What the Federal Budget Means For You.

By David Meffert CFP, and Ben Northwood, Private Wealth Advisers, Linea Private Wealth

Delivered on 12 May 2026, Treasurer Jim Chalmers handed down what is, in our view, the most consequential Federal Budget for wealth management in recent times. The announcements touch numerous layers of a well-structured financial plan, from how capital gains are taxed, to the future role of family trusts, to the treatment of investment properties, and the ongoing reform of superannuation.

This is not a budget that calls for panic. It is, however, one that calls for clear thinking, careful review, and, where the timing allows, considered action. Most of the major changes carry effective dates in 2027 and 2028, which means there is a meaningful window in which the implementation of thoughtful strategies, can make a genuine difference to outcomes.

Below, we outline the key changes and what they mean across the areas most relevant to our clients.

CAPITAL GAINS TAX

The 50% Discount Is Ending. Cost Base Indexation Returns.

From 1 July 2027, the longstanding 50% capital gains tax (CGT) discount will be abolished. In its place, cost base indexation will return, calculated using the Consumer Price Index (CPI), in a manner similar to the rules that applied between 1985 and 1999.

A minimum tax rate of 30% will apply to all net capital gains under the new regime. Superannuation funds are unaffected and will continue to receive the existing one-third CGT discount.

The scope of these changes is broad:

–    All asset classes are caught: property, shares, managed funds, unit trusts, businesses, and infrastructure.

–    Pre-1985 (pre-CGT) assets, previously exempt, will now be subject to these rules for gains accruing from 1 July 2027.

–    Gains accrued prior to 1 July 2027 will be assessed under the existing rules. The transition is prospective, not retrospective.

–    Income support recipients, including Age Pension recipients, are exempt from the minimum 30% rate.

What this means in practice:

For liquid assets, such as shares, managed funds, and unit trusts, the ability to time disposals, make partial sales, and sequence capital gains events across financial years  provides flexibility. Property, by contrast, has far less: it is sold in full, in its own time, with limited control over when a gain is crystallised.

For clients holding a mix of assets, the strategic sequencing of when and how you realise gains, and in which structure, will become an important part of ongoing planning.

NEGATIVE GEARING

Full Deductibility Ends for Established Residential Properties.

From 1 July 2027, losses from established residential investment properties purchased after 7:30pm AEST on 12 May 2026 will no longer be deductible against wage and salary income. Under the new rules, those losses will only be deductible against income generated by that same property, such as rental income or capital gains, and any unused losses can be carried forward.

Properties already owned at the time of this announcement are grandfathered under the existing rules until they are sold. The changes apply only to established residential property; other asset classes, including commercial property, shares, and new-build residential property, are not impacted. Widely held trusts and superannuation funds, including SMSFs, are also excluded.

What this means in practice:

Moving forward, individuals wanting to purchase one or more negatively geared investment properties need to think about the cash flow impact. Debt structures, loan types, and repayment strategies may all need to be considered differently in light of a reduced tax benefit.

Existing arrangements also need to be considered as once they are unwound (sale of the property) the negative gearing benefit will be lost for good.

DISCRETIONARY TRUSTS

A Minimum 30% Tax on Trust Distributions. And a Window to Act.

From 1 July 2028, a minimum 30% tax rate will apply to taxable income distributed by discretionary trusts. This is a significant change to the tax efficiency that discretionary trust structures have historically offered, particularly for families who have distributed income to lower-rate beneficiaries.

There are important exclusions:

–    Complying superannuation funds

–    Fixed and widely held trusts, including fixed testamentary trusts

–    Special disability trusts

–    Deceased estates

Of particular note for estate planning purposes: fixed testamentary trusts created through a Will are excluded from the new minimum tax. This distinction will become an important consideration in the review of superannuation nominations and overall estate structure.

Three years of rollover relief creates a genuine restructuring opportunity — but it requires early, deliberate planning to use it well.

The Government has confirmed three years of rollover relief, providing a window to restructure existing arrangements without triggering immediate tax consequences. This relief period should not be treated as a reason to defer. It is, rather, an opportunity that rewards those who plan ahead.

For many clients, the question will be whether the discretionary trust remains the right vehicle for wealth accumulation going forward, and if not, what the preferred alternative structure looks like for both the present and the next generation.

SUPERANNUATION

Division 296 Is Now Law. And Super Remains a Powerful Vehicle.

Division 296 - the additional 15% tax on superannuation earnings attributable to balances above $3 million - has passed into law, effective 1 July 2026. For balances above $10 million, an additional 10% applies on top of that.

Payday super also takes effect from 1 July 2026, requiring employers to remit Superannuation Guarantee contributions within 7 days of each pay cycle, rather than quarterly.

It is also worth noting what this budget did not change:

–    The Transfer Balance Cap increases to $2.1 million from 1 July 2026, expanding the amount that can be held in the tax-free pension phase.

–    The CGT discount within superannuation remains unchanged at one-third.

–    For the vast majority of clients, superannuation continues to be the most tax-effective accumulation vehicle available.

OTHER ANNOUNCEMENTS

Measures Worth Noting.

$1,000 instant tax deduction: From the 2026–27 income year, individuals can claim up to $1,000 in work-related expense deductions without needing to retain receipts. Expenses above that threshold can still be itemised in the usual way.

Working Australians Tax Offset (WATO): A new $250 offset applies from the 2027–28 income year, effectively lifting the tax-free threshold for income from work.

Marginal rate reductions: Already legislated cuts see the lowest marginal rate fall from 16% to 15% on 1 July 2026, then to 14% on 1 July 2027.

LOOKING AHEAD

The Weeks Ahead Matter. Here is What We Are Focused On.

The most important thing to understand about this budget is that the headline changes do not take effect immediately. The key dates: 1 July 2027 for CGT and negative gearing, 1 July 2028 for discretionary trusts, create a genuine planning horizon. That is both the challenge and the opportunity.

For our clients, the question is not simply 'what has changed?' but rather: given what has changed, does your current structure still represent the most effective way to create wealth now, fund your retirement, and ultimately transfer that wealth, whether during your lifetime or on passing?

We are currently working through the specific implications of these changes across our client base. Where restructuring, repositioning, or new strategies are warranted, and where they can be implemented ahead of the relevant effective dates, we will be in touch with tailored guidance in the coming weeks.

Budget announcements are not yet law and must pass through Parliament before taking effect. We will continue to monitor their progress and refine our thinking as legislative detail becomes clearer.

If you feel you'd like to discuss any of these changes or seek financial advice please connect with the Melbourne Wealth Management team at Linea Private Wealth.

This article contains general information only and does not constitute personal financial advice. It does not take into account your individual objectives, financial situation, or needs. Before acting on any of the above, please consider the appropriateness of this information to your personal circumstances.