Several major tax reforms announced in the 2026–27 Federal Budget are progressing, with further detail now available on how the changes could affect property investors, business owners and people using discretionary trusts.

Some changes won't take effect until 2027 or 2028. However, decisions being made now about property, business structures and future transactions may still be affected.

Here's where some of the major reforms currently stand.

Negative gearing is changing from 1 July 2027

From 1 July 2027, negative gearing for residential property will generally be limited to new builds.

Residential properties held before 7:30pm AEST on 12 May 2026 are protected from the changes.

For established residential properties acquired after that time, losses will generally no longer be deductible against non-residential income, such as salary and wages, from 1 July 2027.

Eligible losses may instead be used against other residential property income, including capital gains, with excess losses carried forward to future years.

New residential builds can continue to qualify for negative gearing, subject to the eligibility requirements.

Capital Gains Tax is also changing

From 1 July 2027, the existing 50% Capital Gains Tax (CGT) discount will be replaced for affected gains by new inflation-based arrangements and a minimum 30% tax rate on real capital gains.

The reforms are prospective. Gains accrued before 1 July 2027 remain subject to the existing rules, even where the asset is sold later.

For investors who buy eligible new residential builds, the Government has provided a choice between the existing 50% CGT discount and the new arrangements for relevant gains.

The eventual tax outcome can depend on factors including the asset, when it was acquired, how long it is held, inflation and the gain realised when it is sold.

More detail has emerged since the Budget

Implementation work since the May Budget has addressed several situations that were not fully covered in the initial announcement.

This includes how the property reforms apply in circumstances such as inheritance and relationship breakdown, as well as the treatment of certain trusts and managed investments.

The Government has also provided further detail around which properties can qualify as new residential builds.

A second tranche of tax reform legislation passed the Senate on 19 August 2026, while consultation on further CGT and negative gearing implementation measures closed on 21 August.

Further implementation work is still expected as the reforms move towards their commencement date.

Discretionary trusts face separate changes

From 1 July 2028, the Government plans to introduce a minimum tax rate of 30% for discretionary trusts, with some exceptions.

Under the proposed approach, the minimum tax would generally apply at the trustee level. The treatment of beneficiaries and distributions will therefore be an important consideration for affected trusts.

For some businesses and families using discretionary trusts, the reforms could affect how income is distributed and how existing structures are used.

Expanded rollover relief is also planned for three years from 1 July 2027 to support eligible businesses and others that choose to restructure.

Small business CGT concessions are staying

The four existing small business CGT concessions are set to remain.

The turnover threshold associated with the 50% active asset reduction is also increasing from $2 million to $10 million from 1 July 2027.

This is an important distinction for business owners. The broader CGT reforms do not remove the existing small business CGT concessions for businesses that continue to meet the eligibility requirements.

Planning ahead

These reforms have different commencement dates and transitional arrangements. Further implementation detail may also emerge before all measures take effect.

For investors and business owners, the focus should be on understanding how the rules interact with decisions you are already considering rather than making changes based on a headline alone.