Three of the biggest tax changes announced in the 2026 Federal Budget relate to:

• negative gearing
• capital gains tax
• discretionary trusts

A few months on, the picture is clearer.

Negative gearing and CGT changes have now been legislated. The discretionary trust changes have not.

And, as I have said many times since Budget night, the devil is always in the detail.

Negative gearing: this one is now law

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

The important date is 7.30pm on 12 May 2026 — Budget night.

Properties held before then are grandfathered, so the existing negative gearing arrangements continue.

For established residential property acquired after Budget night:

• the existing rules continue through to 30 June 2027
• from 1 July 2027, excess losses will no longer simply be deductible against unrelated income such as salary and wages
• eligible new builds can continue to access negative gearing.

This is no longer a proposal. It is legislation, so investors now need to plan around it.

Capital gains tax: also legislated

The CGT changes also commence from 1 July 2027.

Importantly, the existing 50% general CGT discount can continue to apply to eligible gains accrued up to 30 June 2027.

That does not mean the asset necessarily needs to be sold before then.

For assets held beyond 30 June 2027:

• gains accrued up to that date remain under the existing regime
• gains accruing from 1 July 2027 move into the new system
• indexation applies going forward
• the new minimum 30% tax rate applies to relevant post-30 June 2027 real capital gains.

That makes 30 June 2027 a very important valuation and tax-planning date, particularly for assets that have already experienced substantial capital growth.

So the changes are significant, but it is not a case of anything sold after Budget night suddenly being taxed at full freight.

There is a transition between the two systems.

Discretionary trusts: this is where it gets difficult

The proposed 30% minimum tax rate for discretionary trusts is intended to apply from 1 July 2028.

Unlike negative gearing and CGT, however, these changes have not yet been legislated.

The Federal tax mechanics may ultimately be manageable, particularly if appropriate rollover relief allows businesses and investments to move into different structures.

The bigger complication is likely to be property.

Property is where the rubber hits the road

There are many discretionary trusts around Australia holding property.

That brings state taxes into the picture, particularly:

• stamp duty
• land tax.

For example, a property may legally be registered in the name of a corporate trustee, but that company holds it as trustee for the trust, rather than beneficially in its own right.

If a restructure results in the company becoming the beneficial owner, Federal rollover relief does not automatically solve the state tax consequences.

Why the states matter

New South Wales provides a good example.

Discretionary trusts and companies can receive different land tax treatment.

So if the Federal Government wants taxpayers to restructure out of trusts, the states will need to determine how they deal with:

• stamp duty on transfers
• existing land tax treatment
• any concessions or exemptions applying to restructures.

That is where I think the real negotiation will occur.

The Federal Government has one policy objective. The states and territories have their own revenue bases.

Those two things do not necessarily line up neatly.

So where are the big three today?

In simple terms:

• Negative gearing: legislated, with changes from 1 July 2027.
• Capital gains tax: legislated, with the new regime applying from 1 July 2027.
• Discretionary trusts: proposed from 1 July 2028, but the final legislation and implementation details are still to come.

That is the key distinction: what is now law, and what is still being worked through. 

What if a future government changes the rules?

People regularly ask what happens if another government gets in.

The simple answer is that we do not structure businesses and investments around ifs, buts and maybes.

We work with the law and information available today.

A future Parliament could revisit negative gearing or CGT.

My view is that the discretionary trust reforms may be less likely to disappear altogether, because governments have considered changes to trust taxation in various forms for many years.

But that remains opinion, not law.

The practical takeaway

We now know considerably more than we did on Budget night.

For anyone holding investment property, appreciated capital assets or significant assets inside a discretionary trust, the next couple of years will require some forward planning.

That does not mean rushing to sell assets or restructure entities.

It means understanding:

• what you own
• how it is structured
• what key assets are worth approaching 30 June 2027
• what the final trust rules mean once the legislation is available.

The devil remains in the detail, particularly with discretionary trusts.

If there is a particular part of these changes you would like me to cover in more detail, let me know.

Disclaimer: This article provides general information only and does not take into account your personal circumstances. It is not financial or tax advice. You should seek independent advice from a qualified professional before making decisions about tax, legal or financial planning matters, along with loan structures or entity structure.