I hope everyone is well. I have been up all night looking at the Federal Budget in detail and adding the necessary changes to the latest edition of my book 101 Ways to Save Money on Your Tax – Legally! 2026- 2027 Edition. This year’s Budget suggested fairly extensive tax reform, so if there ever was an edition of 101 Ways to purchase, it’s this one… available for pre-order now via: Amazon and Booktopia.

I must admit that it is one of the busiest Budgets in a long-time with respect to tax reform.  No doubt that you would have seen the news about some of the proposed reforms.

My quick take on a few key items:

Now what I will say is that the announcements are not yet law & from experience they make take some time to get legislated.  I expect that there will be some refinements.  The good news is that a lot won’t come into play for a few years so we can do some tax planning between now & then if you are impacted.

  • Family/Discretionary trusts – there are about 840,000 of these across the country, including a small number of Mr Taxman clients. This proposal will only impact those who distribute funds to lower income earners (eg adult kids working at uni, stay at home spouses etc).  I am predicting that by the time this law gets passed the 30% tax rate will get reduced to 25% in line with the small company tax rate.  The taxation of trusts has been a standing topic of conversation for a good decade & New Zealand were taxing them in 1996 when I was over there, so I guess we cannot complain too much that a proposal has finally been made.  The changes are not planned to commence until 1 July 2028 – I predict that will be rolled down the road by another year or two.  The good news is that the Government has suggested that CGT Rollover Relief is available if family groups want to restructure to either a company or fixed trust.  If you have a Family/Discretionary Trust, we will need to have a discussion about your structure in late 2027/early 2028.  Til then business as usual.
  • Pre-CGT assets – there was absolutely no discussion about this one last night.  Been kept very quiet for obvious reasons. If you have an investment that you purchased prior to 19 September 1985 then – at this stage – it is going to get caught up in the proposed CGT changes coming into play from 1 July 2027, but only on “apportioned” gains after that date.  If you have a pre-CGT asset, please reach out to me so that we can do the appropriate tax planning between now & then.
  • Capital gains – The Federal Treasurer announced some pretty complex changes on how capital gains are taxed on investments (ie property, crypto & shares) sold after 1 July 2027.  The 50 per cent CGT discount will only be applied on net gains prior to 1 July 2027 but indexation and a minimum 30 per cent tax will be used on gains accrued after that date. Pre-CGT assets will be included as well. The ATO will provide a specified apportionment formula to estimate a property’s value as at 1 July 2027 (ie it won’t be a dodgy valuation).  Investors who buy new builds will get a choice between the two CGT methods.  I am expecting a fair bit of adjustment before this proposal becomes law but the 1 July 2027 timeline is not too far away, particularly if you hold property that traditionally takes a while to sell. **The 30% minimum tax will hurt those thinking of selling in retirement or others on lower income levels.** If you are sitting on some large unrealised capital gains then reach out to me to discuss the right time to sell.  For small business owners, there are no changes to the four generous small business CGT concessions.
  • Personal tax returns – no changes to the upcoming 2025/26 return.  In the 2026/27 return you can claim a minimum $1,000 for work-related expenses but for a lot of you that won’t be applicable as you keep your logs for car usage & WFH plus all your receipts for your other work costs.  In the 2027/28 return there will be an election sweetener of $250 for all working Australians, including sole traders.
  • Negative gearing – the Federal Opposition will be ramming this down Labor’s throats between now & the next election about a broken promise, but the reality is that this proposed change is going to have very, very little effect.  If you already have an investment property then continue on as normal.  If you buy a brand new build then continue on as normal.  If you borrow to buy shares then continue on as normal.  However, if you purchase a pre-existing property from today onwards, it will have an impact from 1 July 2027 – any negative gearing losses will be quarantined & offset against future positive gearing gains.  For the small percentage who will be in this category then a 2026/27 tax planning tip will be to prepay 12 months of interest in June 2027 & get one last sugar hit.
  • FBT on Electric Vehicles – these are currently FBT exempt but the Government plan on gradually phasing in FBT at 15% of the cost of the car (25% discount from the 20% rate for other vehicles)
  • Superannuation – there were no major super measures announced last night but from 1 July there are the Same Pay Day Super obligations for employers coming into effect together with the new Div 296 Tax for those with more than $3m in super. SMSFs are excluded from the CGT changes.
  • Instant Asset Write-Off – after plenty of chopping and changes over the years, it looks like some certainty is going to be provided with a permanent $20,000 threshold for instant deduction for businesses.  Note that you only get a % back as a tax saving eg a small company who’s tax rate is 25% will only save $5k in tax for a $20k cash outlay – or in other words their bank account will reduce by $15k.  In this current economy remember my A-B-C motto … Absolutely Bloody Cashflow!”

No immediate rush to come see me – I have some pressing 15 May deadline tax returns to finish off first – but reach out if you need some guidance or clarity.