Treasurer Jim Chalmers delivered the 2026–27 Federal Budget last night, with a strong focus on cost‑of‑living relief, housing supply, and targeted tax reform. Following is a summary:

Economic Outlook

Australia enters the new financial year with slowing economic growth, persistent inflation pressures, and a continued emphasis on fiscal restraint.

  • GDP growth forecast: 1.75% in 2026–27
  • Inflation expected to moderate but remain elevated in the near term
  • Budget position: underlying cash deficit of $31.5 billion
  • Government signalling a shift toward structural reform rather than broad stimulus

Key Measures for Individuals

  • $250 Working Australians Tax Offset (WATO)  – a new ongoing $250 annual tax offset for wage‑earning Australians from 2027–28. Does not apply to investment income.
  • $1,000 Standard Work‑Related Expense Deduction  – employees will be able to claim a flat $1,000 deduction without itemising, simplifying compliance for around 6 million workers.
  • Housing Affordability & Supply
    • Funding to support up to 65,000 new homes
    • Additional support for 75,000 first‑home buyers
    • Continued focus on easing rental pressures
  • Cheaper Medicines & Health Investment  – ongoing PBS cost reductions and a $25 billion investment in public hospitals.
  • Energy & Cost‑of‑Living Relief  – targeted support for households facing rising energy and fuel costs.

Key Measures for Businesses

  • Red‑Tape Reduction & Compliance Simplification  – the government has committed $10.2 billion per year to reduce administrative burden for businesses.
  • Support for Manufacturing, Logistics & Supply Chains  – interest‑free loans and targeted incentives to help businesses manage fuel‑driven cost pressures.
  • Productivity & Investment Measures  – a suite of initiatives aimed at boosting long‑term productivity, including digital capability uplift and sector‑specific support.
  • NDIS Reform  – major structural changes expected to deliver $37.8 billion in savings over four years, with flow‑on effects for service providers.

Tax Reform: Property, Investment & Trusts

This Budget introduces significant tax changes that will affect investors, property owners, and trust structures.

  • Capital Gains Tax (CGT) Reform  – the 50% CGT discount will be replaced with inflation‑based indexation, with a minimum 30% tax rate on gains. Pensioners and income‑support recipients are exempt from the minimum rate.
  • Negative Gearing Changes  – from 1 July 2027, negative gearing will be restricted to new builds. Existing arrangements will be grandfathered.
  • Trust Taxation  – from 1 July 2028, discretionary trusts will be subject to a 30% tax rate, part of broader integrity measures.

These reforms represent the most substantial shift in investment taxation in over a decade.

Overall, the Budget creates a clear divide in outcomes: wage earners, first‑home buyers, renters, the public hospital system, and the manufacturing and logistics sectors stand to benefit most from the government’s targeted relief and investment measures, while property investors in existing dwellings, high‑income investors who have relied on the CGT discount, and beneficiaries of discretionary trusts are expected to feel the greatest impact from the new tax settings and structural reforms.

Click HERE to read the full Federal Budget Summary.

Please contact our team if you have any questions.

The material and contents provided in this publication are informative in nature only.  It is not intended to be advice, and you should not act specifically on the basis of this information alone.  If expert assistance is required, professional advice should be obtained.