Practice Updates 2026

Federal Budget 2026-27

1. Fundamental reforms to the CGT regime

1.1 Replacing the 50% CGT discount with indexation

From 1 July 2027, the 50% CGT discount will be replaced by cost base indexation for assets held for more than 12 months, with a 30% minimum tax on net capital gains. These changes will apply to all assets, including pre-CGT assets, held by individuals, trusts and
partnerships.

Transitional arrangements will limit the impact on existing investments by ensuring the changes only apply to gains accruing on or after 1 July 2027. The 50% CGT discount will continue to apply to gains that accrued before 1 July 2027. Capital gains on pre-CGT assets that accrued before 1 July 2027 will remain exempt from CGT.

Furthermore, investors in new residential properties will be able to choose either:

• the 50% CGT discount; or
• cost base indexation and the 30% minimum tax.

Income support payment recipients, including Age Pension recipients, will be exempt from the minimum tax.

Assets that are sold prior to 1 July 2027 will continue to be subject to the existing rules.

Budget musings: Changes to Negative Gearing, the CGT Discount on the Cards

Even before the current war in the Middle East, the Budget has clearly been under some pressure. Recent comments from various government sources suggest that changes to the tax rules around investment properties could be under serious consideration.

So, what sort of changes could we see on 12th May? And how might they affect you?

While there has been a lot of focus on the offset rental losses against other income, such a salary and wages. Most other countries don’t permit this.

The 50% discount Arguments have been advanced that the 50% discount is too generous, especially for assets that have not been held for a long time, and there are calls for reducing the discount to 33 ⅓ % or even 25%.

Div 296 Tax is Now Law: What It Means for Your Super

There’s been alot of talk about changes to super, and one of the biggest updates is now official.

The government has passed the Division 296 tax, which will start from 1 July 2026. While it mainly affects people with large super balances, it’s still important to understand what’s changing and why.

When this tax was first proposed back in 2023, it caused quite a stir. The original plan included:

» Taxing unrealised gains (basically, increases in value on paper that you haven’t actually received yet)

» A $3 million threshold that wasn’t going to increase over time

Understandably, many peoplewereconcernedthis wasn’t fair. After strong feedback, the governmenthasrevised the rules. The final legislated version alignsmore closely with how tax usually works, thatbeing, taxation of actual income not paper gains.

Payday Super Checklist for Employers: Steps to Stay Compliant

From 1 July 2026, employers must pay theiremployees’ superannuation guarantee (SG) contributions at the same time as salary or wages. This new system is known as payday super.

Currently, most employers pay super on a quarterly basis. From July 2026, super will instead need to be paid each pay cycle. The ATO has released a checklist to help employers prepare for this change. Below is a straightforward guide outlining what small businesses should be doing now to get ready.

If you’re an employee, this article explains what youremployer will need to do on your behalf from 1 July 2026. The aim of these changes is to ensure super is paid more frequently and reaches your super fund sooner.

No doubt noting the growing trend for people to rent out property for short-term accommodation, the ATO has withdrawn a 40-year old ruling and replaced it with a new draft Taxation Ruling accompanied by two draft Practical Compliance Guidelines that between them cover everything relating to renting out all or part of your property without carrying on a business, including income and deductions in a variety of circumstances.