While the 2026–2027 Federal Budget delivered on 12 May 2026 included announcements of significant personal tax changes, superannuation planning remains relatively stable with few new measures announced.
The Budget’s headline personal tax measures will reshape financial planning strategies from 2027. A new $250 working Australians tax offset (WATO) will apply from 1 July 2027, effectively increasing the tax-free threshold for work income to $19,985. Combined with the previously announced $1,000 standard deduction for work-related expenses, workers could see substantial tax savings.
The government confirmed existing modest tax rate reductions will proceed as planned, with the 16% rate dropping to 15% in 2026–2027 and 14% in 2027–2028 for income between $18,201 and $45,000.
From 1 July 2027, the 50% capital gains tax discount will be replaced with inflation-adjusted indexation, accompanied by a minimum 30% tax rate on realised gains. This change affects all assets held by individuals, trusts and partnerships for more than 12 months, including pre-1985 assets.
The changes include transitional arrangements ensuring only gains arising after 1 July 2027 face the new rules. However, the implications for retirement planning are significant, particularly for those considering whether to hold investments inside or outside superannuation.
Importantly, complying superannuation funds, including self-managed superannuation funds, will continue receiving their existing one-third capital gains tax discount. This means super funds will maintain their 10% effective tax rate on capital gains for assets held longer than 12 months.
This preservation of the super CGT discount makes superannuation even more attractive relative to personal investments, particularly given the new minimum 30% tax rate applying outside super.
From 1 July 2028, discretionary trusts will face a minimum 30% tax rate on taxable income. Beneficiaries will receive non-refundable credits for tax paid by trustees, but this could result in higher effective tax rates for lower-income beneficiaries who would normally pay less than 30%.
The government will provide expanded rollover relief for three years from 1 July 2027 to help restructure discretionary trusts into companies or fixed trusts.
Investment property strategies will change from 1 July 2027, with negative gearing limited to newly constructed dwellings. Losses from established residential properties will only be deductible against rental income or capital gains from residential properties. Properties owned at Budget time remain exempt until sold.
These changes create several planning opportunities and challenges:
superannuation becomes relatively more attractive for capital growth investments;
timing of asset disposals before July 2027 may be beneficial for some taxpayers;
discretionary trust structures require review before the 2028 changes;
investment property portfolios may need restructuring; and
the enhanced work-related deduction simplifies tax compliance for many employees.