The 2026–27 Federal Budget tax measures relating to discretionary trusts and capital gains tax have been passed by Parliament, although some measures don’t commence until future income years. Here is a plain-English summary of the key changes and what they mean for business clients and family groups.

Negative Gearing (from 1 July 2027)

Negative gearing will be limited to new residential properties. Existing investment properties acquired before 7:30 pm AEST on 12 May 2026 are not affected—the existing rules continue to apply to those properties.

Discretionary Trusts

A new 30% minimum tax on trust distributions is legislated to commence from 1 July 2028, subject to the detailed rules and exceptions in the legislation. This is one of the most significant changes to trust taxation in decades and will require careful review of existing trust structures well before that date.

Capital Gains Tax (CGT)

The current 50% CGT discount for individuals, trusts and partnerships is being replaced for future gains with:

  • Cost-base indexation for inflation, and
  • A 30% minimum tax on capital gains

These changes apply only to capital gains accruing from 1 July 2027. Transitional rules preserve the existing treatment for gains accrued before that date, so the timing of asset disposals will become increasingly important.

Practical Implications

These are significant structural changes, not just rate adjustments. The practical implications for business clients and family groups include:

  • Existing discretionary trust structures should be reviewed over the next 12–24 months
  • Asset acquisition and disposal timing will become much more important—gains accrued before and after 1 July 2027 are treated differently
  • Family groups using bucket companies, investment trusts and inter-entity distributions may need restructuring before the new trust rules commence in 2028

It is also worth noting that planning opportunities exist now, before the commencement dates—which means these changes will affect many family groups well before 2027 or 2028.

What You Should Do Now

If you have a discretionary trust, investment property, or significant capital assets, it is worth booking a review appointment sooner rather than later. The window for restructuring and planning is narrower than the commencement dates suggest, and the cost of early action is generally far less than the cost of acting too late.

If you would like to discuss how these changes affect your specific situation, please get in touch.