What the New CGT, Negative Gearing & Trust Changes Mean for You
The 2026–27 Federal Budget has introduced proposed reforms to Capital Gains Tax (CGT), negative gearing, and discretionary trusts — representing one of the most significant shifts to Australia’s tax landscape in decades.
While these measures are not yet law, the Government has outlined clear start dates, making early planning essential. For business owners, investors, and families, the decisions made over the next 12–18 months could materially shape outcomes for years to come.
Key Changes at a Glance
1. Capital Gains Tax (From 1 July 2027)
The current 50% CGT discount is proposed to be replaced with:
- A cost-base indexation model (taxing real gains after inflation)
- A minimum 30% tax on capital gains
Gains accrued before this date are expected to retain the existing discount.
2. Negative Gearing (From 1 July 2027)
Negative gearing on residential property is proposed to be:
- Limited to new builds only
- Grandfathered for properties held at Budget night (12 May 2026)
Existing investments are largely protected, but future strategies will need to adapt.
3. Discretionary Trust Taxation (From 1 July 2028)
A 30% minimum tax will apply to discretionary trust income, paid at the trustee level.
This represents a major shift away from the current flexibility of income distribution across beneficiaries.
What This Means for You
These reforms signal a clear move towards:
- Higher effective tax on investment income
- Reduced flexibility in trust structures
- Greater focus on compliance and valuation
Discretionary trusts — which have been widely used for asset protection, income splitting and tax efficiency — are expected to see their advantages significantly reduced from July 2028.
At the same time:
- Existing property investments are expected to retain current concessions
- Historical capital gains may remain protected
However, these protections are not universal, and outcomes will depend on:
- When assets were acquired
- How they are structured
- The type of income generated
A Time-Limited Opportunity to Restructure
One of the most important elements of the reform is the introduction of a three-year rollover relief period (1 July 2027 – 30 June 2030).
This allows eligible structures to:
- Transition out of discretionary trusts
- Move into alternative entities such as companies or fixed structures
- Do so without triggering immediate CGT or income tax on the transfer
After this period, full tax consequences are expected to apply, making the window a critical planning opportunity.
Why Timing Matters
The impact of these reforms will vary, but the key takeaway is:
Your outcomes will depend on decisions made before the changes take effect.
Key considerations include:
- Whether to restructure before the new trust rules begin
- Timing of asset sales before CGT changes apply
- Reviewing existing estate and succession planning strategies
The Government’s direction is clear — long-standing tax advantages linked to property, capital growth, and trust structures are being rebalanced toward a more standardised tax framework.
How ASV Wadeson Can Help
At ASV Wadeson, we’re already working with clients to:
- Assess how these changes impact their current structures and investments
- Identify risks and opportunities early
- Develop practical restructuring strategies within the available window
- Align tax planning with broader business and financial goals
What You Should Do Next
If you own:
- Investment properties
- Shares or business assets
- Interests in discretionary trusts
Now is the time to review your position and plan ahead.
Final Thought
This Budget is not just a policy update — it represents a structural shift in how capital, property, and trust income are taxed in Australia.
Early planning will be the difference between reacting later and optimising your position now.
