Market Update – May 2026
19/05/2026Market Update – June 2026
19/06/2026
Issue 29, May 2026
What the tax changes
actually mean for you
- 50% CGT discount (for assets held 12+ months), removed
- Replaced with cost base indexation (inflation adjustment)
- 30% minimum tax applied to net capital gains
- Affects shares, investment property, business assets, and even pre-1985 assets
Investors in new residential property can choose between the old 50% discount or the new indexation model. This is a deliberate incentive to push capital toward new housing supply.
- Higher effective tax on long-term, high-growth investments
- Indexation helps, but usually less than the 50% discount
- Pre-1985 "holy grail" assets lose much of their historical advantage
- Small business CGT concessions become more important than ever
Market valuations as at 1 July 2027 will likely be needed to lock in pre-change gains. Expect a surge in hold-vs-sell modelling, and asset sales, before that date.
Note: the cut-off date determines which properties are affected, but the new rules don't apply until 1 July 2027.
- Losses can no longer offset salary, business or other income
- Losses quarantined, can only offset rental income or future property capital gains
- Excess losses carried forward to future years
- Properties purchased before 7:30pm 12 May 2026, fully grandfathered
- New builds, full negative gearing still available
- Build-to-rent, widely held trusts, super funds, also exempt
- 30% minimum tax on discretionary trust taxable income
- Tax paid at trustee level, non-corporate beneficiaries get a non-refundable credit
- Eliminates the key benefit: distributing income to lower-tax family members
- Trust vs company tax rates, now largely equivalent
- Fixed trusts & widely held trusts
- Complying superannuation funds
- Special disability trusts
- Deceased estates & charitable trusts
- Certain primary production income
Three years of expanded rollover relief from 1 July 2027 has been offered to help businesses restructure out of trusts. That's a clear message: mass restructuring is expected. Companies and direct ownership structures are the likely beneficiaries.
Supporting R&D expenditure is no longer eligible. Only expenditure directly tied to core R&D activities qualifies. This is a significant narrowing for many existing claimants.
- Premium offset up 4.5 percentage points
- Intensity threshold: 2% → 1.5%
- Turnover threshold: $20M → $50M
- Expenditure cap: $150M → $200M
Refundability is now limited to companies under 10 years old. Older companies with sub-$50M turnover get the higher offset, but on a non-refundable basis only.
- Loss carry-back returns, offset losses against tax paid in prior 2 years (companies under $1B turnover, from 1 July 2026)
- $20,000 instant asset write-off, now permanent for businesses under $10M turnover
- Start-up loss offset, small companies (under $10M) in first 2 years can generate a refundable tax offset from 1 July 2028
- $1,000 automatic work expense deduction, no receipts required for amounts up to $1,000, from 1 July 2026
- $250 Working Australians Tax Offset, new permanent offset from 2027–28 for salary, wages and sole trader income
- Effective tax-free threshold for work income rises to $19,985
- Full FBT exemption continues for EVs under $75k provided before 1 April 2029
- 25% permanent FBT discount applies after that date for eligible vehicles
- Varying existing arrangements may trigger new-arrangement rules, review before changing
- Ban on foreign persons buying established residential dwellings extended to 30 June 2029
- Existing exemptions continue to apply
- Signals ongoing priority for domestic buyers and housing supply
Disclaimer – This document is prepared for general informational purposes only and does not constitute legal, tax or financial advice. The content summarises Budget announcements as at May 2026 and does not account for individual circumstances. All measures remain subject to parliamentary passage and may change. Please obtain professional advice tailored to your situation before taking any action.