The 2026–27 Federal Budget introduces a range of proposed tax and structural reforms that may impact businesses, investors and family groups over the coming years. Below, we address some of the key questions clients are asking and outline practical considerations ahead of 30 June 2026.

Q: What happens with quarantined negative gearing losses? 
A: Excess losses will be carried forward and able to be offset against residential property income in future years.

Q: What if I sell an investment property I've held for 3 years after 1 July 2027?
A: 50% discount may no longer be available, as the changes will apply to gains arising on or after 1 July 2027.

Q: Are investors required to value properties as at 30 June 2027 to determine the gains still eligible for the 50% discount?
A: Yes, the transitional arrangement ensures the change only apply to gains arising on or after 1 July 2027, so the portion of gain up to 30 June 2027 may still be eligible for the 50% discount. The ATO will be providing tools to calculate the value of the asset at 30 June 2027, alternatively affected investors can also consider obtaining a formal valuation of their properties as at 30 June 2027.

Q: What impact will this have for my start-up venture?
A: The CGT discount changes may significantly affect future tax cost on an exit event, but the loss carry-back, loss refundability, and instant asset write-off measures may provide a meaningful boost to the early stages of your business venture. The expansion of R&D tax incentives may also benefit larger ventures.

Q: If I enter into a novated lease arrangement for an EV before 1 April 2027, will the changes to FBT affect me?
A: The proposed changes to the FBT exemption will only impact new arrangements starting on or after the relevant starting dates. Existing arrangements entered into before these dates will be preserved for the term of the lease.

Q: What will happen to PSI Trusts?
A: PSI if not satisfying the PSB tests will be deemed income of the individual - in that case there is no "retained profit" that the trust could pay the 30% minimum trust tax on. However, if it does satisfy the results test such that the income forms part of the income of the trust estate, then it will be impacted by the 30% minimum trust tax.

Q: Does the permanent $20,000 instant asset write‑off mean I should change how I plan equipment purchases?
A: We remind readers that subject to passing legislation, the instant asset write-off threshold reverts to $1,000 from 1 July 2026. Your plan to purchase equipment should form part of your year-end tax planning strategy.

Q: Will the loss carry‑back help my business get a tax refund?
A: Subject to satisfying eligibility criteria, this measure will help businesses that makes a loss in the current year to get a tax refund for income taxes paid in the previous two income years.

Q: I operate through a trust — do any of these tax changes apply to me?
A: If you operate your business through a discretionary trust, you may be impacted by the introduction of the 30% minimum trust tax. The Government is providing expanded rollover relief for three years from 1 July 2027 to support small businesses and others that wish to restructure out of discretionary trusts into another entity type, such as a company or a fixed trust.

Q: If I’m planning to sell my business or property in the next few years, should I rethink the timing?
A: It is expected due to the grandfathering arrangements the impact of these CGT changes should not have a significant impact immediately after 1 July 2027, but rather a gradual reduction in the benefit from the 50% CGT discount. Any sale should be considered not only from a tax perspective, but as part of holistic financial planning for your family and business.

Q: Should I be changing my business structure because of these reforms?
A: Proactive review of business structure is always beneficial, even outside the framework of these tax reforms. If you are affected by the new trust tax changes, there will be an opportunity to obtain rollover relief to restructure out of discretionary trusts.

Q: Do I need to take action before 30 June because of this Budget?
A: Speak with Prosperity about proactive year-end tax planning to unpack what this Budget means for you and our recommendations for action before 30 June 2026.