On Tuesday night, Treasurer Jim Chalmers unveiled the federal budget for the 2026-27 financial year – notching his fifth as Treasurer – with the Government channelling much of its efforts into addressing intergenerational inequality, which, of course, means taxes.
In the months leading up to the budget, there had been speculation about whether the Albanese government would be able to go ahead with its plans for delivering “ambitious” reforms this time around after Israel and the US launched their attack on Iran in February.
But given we are two years away from the next federal election (which is basically a lifetime in politics), it became a question of, if not now, when?
Taking one last opportunity to set Australian’s expectations, Chalmers said in a video posted to Prime Minister Anthony Albanese’s X account just hours before the budget drop that, “Tonight we’re changing Australia’s tax system to level the playing field for [young Australians]”, particularly flagging changes to improve housing equality.
Chalmer’s attempt at an ambitious budget, however, wasn’t enough for the financial advice to warrant even a single mention in the 617 pages across Budget Paper No. 1 and 2, keeping up the trend of the last few years.
This is despite the Financial Advice Association Australia (FAAA) having called for five key measures in its pre-budget submission that would “increase the supply of professional advisers, improve the quality of advice and cut red tape, while not compromising consumer protection”.
The recommendations included:
- Increase the supply of professional advisers across key career points,
- Provide ATO portal access to professional advisers,
- Simply and enhance the tax deductibility of advice,
- Lower the ASIC levy, and
- Make the CSLR sustainable.
- Capital Gains Tax
As for what they are doing, Chalmers announced the capital gains tax (CGT) discount will be scrapped in favour of an inflation-based discount and introduce a minimum 30 per cent tax on gains from 1 July 2027, breaking earlier promises from the Albanese government that it wouldn’t change CGT.
With suggestions that this could happen floating around prior to the budget, though whether it would be 33 per cent or 27 per cent had been up for speculation, Findex head of client, wealth, Jonathan Sholes said earlier in the week that “any of these would represent the most significant change to investment taxation in 27 years”.
“The 1999 reform changed how long-term investment gains are taxed in Australia, particularly across property and listed markets. Any adjustment of this scale would again shift the way those decisions are made over time. While the precise impact depends on individual circumstances, the direction is clear: after-tax outcomes on realised investment gains would be lower under any of the options currently being considered.
“Importantly, the relative position between investment structures also shifts. If superannuation tax settings remain unchanged, it may increase the comparative efficiency of investing within super over investing personally.”
Keeping on theme with the intergenerational inequality focus, the budget also delivered changes to negative gearing which will be limited to new builds from 1 July 2027 while existing arrangements will remain unchanged for properties held before Budget night.
Investors who buy established homes after Budget night will still be able to deduct losses against residential property income and carry forward unused losses to future years, but they will not be able to deduct those losses against other income such as wages.
The reforms will only apply to gains arising after that date, while investors in new builds will be able to choose between the existing 50 per cent CGT discount and the new arrangements.
The budget papers said the negative gearing and CGT changes are expected to support an additional 75,000 homeowners over the decade, as the government seeks to rebalance housing tax settings away from established investment properties and towards home ownership and new supply.
What about SMSFs and super?
Super investors, including SMSFs, will be exempt from changes to the capital gains tax discount announced in tonight’s budget.
The current CGT settings for super will remain unchanged. Currently, outside of super, investors currently receive a 50 per cent discount on CGT for assets held for longer than 12 months. From 1 July 2027, the CGT payable in this context will be the higher of either a rate of 30 per cent or the investor’s marginal tax rate minus an inflation-indexed discount.
Inside super, investors receive a less generous 33 per cent discount on capital gains on long-held assets, which will remain. Earnings in super are taxed at a flat 15 per cent rather than an individual’s marginal tax rate. The 33 per cent discount gives an effective tax rate of 10 per cent.
From 1 July 2027, the 50 per cent CGT discount will be replaced by cost base indexation for assets held for more than 12 months, with a 30 per cent minimum tax on net capital gains.
These changes will apply to all CGT assets, including pre-1985 CGT assets, held by individuals, trusts and partnerships. Transitional arrangements will limit the impact on existing investments by ensuring the changes only apply to gains arising on or after 1 July 2027.
The 50 per cent CGT discount will continue to apply to gains arising before 1 July 2027. Capital gains on pre-1985 assets arising before 1 July 2027 will remain exempt from CGT.
Furthermore, the Budget papers state that to maintain incentives for new housing supply, investors in new residential properties will be able to choose either the 50 per cent CGT discount, or cost base indexation and the minimum tax.
Income support payment recipients, including age pension recipients, will be exempt from the minimum tax.
The budget also includes $7.6 million over four years from 2026–27, and $1.4 million a year ongoing, for ASIC, the Office of the Australian Auditing and Assurance Standards Board and Treasury to strengthen governance requirements for managed investment schemes.
ASIC will partially meet the cost of the measure through cost recovery, while the government will also consult publicly on new data collection powers for managed investment schemes.
The measures come as the government separately consults on options to strengthen the superannuation performance test, with the aim of removing unintended barriers to investment and ensuring the framework remains fit for purpose.
The budget papers also noted the government has passed the Treasury Laws Amendment (Building a Stronger and Fairer Super System) Act 2026 and the Superannuation (Building a Stronger and Fairer Super System) Imposition Act 2026, which received Royal Assent on 13 March 2026.
The financial impacts of that policy were reflected in the 2025–26 MYEFO measure covering superannuation reforms, including the boost to the Low Income Superannuation Tax Offset (LISTO) and practical changes to Better Targeted Superannuation Concessions.
Final policy parameters are expected to increase receipts by $20 million over five years from 2025–26.
Trusts
Another one advisers will want to look at is the introduction of a 30 per cent minimum tax on discretionary trusts.
From 1 July 2028, trustees will pay a minimum tax of 30 per cent on the taxable income of discretionary trusts.
Beneficiaries, other than corporate beneficiaries, will receive non-refundable credits for the tax payable by the trustee. The minimum tax will not apply to other types of trusts such as fixed and widely held trusts (including fixed testamentary trusts), complying superannuation funds, special disability trusts, deceased estates and charitable trusts.
Some types of income such as primary production income, certain income relating to vulnerable minors, amounts to which non-resident withholding tax applies, and income from assets of discretionary testamentary trusts existing at announcement will also be excluded.
The Government will provide expanded rollover relief for three years from 1 July 2027 to support small businesses and others that wish to restructure out of discretionary trusts into another entity type, such as a company or a fixed trust.
This measure is estimated to increase receipts by $4.5 billion over the five years from 2025–26.
What else is there?
Turning to other issues, the Government has also looked to address the productivity challenge in Australia by making changes to speed up the process for skilled migrant workers as part of a series of measures designed to boost productivity and grow the economy by around $13 billion per year.
Despite the FAAA calling for changes that would allow financial advisers who are qualified elsewhere to come to Australia in order to provide a necessary boost to local adviser numbers, this also did not get a look-in on the budget.
There may a slight hope in budget when discussing reducing red tape, however.
Though it doesn’t specifically call out financial advice, the budget said Government will “reduce regulatory burden in the financial sector by $780 million per year by progressing 14 legislative reforms”.
“Reducing unnecessary red tape and supporting modernised business communications, will reduce costs for Australian businesses and allow them to operate more flexibly. In addition to these reforms, Council of Financial Regulators agencies are taking 13 actions to reduce duplicative, inconsistent or opaque data requests through improved coordination, planning and engagement with industry, and streamlining existing data collections.
“These changes will reduce costs and uncertainty for financial institutions. Financial regulators will also continue delivering more than 50 commitments in the Better Regulation Roadmap implementation plan.”
Commenting on this on Tuesday night, FAAA chief executive Sarah Abood said: “While we welcome the Government’s commitment to streamlining regulatory requirements including finance sector regulation, we encourage it to broaden its focus by reducing the red tape faced by financial advice businesses, which is a significant burden particularly for small business practices, and drives up the cost of advice for consumers.
“We urge the Government to act decisively and urgently to implement further changes to make it cheaper and easier to provide professional advice, which ultimately leaves Australians better off and more resilient.”
