One of the most important tax-planning tasks to do is to get a recorded value for every CGT asset as at 30 June 2027 using an external valuation or ATO apportionment.
Discretionary Trust Distributions: How the New 30% Minimum Tax Works
From 1 July 2028, discretionary trust distributions face a 30% minimum tax on trust taxable income. The trustee pays the tax, and beneficiaries receive a credit for it — but they cannot get a refund if the credit exceeds the tax they owe.
As a result, distributing to adult children on lower incomes won’t give you the same tax benefit as before.
The Trust Restructuring Window
From 1 July 2027, a three-year restructuring window will give families and small businesses access to rollover relief.
You don’t need to close every trust. Many still work for asset protection, succession or business structure. But if your trust is mainly for income splitting, review it before 2028.
Federal Budget 2026 FAQs for Small Business Owners
Does Negative Gearing Still Exist After the 2026 Budget?
Yes. Grandfathered properties are fully protected. For new purchases from 1 July 2027, full negative gearing applies only to new builds. Losses on established properties can be carried forward or applied to the eventual capital gain — they just can’t offset wages or unrelated income in the same year.
Should I Close My Discretionary Trust?
Not necessarily. Trusts still provide asset protection, succession and structuring benefits. The real question is whether yours still works once the 30% minimum tax applies.
Review trusts before the restructuring window opens in 2027 to get ahead of the changes in 2028.
How Is the Instant Asset Write-Off Changing?
From 1 July, the $20,000 instant asset write-off becomes permanent for businesses with turnover under $10 million. That means eligible businesses can immediately deduct assets without waiting to see whether the measure is extended each year.
This gives business owners more certainty when planning equipment, tools, technology or fit-out purchases. Before using it, check whether the asset will improve revenue, margin or output, whether the timing works for cash flow and tax, and whether buying outright is better than financing or leasing.
The Federal Budget 2026 in Practice
A Trade Business Owner Scenario
Mike runs a trade business with 10 staff. He bought a rental property in 2022 and uses a family trust for investment income. The next 24 months will shape Mike’s tax position for the decade ahead.
Here’s Where He Stands:
- Mike’s 2022 rental is grandfathered, so negative gearing continues under the old rules. No action needed. But any losses on a newly established property bought from 2027 won’t offset his wages or business income in the same year.
- From 1 July 2028, trust distributions to Mike’s adult children face the new 30% minimum tax. Income-splitting benefits drop sharply.
- Mike should obtain a recorded valuation for his business goodwill before 30 June 2027 to separate pre- and post-reform gains.
Mike’s Next Steps:
- Review trust structure before the 1 July 2027 restructuring window opens
- Lock in CGT valuations before 30 June 2027 for goodwill, investment properties, shares and any other CGT assets
- Compare new builds to established properties before his next purchase
Work With a Small Business Advisor Who Knows Your Numbers
Growth iQ helps trade, construction and service business owners cut through the complexity. We show you what the changes mean for your structure, investments and goals.
Our Agile CFO service keeps you ahead of changes like these, so you don’t have to do all the research. Call Growth iQ to see how the 2026–27 Budget affects you and your business.