This budget is a structural reset of how investment wealth is taxed in Australia.
If you hold assets outside super (shares, property, a family trust), the after-tax maths just changed. Capital gains, negative gearing, and trust distributions have all been rewritten in a single budget. That hasn’t happened in decades.
Our team has spent the past fortnight working through what these proposed changes mean for each client’s structure. Here’s what you need to know.
These are proposed measures that still need to pass Parliament. But the direction is clear, and the detail matters now.
Capital gains tax is being restructured. The 50% CGT discount, the cornerstone of Australian investment strategy since 1999, is being removed. In its place, investors would receive indexation for inflation and face a minimum 30% taxrate on capital gains. This applies to shares, property, and other investments held outside super and company structures. For anyone with a long-term growth strategy, the after-tax outcome changes meaningfully.
Negative gearing is being restricted to new builds. Rental losses on established residential property could no longer be offset against salary income. If you already hold an investment property purchased before budget night, existing rules largely continue. But for future purchases of established property, the strategy that has defined Australian property investment looks very different.
Discretionary trusts face a 30% minimum tax. From 1 July 2028, the flexibility to distribute income across family members at lower marginal rates would be significantly reduced. Many of our clients use trusts as part of their wealth structure. For them, this is one of the most consequential proposed changes in the budget.
Super is untouched. Super funds were carved out of the CGT overhaul. The 15% tax on contributions and the effective 10% rate on capital gains inside super remain. Pension-phase benefits are still tax-free under the $2 million transfer balance cap. In a budget that tightened almost everything else, super’s concessions now look more attractive by comparison.
This is where it gets practical. The budget hasn’t just changed the rules. It has reshuffled which asset classes and structures make sense from a tax perspective.
Your home is now one of the most tax-effective assets you can hold. No CGT on the family home. You can live in it, hold it for decades, and sell it without tax consequences. In a world where every other investment just got more expensive to hold, the family home stands apart. Of course, property comes with its own risks/issues, but from a pure tax perspective, it’s untouched.
Superannuation just became relatively more powerful. The contribution caps are still strict, and there are real limits on how much you can add each year. Super also locks your money away until preservation age, and future governments may yet change the rules. But for wealth, you can get into super, the gap between a 15%tax rate and a minimum 30% everywhere else is now hard to ignore.
Australian blue-chip shares paying franked dividends look relatively stronger. Companies that pay large, fully franked dividends are better positioned from a tax perspective. Franking credits still provide a meaningful offset. Share prices still carry market risk, and dividends are never guaranteed. But the maths now favours income-producing shares over pure growth plays when you’re thinking about after-tax returns.
High-growth assets and offshore shares face a bigger tax hit. Returns that come entirely through capital gains, think crypto, gold, or high-growth international shares, are potentially worse off under these changes. The reduced CGT discount means more of those gains go to tax.
Established residential investment property has lost its edge. The classic Australian property strategy was straightforward: buy an established property, run it at a loss, claim the deduction, and sell for a capital gain. Although we have never seen this as an ideal strategy, under these proposed rules, that playbook is now significantly less attractive for future purchases. Commercial property retains more of its existing treatment. But it comes with higher entry costs, higher lending rates, and different risk characteristics.
Here’s what we’re telling clients: don’t act yet, but don’t ignore this either.
These measures are proposed, not legislated. Acting before the final rules are written can create unintended consequences. We’ve seen that happen before, people restructuring in a rush, only to find the final legislation looked different from the announcement.
As the changes are legislated, we will be reviewing every client’s structure against the rules. Every structure is different, and the impact varies. We will be modelling after-tax outcomes under the new settings so that when we deliver our recommendation, it’s grounded in real numbers, and to continue to support your goals.
At 5 Financial, wealth management, tax advisory, and finance broking are coordinated under one roof. That matters here more than ever. These budget changes don’t affect one part of your financial life. They affect how your investments, tax position, and lending all interact. Assessing those moving parts together is what our team does every day.
If this budget feels destabilising, some perspective helps.
The CGT discount itself was introduced in 1999 to replace an earlier indexation method. Negative gearing has been modified, removed, and reinstated at various points over the past 40 years. Trust taxation has been reviewed multiple times since the Ralph Review in the early 2000s.
The families who do best over time are the ones who build strategies that can adapt to shifting rules, not strategies that depend on one tax concession staying in place forever. That’s always been true. This budget just makes it more obvious.
If the budget has raised questions about what it means for your plans, that’s exactly the kind of conversation we’re here for. You can reach out to us directly.