2026 Federal Budget: Unpacked
Everything you need to know about the Federal Budget and how it impacts retirement, investments and financial planning.
5 minutes
The 2026-27 Federal Budget introduces tax changes that could reshape how you support clients with retirement and investment planning.
“The changes to negative gearing, the Capital Gains Tax discount and the minimum tax on trust distributions have potentially big implications for many investors,” said AMP Chief Economist and Head of Investment Strategy Shane Oliver.
Here’s what you need to know and how these changes could impact your client’s financial strategies.
How will retirement change?
Retirement planning could change for clients whose assets or tax outcomes rely heavily on the capital gains tax or negative gearing. (More on this shortly.) There are also new changes to Pension Supplement recipients overseas. The full rate of payment is extended to 12 weeks for temporary departures before stopping entirely, and for permanent departures the Pension Supplement will immediately end upon departure. The aged pension age remains at 67. And the government has committed $3.7 billion to increase the supply of residential aged care accommodations, which may influence long-term retirement plans.
How will superannuation change?
There are no major changes to superannuation.
As fixed trusts, superannuation funds are not subjected to the new minimum 30% tax on discretionary trusts.
However, from 2026-27, super balances above $3 million will begin transitioning to the new Division 296 tax, which applies a higher tax rate to earnings above this threshold.
How will taxes change?
The Government announced several tax changes to help with cost-of-living. This includes:
- A $250 tax offset from 2027-28
- An instant $1,000 deduction for work-related expenses on 2026-27 tax returns
Starting 1 July 2026, the tax rate for income between $18,201 and $45,000 will fall from 16% to 15%, then to 14% on 1 July 2027.
Additionally, a new minimum 30% tax rate will apply to family trusts. From 1 July 2028, income distributed through discretionary and ‘family’ trusts will be taxed at least 30% regardless of the beneficiaries’ taxable income.
How will capital gains tax change?
The Capital Gains Tax (CGT) discount will change from a flat 50% discount to an inflation-based model, with a minimum tax of 30% on total gains for an asset.
This could increase tax on future investment gains and reduce after-tax for some clients.
“Where the CGT tax change may bite is in relation to shares and businesses – particularly those which don’t meet any carve out for startups,” said Oliver.
The change will come into effect after 1 July 2027.
For people who already hold assets, the new rule will only apply to gains made from 1 July 2027 and onward; any gains made before then will not be subject to the new changes.
How will negative gearing change?
From 1 July 2027, negative gearing will apply only to newly built residential properties. There will be no limits on the number properties investors can negatively gear.
The change will apply to homes purchased on and after 12 May 2026 but won’t come into effect until 1 July 2027.
Properties negatively geared before 12 May 2026 will not be affected. Shares and commercial property are also exempt from this change.
How could house prices change?
Changes to negative gearing and the CGT discount could result in a short-term fall of around 5% in house prices, said Oliver.
“Investors [could] retreat due to a fall in the perceived after-tax return to property investments.”
However, Oliver predicts the price dip will be temporary, given Australia’s ongoing housing supply imbalance.
The Budget’s impact on financial planning
The Budget signals a shift in how financial strategies are approached, with less emphasis on tax optimisation and greater focus on structure, clarity and long‑term outcomes.
Capital Gain Tax management strategies
Financial strategies will need to adapt to the new taxation rules, including the end of the CGT discount.
The new minimum 30% CGT may reduce the effectiveness of common CGT-management strategies, such as offsetting gains with personal deductible superannuation contributions.
Valuation and record-keeping will become crucial for clients with long-held assets. From 1 July 2027, clients may need to navigate new valuations or apportionment calculations, adding complexity to financial planning decisions.
Property strategies
Property investments could offer less tax-driven benefits under the new rules. You may need to reassess whether residential property continues to play a role in a client’s portfolio when compared with alternatives such as:
- Commercial property
- Equities
- Superannuation
Overall, the Budget nudges financial planning away from tax-led strategies and towards advice grounded in clarity, structure, and long-term goals.
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