Federal Budget 2026-27 Report
How to start planning for retirement
The Federal Government has announced a number of proposed changes in the 2026–27 Budget that could affect your finances particularly for those approaching retirement, retired or planning for aged care.
It’s important to note that these measures are proposals only and are not yet law. They may change before they take effect.
Below is a summary of the key changes, along with some guidance on how they could relate to your situation. If you have questions about what these measures mean for you and your retirement plans, your financial adviser can help you understand how they could affect you.
Changes to Capital Gains Tax (from 1 July 2027)
Capital Gains Tax (CGT) applies when you sell investments such as shares or property that have increased in value.
What’s changing
From 1 July 2027, the Government proposes to:
- Replace the current 50% CGT discount (where assets have been held for at least 12 months) with a system that adjusts for inflation (called indexation).
- Introduce a minimum tax rate of 30% on capital gains.
What this could mean for you
- If you sell an investment after 1 July 2027, the amount of tax you pay may be higher or lower than under today’s rules, depending on your circumstances.
- The changes would only apply to gains made from July 2027 onwards - gains already earned would continue to be taxed under the current rules.
- Your main home would remain exempt from CGT, and other limited exemptions may still apply.
If you receive a means-tested payment (such as the Age Pension) in the year you sell an asset you won’t be subject to the 30% minimum tax. This is particularly important for retirees managing investments alongside the Age Pension.
Negative gearing (investment property) changes
Negative gearing currently allows losses from an investment property to reduce other taxable income.
What’s changing
- Full negative gearing would apply only to newly built properties.
- For existing properties purchased after 12 May 2026, losses could only be used to offset income from other investment properties (not salary or pension income).
What’s staying the same
- If you already own an investment property as at 12 May 2026, these changes would not apply to you.
- Existing arrangements would be grandfathered, and negative gearing will still be allowed for assets other than existing residential properties such as shares and commercial property.
Investments that increase housing supply (new builds) will continue to receive:
- Full negative gearing benefits.
- More favourable CGT treatment options.
Changes to Trusts (from 1 July 2028)
For those using family or discretionary trusts:
- A minimum 30% tax rate will apply to trust income.
- Beneficiaries receive a credit for tax already paid.
Certain trusts will be excluded from this measure, including fixed and widely held trusts, including testamentary trusts, super funds, special disability trusts and deceased estates. Certain types of income, including primary production income, will also be excluded.
What this could mean
- Reduces the tax benefit of spreading income to lower-income family members.
- May impact estate planning or investment structures.
Personal tax changes
Working Australians Tax Offset
- A new tax offset of up to $250 per year from 1 July 2027.
- Available to people earning employment or business income.
Instant tax deduction
- From 1 July 2026, eligible workers could claim up to $1,000 in work‑related expenses without keeping receipts.
Previously legislated tax cuts
- From 1 July 2026, the 16% tax rate on income between $18,201 and $45,000 would reduce to 15%.
- From 1 July 2027, this rate would reduce further to 14%.
Thresholds | Rates in 2025-26* | Rates in 2026-27* | Rates in 2027-28* |
|---|---|---|---|
$0-$18,200 | Tax free | Tax-free | Tax-free |
$18,201 - $45,000 | 16% | 15% | 14% |
$45,001 - $135,000 | 30% | 30% | 30% |
$135,001 - $190,000 | 37% | 37% | 37% |
>$190,000 | 45% | 45% | 45% |
| * Individual resident taxpayer and excludes 2% Medicare Levy | |||
Aged Care improvements
The Government has announced increased funding for both home care and residential aged care.
Support to stay at home longer
- Additional funding to reduce waiting times.
- Personal care services will be fully funded (no out-of-pocket cost for that component).
- Improvements to home care assessments and support.
Improvements in residential aged care
- Funding for 5,000 additional aged care beds.
- Increased support for people with dementia.
- More oversight to improve quality and safety.
What this could mean
- Better access to care services.
- Lower costs for some types of care.
- More availability of aged care places over time.
Private Health Insurance Rebate change
From 1 April 2027:
- The higher rebate for people aged 65+ will be removed.
- All ages would receive the same rebate.
This may increase private health insurance premiums for some retirees by around $80 per year for every $1,000 of premium.
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