Budget offers personal tax relief but super largely untouched (June 2026)

The 2026–2027 Federal Budget’s headline personal tax measures will reshape financial planning strategies from 2027. A new $250 working Australians tax offset (WATO) will apply from 1 July 2027, effectively increasing the tax-free threshold for work income to $19,985. Combined with the previously announced $1,000 standard deduction for work-related expenses, workers could see substantial tax savings. The government confirmed existing modest tax rate reductions will proceed, with the 16% rate dropping to 15% in 2026–2027 and 14% in 2027–2028 for income between $18,201 and $45,000.

From 1 July 2027, the 50% capital gains tax discount will be replaced with inflation-adjusted indexation, accompanied by a minimum 30% tax rate on realised gains. This affects all assets held by individuals, trusts and partnerships for more than 12 months, including pre-1985 assets. The changes include transitional arrangements so only gains arising after 1 July 2027 face the new rules.

Complying super funds, including SMSFs, will continue receiving their existing one-third capital gains tax discount, so super funds will maintain their 10% effective tax rate on capital gains for assets held longer than 12 months. This makes superannuation even more attractive relative to personal investments, particularly given the new minimum 30% tax rate applying outside super.

From 1 July 2028, discretionary trusts will face a minimum 30% tax rate on taxable income. Beneficiaries will receive non-refundable credits for tax paid by trustees, but this could result in higher effective tax rates for lower-income beneficiaries who would normally pay less than 30%. The government will provide expanded rollover relief for three years from 1 July 2027.

Investment property strategies will change from 1 July 2027, with negative gearing limited to newly constructed dwellings. Losses from established residential properties will only be deductible against rental income or capital gains from residential properties. Properties owned at Budget time remain exempt until sold.