Federal Budget Tax Reforms

 We have taken the time to carefully review and consider the proposed Federal Budget measures before communicating with you.At this stage, these changes have not yet been enacted into law and the details remain subject to further clarification and legislative process.However, we would like to provide you with a summary of the proposed reforms and their potential implications.These changes may require greater engagement with our office and, where relevant, consideration of your current business and investment structures.Importantly, there is still time to prepare for these proposed reforms.As part of preparing your upcoming tax returns, we will review your existing structure and provide tailored advice regarding any actions that may be appropriate.As always, if you have any questions or would like to discuss how these proposed changes may affect you, please contact our office to arrange a suitable time. 

Changes to Negative Gearing 

• The new rules will take effect from the 2028 tax year, commencing 1 July 2027.

• Losses cannot be refunded; instead, they must be carried forward or offset against losses from other residential rental properties.

• These changes apply exclusively to residential properties and do not affect commercial properties or other types of investments.

• Existing rental properties acquired before 12 May 2026 are exempt from these changes.

• The current refundable negative gearing arrangements remain valid until 30 June 2027.

• The new rules do not apply to newly constructed properties or properties held within superannuation funds.

• The changes apply only to residential properties purchased after the budget announcement date.

Changes to the CGT discount 

• The changes will apply to all CGT assets disposed of after 1 July 2027 (i.e. from the 2028 income year onwards).

• New buildings will be excluded from the revised discount provisions.

• Pre-CGT assets will be included within the scope of the changes.

• Transitional provisions will apply, allowing assets sold before 1 July 2027 to continue accessing the existing 50% CGT discount.

• Taxpayers will require a market valuation as at 1 July 2027 to apply the 50% discount up to that date, with any subsequent gains calculated using the ATO indexation method from that point forward.

Individual tax returns 

• From 1 July 2026, taxpayers will be able to claim up to $1,000 in work-related expenses without the need for substantiation.

• This measure will apply from the 2027 income year onwards.

• The concession will not apply to ABN holders or sole traders.

• Non work-related deductions, such as donations and accounting fees, will remain excluded from this threshold.

• The working Australian offset of $250 will apply to your 2028 income tax return

Trusts 

• Taxable income retained within a trust will be subject to tax at a rate of 30%.

• Associated tax credits will be non-refundable.

• The measure will commence from the 2029 income year (effective 1 July 2028).

• The provisions will not apply to capital income.

• Fixed trusts, deceased estates, superannuation funds, and disability trusts will be excluded from the regime.

• Transitional provisions of three years will apply, allowing access to CGT and stamp duty rollover relief during the transition period.

Other 

• The $20000 instant asset write off for business is now permanent

• From the 2029 tax year (1/7/2028) start up companies with losses can have their WHT or FBT tax refunded