The Government has now released the next tranche of exposure draft legislation supporting its 2026 Federal Budget negative gearing and CGT reforms.
The 12 May 2026 Federal Budget introduced one of the most significant shifts to the taxation of discretionary trusts in decades. At its core, the Government is moving away from treating trusts as “flow-through” structures and instead imposing a minimum level of tax at the trustee level. For many private groups, particularly those using family trusts and bucket companies, this will fundamentally change how structures are used going forward (if these measures are legislated). While the announcements are significant, they are high-level and not yet law. Many of the mechanics, including how the minimum tax is calculated, how credits flow, and how existing arrangements are treated, have not been fully articulated. Below is our practical breakdown of what’s been announced, what it may mean in practice, and the actions we recommend taking now.
Last night, the Commonwealth Government delivered the Federal Budget for 2026-2027. True to the speculation which ran rampant in the preceding weeks, this Budget arguably announced the greatest amount of proposed changes to the Australian tax system than any single Budget before it. One of the overarching themes across many of these proposed changes is the apparent objective of the Government to rebalance the taxation burden more evenly across all taxpayers, and implement measures which, according to the Government, will help address the ongoing housing crisis.
The Federal Government has announced changes to how electric vehicles (EVs) will be treated for Fringe Benefits Tax (FBT). The popular FBT exemption isn’t disappearing but is being reshaped. The EV exemption has made salary packaging an EV significantly more cost-effective than traditional vehicles. This has had the desired impact of the policy as EV availability and adoption has increased quite rapidly, with new car sales for electric and plug-in hybrid vehicles up more than 20% since the policy was first introduced in 2022.
Late last year, the ATO finalised PCG 2025/5, setting out how it will apply Part IVA (the general anti-avoidance provisions) to arrangements involving Personal Services Income (PSI) earned through companies, trusts or partnerships.
Tax is usually one of the highest expenses of your business or personal income, yet many business owners and investors wait until after the end of the financial year to think about how much they have paid. The most effective tax outcomes are achieved before 30 June, when there is flexibility to act.
From 1 July 2026, Australia’s revised Division 296 tax will take effect, bringing in a new framework for taxing superannuation balances above key thresholds. While this measure will initially affect a relatively small group of Australians, it represents a material change in how tax concessions apply to high‑balance superannuation and warrants early consideration for those approaching the thresholds.
With global uncertainty, rising interest rates, market swings, artificial intelligence evolution and concerns about housing affordability, this year has brought many challenges. Coupled with the significant tax reforms anticipated in the upcoming federal budget, we believe it is time to bring together our clients and colleagues for a meaningful discussion over lunch. Please join us on Friday 15 May where you will hear the latest insights into the issues that matter most to your business and family wealth.
While the deadline has passed, the work hasn’t stopped. Taking the time now to confirm how non‑cash benefits were treated during the year helps reduce compliance risk, avoids errors at lodgement, and ensures you’re prepared if the ATO reviews your position.
Talk of changes to Australia’s Capital Gains Tax (CGT) discount has intensified, with government leaks and public commentary suggesting reform may feature in the upcoming Budget. Treasury modelling and political signals point toward a reassessment of the longstanding 50% discount, particularly for investment property owners.