The 2026–27 Federal Budget isn’t just another year of tax tweaks and headline announcements.
It signals a major structural shift in the Australian tax system, and for many individuals, investors and business owners, the impact could be significant.
At Hopscotch Accounting, we’re already helping clients understand what these proposed reforms could mean for their investments, trusts, property portfolios and long-term tax planning strategies.
Here’s a breakdown of the key changes, and what you should be thinking about now.
A shift away from traditional tax planning
The Government’s direction is becoming increasingly clear.
This Budget focuses on:
- Housing affordability and intergenerational equity
- Reducing the use of tax minimisation strategies
- Introducing minimum tax concepts
- Broadening the tax base to fund personal tax relief
In practical terms, the reforms are designed to reduce the effectiveness of strategies that have traditionally helped Australians build wealth through:
- Property investment
- Trust structures
- Capital growth assets
- Negative gearing
The three biggest areas to watch are:
- Capital Gains Tax (CGT) reform
- Trust taxation changes
- Negative gearing restrictions
1. Capital gains tax (CGT): A major overhaul
What’s changing?
From 1 July 2027, the current 50% CGT discount is proposed to be removed and replaced with:
- CPI-based cost base indexation, and
- A minimum 30% tax on net capital gains
The changes are expected to apply to:
- Individuals
- Trusts
- Partnerships
- Most CGT assets
Why this matters
For decades, the 50% CGT discount has been one of the key drivers behind long-term property and investment strategies.
Under the proposed reforms:
- Capital gains may become significantly more taxable
- Low-income taxpayers could still face a 30% minimum CGT rate
- Trust structures become less effective for distributing gains tax-efficiently
For many investors, this represents a substantial change in how wealth accumulation is approached.
What Sydney investors should consider
If these measures proceed, the period before 1 July 2027 becomes critically important.
Potential planning considerations may include:
- Reviewing investment structures
- Considering whether certain assets should be sold before the changes
- Obtaining valuations around the transition date
- Reassessing long-term capital growth strategies
Every situation is different, and any action should be based on tailored advice, not panic decision-making.
2. Trust taxation changes: Minimum 30% tax
What’s proposed?
From 1 July 2028, discretionary trusts may face a minimum 30% tax at the trustee level.
Beneficiaries would then receive non-refundable tax credits.
The reforms target:
- Family trusts
- Discretionary trusts commonly used for income splitting
Importantly, the changes are not expected to apply to:
- Fixed trusts
- Super funds
- Charitable trusts
- Deceased estates
- Widely held trusts
The bigger picture
For many years, discretionary trusts have offered flexibility in distributing income to family members on lower marginal tax rates.
This proposal substantially reduces that advantage.
In many cases, companies may become more tax-effective than discretionary trusts under the new rules.
That doesn’t mean trusts disappear entirely, but their role may shift more toward:
- Asset protection
- Estate planning
- Succession structuring
rather than tax minimisation.
A key planning window
One important feature of the reforms is the proposed three-year rollover relief period from 1 July 2027.
This could allow eligible restructuring into:
- Companies
- Fixed trusts
- Alternative investment entities
For many business owners and investors, this may create a valuable opportunity to review outdated structures before the rules tighten further.
3. Negative gearing changes
What’s changing?
From 1 July 2027, negative gearing would be limited to new-build properties only.
For existing properties:
- Rental losses could no longer offset salary or business income
- Losses would instead be carried forward to offset future rental profits or property gains.
Existing property owners
The Government has proposed grandfathering for properties held before:
12 May 2026 at 7:30pm
This means existing investors may retain current treatment, depending on how the legislation is ultimately drafted.
Why this is significant
This reform works hand-in-hand with the CGT changes.
Together, they effectively dismantle the traditional strategy of:
Negative gearing → reducing taxable salary income → selling with discounted CGT
For investors heavily reliant on tax deductions to support property holding costs, cash flow planning will become increasingly important.
What this means for Hopscotch clients
While these reforms are still proposals, they represent one of the most substantial tax policy shifts Australia has seen in decades.
For Sydney business owners, investors and families, the next 12–24 months may become a critical planning period.
Key areas worth reviewing now include:
- Trust structures
- Investment ownership entities
- Property portfolio strategies
- Capital gains exposure
- Succession and estate planning
- Future business structuring
The bottom line
The 2026–27 Budget signals a move away from aggressive marginal tax optimisation and toward broader minimum tax regimes.
The combined effect of:
- Removing the 50% CGT discount
- Introducing a 30% trust tax floor
- Restricting negative gearing
could fundamentally reshape long-term investment and wealth strategies in Australia.
At Hopscotch Accounting, we’re helping clients understand not just what’s changing, but how to prepare strategically and proactively.
If you’d like guidance on how these proposed reforms could affect your personal or business structure, now is the time to start the conversation.
