Bill passed both Houses 25 June 2026 (CGT, negative gearing, small business CGT, WATO, $1,000 deduction) · Royal Assent pending
What is in the bill — passed both Houses, awaiting Royal Assent
| # | Measure | What changes | Effective |
|---|---|---|---|
| 1 | Abolition of the 50% CGT discount | The 50% CGT discount for individuals and trusts — a cornerstone of Australian investment tax policy since 1999 — is abolished. It is replaced by a cost base indexation method, which adjusts the asset’s cost base for CPI so that only the gain above inflation is taxed. The practical effect is that tax on future property and investment gains will be materially higher for most taxpayers. | Gains accruing from 1 July 2027 |
| 2 | New 30% minimum tax on capital gains | A new 30% minimum tax rate applies to realised capital gains. This ensures individuals and trusts cannot achieve an effective rate below 30% on their capital gains, regardless of overall income in the year of sale. | Gains accruing from 1 July 2027 |
| 3 | Negative gearing restricted to new builds | Losses from residential properties purchased after 7:30 pm AEST on 12 May 2026 will no longer be deductible against wages and other income. Losses are quarantined and carried forward to offset future residential property income or capital gains. Properties already held at Budget night are fully grandfathered; new-build properties remain eligible. | 2027–28 income year |
| 4 | Small business CGT active asset reduction — threshold lifted | The annual turnover threshold for the small business 50% active asset CGT reduction is lifted from $2 million to $10 million. This applies only to this specific concession — the other three (15-year exemption, retirement exemption, small business rollover) retain their existing $2 million threshold. | On Royal Assent |
| 5 | Working Australians Tax Offset (WATO) | A new permanent $250 non-refundable tax offset for working Australians, contained in Schedule 3 of the bill. It will automatically benefit over 13 million workers. | 2027–28 income year |
| 6 | $1,000 instant work-related deduction | Workers can claim a $1,000 deduction for work-related expenses without needing to keep receipts (Schedule 4 of the bill). Workers with more than $1,000 in actual expenses can still claim the higher amount in the usual way. | 2026–27 income year |
Superannuation funds are excluded from the CGT changes
SMSFs and other superannuation funds retain their existing concessional CGT treatment. The effective 10% rate on gains in accumulation phase, and the 0% rate for members in pension phase over age 60, are unchanged. The CGT reforms apply only to assets held outside superannuation.
18 June 2026 announcements — mixed status
On 18 June 2026, the PM announced further modifications described as responding to post-Budget consultation. Their status differs:
Testamentary trusts — carve-out confirmed (policy only)
The proposed 30% minimum tax on discretionary trusts (proposed from 1 July 2028) will not apply to discretionary testamentary trusts established for genuine testamentary purposes. This is a meaningful concession for estate planning structures. However, the trust minimum tax itself has not yet been introduced as legislation — so neither the tax nor the carve-out is law yet. This remains a policy position only.
New CGT concession for innovative start-ups — consultation only
A proposed Innovative Business CGT Concession (IBCC) to provide a 50% discount to early-stage investors in innovative start-ups was flagged, with a consultation paper released on 18 June. It is not in any legislation and remains at an early design stage.
Still proposals only — not in any legislation
- 30% minimum tax on discretionary trust income from 1 July 2028 — no bill introduced.
- Testamentary trust exemption from the 30% trust tax — policy only (dependent on the trust tax bill).
- Start-up CGT concession (IBCC) — consultation paper only.
- Definitions of eligible ‘new builds’ and affordable housing exemptions for negative gearing — to come via legislative instrument following further consultation.
A word on housing policy and reality
It is our view that the Government is using the housing crisis as political cover for a raft of tax measures that go well beyond what is needed to address affordability. The real-world consequence of removing negative gearing and tightening CGT is not more housing supply — it is higher rents. Landlords who can no longer offset losses or realise gains on a tax-advantaged basis will do one of two things: exit the market entirely, or raise rents to restore their after-tax position. Australia risks following the path of much of Europe, where homeownership is the preserve of those who inherited wealth, and the rest are locked into an expensive, insecure rental market for life.
We have also heard from many clients that the intergenerational dimension of this is deeply concerning. Parents helping children into the property market — one of the last practical ways ordinary Australians can pass on what they have built — becomes more fraught when the tax system treats asset accumulation as a target. If the Government were a private business and made these kinds of representations about housing affordability while implementing policies that make it worse, it would arguably constitute misleading and deceptive conduct.
Where to from here
The CGT changes, negative gearing restrictions, small business threshold lift, WATO, and $1,000 instant deduction have all passed both Houses and Royal Assent is expected imminently. Once law, the planning window begins to narrow in earnest. Future gains from 1 July 2027 will be taxed on a fundamentally different basis. Please contact us before making any decisions about your investment portfolio, property holdings, or trust structures.
Please get in touch with the AAG team before making any decisions on your investments, property holdings, or trust structures.
