The 2026/27 Federal Budget includes several proposed changes that may significantly affect business owners, investors, family groups and high-income earners.
While much of the public commentary has focused on cost-of-living relief, the more important issue for many Rosenfeld Kant clients is structural.
The proposed changes to capital gains tax, negative gearing and discretionary trusts may change how clients think about asset ownership, business structures, succession planning, investment property and long-term wealth planning.
These measures are not yet law. However, given the proposed commencement dates, the scale of the changes and the potential planning windows available, this is not a Budget to skim over.
For a more detailed breakdown of the Budget measures and their potential implications, you can also read Rosenfeld Kant’s in-depth Federal Budget 2026/27 report.
For many clients, the right response is not to rush into decisions. It is to review existing arrangements before the rules change.
The biggest issue may be discretionary trusts
One of the most significant announcements is the proposed introduction of a minimum 30 per cent tax on discretionary trusts from 1 July 2028, with some exceptions. The Government has also announced three years of rollover relief from 1 July 2027 to assist small businesses and others that may wish to restructure.
For many business owners and family groups, this may be the most important Budget measure.
Discretionary trusts have long been used for legitimate reasons, including asset protection, succession planning, business structuring, investment ownership and family wealth management. The announcement does not mean trusts will no longer have a role. However, it does mean that the tax efficiency and practical purpose of existing trust structures may need to be reviewed.
The key questions are:
- Is the trust still the right structure for the business or assets it holds?
- How will future income distributions be taxed?
- Are corporate beneficiaries still appropriate?
- Should the structure be reviewed before the proposed 1 July 2028 start date?
- Would a company, fixed trust or other structure be more appropriate in future?
- How would any restructure interact with asset protection, succession planning and stamp duty?
This is not a simple “trusts are bad, companies are good” issue. Structure should never be reviewed through a tax lens alone.
For some clients, a trust may still make sense. For others, the proposed changes may materially reduce its usefulness. The point is that trust structures should not be left on autopilot.
Capital gains tax changes may affect timing, valuations and exit planning
The Budget proposes replacing the 50 per cent capital gains tax discount with a discount based on inflation, as well as introducing a minimum 30 per cent tax on gains from 1 July 2027. The Government has stated that the CGT reforms will only apply to gains arising after 1 July 2027. Investors in new builds will be able to choose between the existing 50 per cent CGT discount and the new arrangements.
This may have important implications for clients holding long-term assets, including investment properties, shares, business interests and other appreciating assets.
For many clients, the issue will not simply be whether to sell before 1 July 2027. That would be too narrow. The better question is whether your current structure, ownership, records and future plans are ready for a more complex CGT environment.
In practice, clients may need to consider:
- whether current asset valuations are up to date
- whether long-held assets may require more detailed record keeping
- whether planned sales, succession events or restructures should be brought forward or delayed
- how capital gains may be apportioned before and after the proposed change date
- whether personal, trust or company ownership remains appropriate
For clients planning to sell a business, transfer wealth, restructure entities or dispose of investment assets, timing and documentation may become more important.
The practical takeaway is simple: if a significant asset sale or succession event is on the horizon, the modelling should start early.
Negative gearing changes may shift property investment strategy
The Budget also proposes limiting negative gearing to new builds from 1 July 2027. Existing arrangements will remain unchanged for properties held before Budget night. Investors who buy established residential property after Budget night will still be able to deduct losses against residential property income and carry forward unused losses, but they will not be able to deduct those losses against other income, such as wages.
This does not mean property investment is no longer viable. It does mean the assumptions behind some property strategies may need to change.
For clients considering future property purchases, the proposed rules may make it more important to assess:
- whether the property is a new build or established dwelling
- the cash flow position without relying on negative gearing against salary or business income
- the ownership structure before acquisition
- the expected capital gain under the proposed CGT rules
- whether the investment still makes commercial sense without the same tax treatment
The days of looking at property tax benefits in isolation may be coming to an end. Property strategy will need to be considered alongside cash flow, debt, ownership structure, estate planning and broader investment objectives.
Business cash flow measures may help, but they do not replace planning
The Budget includes several measures aimed at supporting business cash flow and investment.
The Government has announced the reintroduction of loss carry back from 2026/27. Eligible companies that make a current-year loss may be able to use that loss to obtain a refund against tax paid in the prior two income years. The Budget also proposes making the $20,000 instant asset write-off permanent from 1 July 2026 for small businesses with turnover up to $10 million.
These measures may be useful for businesses planning equipment purchases, technology investment, expansion or productivity improvements.
However, they should not drive spending decisions on their own.
A tax deduction is only useful if the expenditure makes commercial sense. Business owners should consider whether the asset is genuinely needed, whether the timing is right, and how the deduction fits into cash flow, profit forecasts and finance arrangements.
There are also proposed changes to PAYG instalments, including flexibility for businesses to opt in to monthly instalments from 1 July 2027 and expanded access to dynamic instalments through business software.
For businesses with fluctuating income, this may help reduce timing pressure. But again, the benefit will depend on how the measures are implemented and whether the business has accurate, timely financial information.
Personal tax relief is helpful, but it is not the main story for complex clients
The Budget includes a new Working Australians Tax Offset of up to $250 from the 2027/28 income year, further personal tax rate reductions from 1 July 2026 and 1 July 2027, and a $1,000 instant tax deduction for work-related expenses from 2026/27.
These measures may provide modest relief for individuals and employees.
However, for business owners, investors and family groups, the more important issue is the proposed shift in how wealth, assets, trusts and property investment are taxed.
In other words, the headline tax cuts may matter less than the structural tax changes sitting behind them.
What this means for Rosenfeld Kant clients
For many clients, this Budget should prompt a review of current arrangements across three areas.
Your structure
If you operate through a discretionary trust, company, family group or multiple entities, your structure should be reviewed before the proposed changes take effect.
The question is not simply “will this cost more tax?” The better question is whether the structure still supports your commercial, tax, asset protection and succession objectives.
Your assets
If you hold investment properties, business assets, shares or long-term family assets, the proposed CGT changes may affect future sale decisions.
This is particularly relevant where there are unrealised gains, planned restructures, succession events or future liquidity needs.
Your timing
Several of the Budget measures have future start dates, including 1 July 2027 and 1 July 2028.
That creates a planning window. It also creates risk for those who wait too long.
Where major decisions are being considered, such as selling an asset, changing an ownership structure, acquiring property or preparing for succession, advice should be sought well before the rules commence.
Do not wait until the legislation is final to start the conversation
It is important to remember that Budget announcements are proposals until passed into law.
However, waiting for every detail to be finalised may leave too little time to plan properly.
For clients with discretionary trusts, investment property portfolios, business structures, significant unrealised capital gains or succession plans, now is the time to start identifying where the proposed changes may apply.
Not every client will need to restructure. Not every client will need to change strategy. But almost every client with a complex structure should understand their position.
The next step
Rosenfeld Kant will continue to monitor the proposed Federal Budget measures as further details are released.
In the meantime, clients should consider whether their current arrangements remain fit for purpose, particularly in relation to:
- discretionary trusts
- property investment
- business structures
- asset sales
- succession planning
- family wealth arrangements
- business investment and cash flow planning
The Budget has not changed the rules overnight. But it has signalled a material change in direction.
For business owners, investors and family groups, the best response is to review early, model carefully and make decisions based on your broader objectives, not headlines.
If you would like to understand how the proposed Federal Budget changes may affect your structure, assets or business plans, please contact the Rosenfeld Kant team.