Federal Budget 2026: Our Take for Business Owners and Investors

The 2026 Federal Budget introduced several significant proposed changes impacting business owners, investors and wealth structures.

While many measures still need to pass legislation, the direction of policy is becoming clearer: increased taxation of investment wealth, tighter rules around property investment, and greater scrutiny of discretionary structures.

Below is a breakdown of the key announcements we believe business owners should understand now.

Permanent $20,000 Instant Asset Write-Off

The Government announced the $20,000 instant asset write-off for businesses with turnover under $10 million will become permanent.

This allows eligible businesses to immediately deduct the cost of assets under $20,000 rather than depreciating them over multiple years.

What this means:

• greater certainty for equipment and vehicle purchases

• improved cash flow management

• less reliance on temporary yearly extensions

• better long-term investment planning

The threshold applies on a per-asset basis.

Capital Gains Tax (CGT) Changes

One of the most significant proposed changes was the overhaul of the current CGT discount system.

From 1 July 2027:

• the existing 50% CGT discount for assets held longer than 12 months is proposed to be replaced with an indexation-based system

• a minimum 30% tax rate may apply to net capital gains

• the changes are expected to apply broadly across CGT assets, including property, shares and business investments

The Government has indicated existing assets may be grandfathered, although full legislation has not yet been released.

Why this matters

The current CGT discount has been a major driver of long-term investment and wealth creation strategies.

The proposed changes to CGT could impact:

• business exit planning

• investment holding strategies

• asset ownership structures

• retirement planning

• property investment decisions

Clients considering major asset sales over the coming years should seek advice early.

Changes to Negative Gearing

The Government announced proposed changes to negative gearing rules for residential investment properties purchased after Budget night.

Under the proposal:

• negative gearing deductions will only remain available for eligible new-build properties

• established residential properties purchased after the commencement date will no longer qualify

Existing investment properties are expected to be grandfathered.

Likely impacts

• increased focus on new developments and construction

• reduced investor demand for established housing

• potential changes to property values and rental supply dynamics

• greater emphasis on cash-flow-positive investing

This represents a significant potential shift for property investors and may influence future acquisition strategies.

Discretionary Trust Changes

From 1 July 2028, discretionary trusts may face a minimum 30% tax on taxable income distributions.

A transition period is expected to allow restructuring into alternative entity types.

Why this matters

Discretionary trusts are widely used by business owners and investors for:

• asset protection

• income distribution flexibility

• tax planning

• succession planning

If implemented, these proposed changes could reduce the tax effectiveness of many existing trust structures.

Business owners using trusts should review:

• current distribution strategies

• long-term structure suitability

• succession and estate planning

• potential restructuring requirements

Modest Personal Tax Relief

The Budget also included modest personal tax measures, including:

• a proposed $250 tax offset for employees and sole traders

• further reductions to lower personal income tax brackets over coming years

While relatively small individually, these measures are aimed at easing cost-of-living pressure.

What Business Owners Should Focus On

Most Budget announcements create headlines long before they create operational impact.

For business owners, the real considerations are:

• cash flow

• investment timing

• tax planning opportunities

• structure effectiveness

• succession planning

• long-term wealth strategy

Several of the proposed measures announced in this Budget could materially change how business owners invest, structure and plan over the next decade.

At this stage, many measures are still proposed changes and will require legislation before becoming law.

We’ll continue monitoring developments as more detail becomes available.