2026-27 Federal Budget What It Means for You and Your Business
- May 20
- 4 min read
The Federal Treasurer handed down the 2026-27 Federal Budget on 12 May 2026. There's a lot to unpack — so we've done the work for you. Here are the key announcements that matter most to our clients.
Income Tax Cuts — Already Legislated
The Government has confirmed previously legislated personal income tax cuts:
From 1 July 2026 — the 16% tax rate on income between $18,201 and $45,000 reduces to 15%
From 1 July 2027 — the same rate reduces further to 14%
This is particularly good news for sole traders and small business owners who pay tax at individual rates. The Government estimates 1.5 million sole traders will benefit.
$20,000 Instant Asset Write-Off
The Government has announced it will permanently extend the $20,000 instant asset write-off from 1 July 2026 for businesses with turnover under $10 million. Previously renewed annually, the permanent extension provides certainty for investment planning.
Important — the current 2025-26 write-off covering assets first used or installed between 1 July 2025 and 30 June 2026 is already law. The permanent extension from 1 July 2026 has been announced but still requires legislation before it becomes law.
Loss Carry Back — Announced
From 2026-27, eligible companies that make a loss can use that loss to get a refund against tax paid in the prior two income years. Up to 85,000 companies, mostly small businesses, are expected to benefit.
Note — this measure has been announced but still requires legislation.
$1,000 Instant Tax Deduction — Proposed
From the 2026-27 financial year, eligible workers will be able to claim up to $1,000 in work-related expenses without keeping receipts. Around 6.2 million workers are expected to benefit with an average tax saving of $205.
Note — this measure still requires legislation.
Working Australians Tax Offset (WATO) — Proposed
A new permanent tax offset of up to $250 per year is proposed from 2027-28 for all Australian workers including sole traders. It will be automatically applied to tax returns.
Note — this measure still requires legislation.
Capital Gains Tax — Major Changes Proposed
The Government has proposed the most significant CGT reform in decades. From 1 July 2027:
The current 50% CGT discount will be replaced with an inflation-based discount
A minimum 30% tax on capital gains will apply
CGT reforms will only apply to gains arising after 1 July 2027
Investors in new builds will be able to choose the 50% CGT discount or the new arrangements
Important — properties owned before 12 May 2026 are protected. However if you hold investment assets or are planning to sell, speak to us now about how these proposed changes may affect your position.
Negative Gearing — Proposed Changes
From 1 July 2027, negative gearing will be limited to new builds only for residential property:
Existing properties owned before Budget night (12 May 2026) are fully protected
Investors who buy new builds will still be able to deduct losses from other income
Investors who buy established housing after Budget night can still deduct losses against residential property income but cannot deduct against other income like wages
If you are considering purchasing an investment property, the timing of that decision now matters significantly.
Discretionary Trusts — Proposed Changes
The Government proposes a minimum tax of 30% on discretionary trusts from 1 July 2028. Rollover relief will be provided for three years from 1 July 2027 to assist small businesses that wish to restructure.
If you operate through a discretionary trust, speak to us about how this may affect your structure.
Electric Vehicle FBT — Proposed Changes
The Government proposes transitioning EV arrangements to a permanent 25% FBT discount:
EVs costing up to $75,000 — full FBT exemption continues provided the arrangement commences before 1 April 2029
EVs over $75,000 — 25% FBT discount from 1 April 2027
All eligible EVs — 25% FBT discount from 1 April 2029
Support for Small Business Owners
$8 million has been allocated to continue the New Access for Small Business Owners program and the Small Business Debt Helpline — supporting the mental health and financial wellbeing of small business owners.
What's Law and What's Still a Proposal?
It is important to note that Budget announcements do not automatically become law. Here is where things stand as at Budget night 12 May 2026:
Already law ✅
Income tax cuts — reduction from 16% to 15% from 1 July 2026 and 14% from 1 July 2027
Energy bill relief — $150 additional rebate for small businesses
Announced — requires legislation ⚠️
$20,000 instant asset write-off — permanent extension from 1 July 2026
Loss carry back for eligible companies from 2026-27
$1,000 instant work-related expense deduction
Working Australians Tax Offset — $250 from 2027-28
Capital Gains Tax reforms — from 1 July 2027
Negative gearing changes — from 1 July 2027
Discretionary trust minimum tax — from 1 July 2028
Electric vehicle FBT changes — from 1 April 2027 and 1 April 2029
R&D Tax Incentive reforms — from 1 July 2028
Venture capital tax incentive expansion — from 1 July 2027
Our advice — do not make major financial decisions based solely on proposed measures that have not yet passed Parliament. Tax law can change as legislation progresses.
Speak to us before acting on any Budget announcement.
Aperture Accounting will continue to monitor all measures as they move through Parliament and will keep our clients informed.
What Should You Do Now?
Review your asset purchases — the current 2025-26 write-off is law. The permanent extension is proposed — we will confirm once legislated
Property investors — speak to us now about your CGT and negative gearing position before the proposed 2027 changes
Sole traders — your tax rate is going down from 1 July 2026. Let's make sure your tax planning reflects this
Companies that made a loss — the proposed loss carry back provisions could mean a cash refund. Talk to us
Discretionary trust holders — review your structure with us ahead of the proposed 2028 changes
As always, Aperture Accounting is here year-round — not just at tax time. If you would like to understand how the 2026-27 Budget affects your specific situation.
Call us on 1300 273 788 or email info@apertureaccounting.com.au
Source: Australian Government Budget Papers 2026-27 — https://budget.gov.au
Your Vision is Our Focus.
Call us on 1300 273 788 or email info@apertureaccounting.com.au
Your Vision is Our Focus.