Federal Budget 2026: What Investors & Business Owners Need to Know
Last night’s Federal Budget was a big one for investors, tradies, business owners, and anyone operating through trusts or investment structures.
There’s already been a huge amount of commentary online, but most people are still trying to work out one simple thing:
“What does this actually mean for me?”
While many of the announcements are still proposed changes and not yet law, they give a very clear indication of where tax policy may be heading over the next few years. For investors and business owners, understanding these changes early matters because decisions around structure, tax planning, and investments made now could have long-term impacts later.
Below is a practical breakdown of the key announcements and what they may mean moving forward.
Negative Gearing Changes
One of the biggest headlines from the Budget was the proposed change to negative gearing.
For those unfamiliar, negative gearing occurs when the costs of owning an investment property are greater than the rental income it generates. For example, if a property earns $30,000 in rent but costs $40,000 in interest and expenses to hold, that creates a $10,000 taxable loss.
Under the current system, that loss can generally be used to reduce your other taxable income, which lowers the amount of tax you pay overall.
The Government is proposing that established properties purchased after Budget night will no longer qualify for these negative gearing benefits. Existing investment properties are expected to be grandfathered, meaning current owners should not be affected, while newly built properties are still expected to qualify.
This doesn’t mean property investing suddenly stops making sense. But it does change the numbers for future purchases and may shift investor focus toward new builds, commercial property, or different investment structures.
For many Australians, this will simply mean that tax planning around property becomes more important than ever.
Capital Gains Tax (CGT) Changes
Another major announcement was around the Capital Gains Tax.
Currently, individuals who hold an investment asset for more than 12 months generally receive a 50% discount on the taxable gain when they sell it. This applies to assets such as investment properties, shares, and businesses.
For example, if you purchased shares for $100,000 and later sold them for $200,000, the gain would normally be $100,000. Under the current rules, only half of that gain is taxed if the asset has been held for more than 12 months.
The Government is proposing to replace this discount system from 1 July 2027 with an inflation-indexed model similar to older CGT rules used before the current discount existed.
In practical terms, this means future investments may no longer receive the same generous discount treatment Australians have become used to over the past two decades.
It also means CGT calculations are likely to become significantly more complicated moving forward, especially for investors holding assets across different periods and under different rule systems.
For business owners, however, the small business CGT concessions remain extremely valuable. In many cases, these concessions can still significantly reduce or even eliminate tax when selling a business, depending on eligibility.
Trust Tax Changes
This was probably the most unexpected announcement for many business owners.
From 1 July 2028, the Government is proposing a 30% minimum tax on discretionary trust distributions.
At the moment, trusts themselves generally don’t pay tax. Instead, income is distributed to beneficiaries, who then pay tax at their own individual tax rates. This flexibility is one of the reasons trusts are commonly used for family businesses, trade businesses, investments, and asset protection strategies.
Under the proposed rules, trusts may instead pay a minimum 30% tax on distributions upfront. Beneficiaries would then receive credits for that tax already paid.
For higher-income earners, this may not make a huge difference. But for lower-income beneficiaries who currently benefit from lower marginal tax rates or tax-free thresholds, the effectiveness of discretionary trusts could be reduced significantly.
This is a major potential change for:
family trusts
trade businesses
investment structures
bucket company arrangements
Importantly, this does not mean everyone should immediately unwind their trust structures.
These are still proposed rules, and there is also proposed rollover relief from 2027 to help some businesses restructure if required. However, this announcement is a strong sign that trust structures will need to be reviewed carefully over the coming years.
Loss Carry-Back Rules Returning
One of the more positive announcements for companies was the return of loss carry-back rules.
Currently, if a company makes a profit one year and pays tax, then makes a loss the following year, it generally cannot immediately recover the tax paid previously. Instead, those losses are usually carried forward to offset future profits.
The proposed changes would allow eligible companies to use current year losses against prior year profits and potentially receive refunds of tax already paid.
For businesses with fluctuating profits, this could provide valuable cash flow relief during tougher trading periods.
This is particularly relevant for industries like construction and trade services, where profitability can vary significantly year to year depending on projects, staffing, and market conditions.
Instant Asset Write-Off
The Government also announced plans to make the instant asset write-off a permanent measure rather than renewing it year by year.
For small businesses, this provides much-needed certainty when purchasing tools, equipment, vehicles, machinery, and technology.
Rather than constantly waiting to see whether the rules will be extended each Budget again, businesses may finally be able to plan purchases with more confidence moving forward.
What Happens Next?
The most important thing to remember is that these are still proposed changes only.
None of these measures becomes law until legislation passes Parliament, and there will likely be negotiation and amendments before anything is finalised.
But even at this stage, the Budget sends a very clear message about the direction tax policy may be heading in Australia:
increased scrutiny on tax planning structures
reduced reliance on negative gearing
tighter rules around trust distributions
more focus on compliance and transparency
For investors and business owners, this means proactive planning will become even more important over the next few years.
The businesses and investors who usually handle change best are the ones reviewing structures regularly, understanding their numbers, and planning ahead before changes become urgent.
The Earlier You Understand the Changes, the More Options You Have
For many Australians, these announcements won’t require immediate drastic action. But they absolutely warrant review and discussion, especially if you:
operate through a trust
own investment properties
run a growing business
are planning future investments
rely heavily on tax planning strategies
The earlier these conversations happen, the more flexibility and planning opportunities are usually available.
If you’d like to discuss how these proposed changes may affect your business, investments, or structure, the team at Bold Accounting is always happy to help.
