The proposed tax changes announced in the 2026 Federal Budget have created plenty of discussion.

Property investors are reviewing their portfolios. Business owners are reassessing their structures. Families using discretionary trusts are asking what happens next.

The proposed reforms focus on three key areas:

• Negative gearing
• Capital gains tax (CGT)
• Discretionary trusts

Importantly, these measures are not law yet. Parliament still needs to consider and pass the legislation.

However, that does not mean you should ignore the proposals. Instead, now is a good time to understand the possible impact and plan ahead.

Why Planning Early Makes Sense

Many people are waiting for certainty before taking action.

However, smart planning does not require certainty.

The proposed negative gearing and CGT changes are due to start from 1 July 2027. Meanwhile, the trust reforms are not expected to begin until 1 July 2028.

As a result, investors and business owners have time to review their position and explore different options.

You do not need to make major changes today. However, understanding your risks and opportunities now can help you make better decisions later.

1. Review Your Existing Property Portfolio

One of the biggest Budget announcements relates to negative gearing.

The Government plans to limit negative gearing for established residential properties purchased after 12 May 2026.

Existing Investors May Have an Advantage

Current property owners could benefit from grandfathering rules.

Under the proposal, investors who owned residential property before Budget night can continue using the existing negative gearing rules.

As a result, eligible rental losses could still offset salary, business income and other taxable income.

For many investors, this may become a valuable long-term benefit.

Why This Matters

Not all investment properties may receive the same tax treatment in the future.

Because of this, now is a good time to review your portfolio.

First, identify which assets may qualify for grandfathering. Next, consider how those assets fit within your long-term investment goals.

A simple review today could uncover opportunities you may have overlooked.

2. Think Carefully About Future Property Purchases

The proposed reforms could change how investors approach new property purchases.

In the past, many investors used negative gearing when buying established residential properties.

However, future buyers may need to focus more on investment fundamentals.

Focus on Quality Investments

Tax benefits are important. However, they should never be the main reason for buying an investment property.

Instead, focus on:

• Strong locations
• Rental demand
• Cash flow potential
• Long-term growth

These factors often have a greater impact on returns than tax deductions alone.

New Builds Could Attract More Interest

In addition, the Government has indicated that newly built residential properties may continue to receive favourable tax treatment.

Some housing developments and build-to-rent projects may also qualify for concessions.

As a result, investors may begin comparing new builds more closely with established properties.

3. Identify Assets That May Need Valuations

The proposed CGT changes could create new planning opportunities.

They could also create additional record-keeping requirements.

Why Valuations Matter

Under the proposal, gains that build up before 1 July 2027 will receive different tax treatment from gains that arise after that date.

Because of this, many investors may need accurate market values as at 1 July 2027.

This could apply to:

• Investment properties
• Commercial real estate
• Share portfolios
• Business assets

Start Early

Valuations often take time.

Therefore, it makes sense to start planning well before any deadline arrives.

Good records today can save time, money and stress later.

4. Review Your Capital Gains Tax Strategy

The Government also plans to change the current CGT discount rules.

This is one of the biggest Budget announcements.

For many years, investors have relied on the 50% CGT discount when selling assets.

However, the proposed rules may change the way some investors think about future sales.

Look at Future Exit Plans

Now is a good time to review your long-term plans.

For example:

• Which assets might you sell in the next five years?
• How would the current rules affect the outcome?
• How could the proposed rules change that result?

These questions can help you identify potential risks early.

Keep the Bigger Picture in Mind

Tax matters. However, it should not drive every decision.

Likewise, your investment goals, retirement plans and cash flow needs should remain key considerations.

5. Review Your Trust Structure

The proposed trust changes have attracted significant attention.

If introduced, discretionary trusts would face a minimum tax rate of 30%.

Understand the Potential Impact

Many families use discretionary trusts to distribute income among beneficiaries.

The Government wants to reduce some of the tax benefits associated with these arrangements.

As a result, some families could pay more tax under the proposed system.

Remember the Non-Tax Benefits

Importantly, trusts offer more than tax advantages.

They can also assist with:

• Asset protection
• Estate planning
• Succession planning
• Family wealth management

Therefore, trusts may still play an important role even if tax outcomes change.

6. Consider Alternative Structures

Some taxpayers may decide to review their current structures.

However, restructuring is not always the right move.

Explore Different Options

Depending on your situation, you may wish to compare:

• Private companies
• Fixed trusts
• Corporate beneficiaries
• Other business structures

Each option has strengths and weaknesses.

Avoid Rushed Decisions

Finally, avoid making major changes based on proposed legislation alone.

Instead, compare tax outcomes alongside asset protection, business goals and succession planning needs.

7. Stay Informed

The final action may be the most important.

At this stage, the proposals are not law.

Focus on Preparation, Not Panic

Many details could change before the legislation passes Parliament.

Therefore, preparation is more valuable than speculation.

Review your position. Model different scenarios. Understand your options.

Then, when more details become available, you can act with confidence.

Frequently Asked Questions

Will negative gearing be abolished?

No. The proposal restricts how some losses can be used. It does not abolish negative gearing.

Will existing properties be protected?

Under the current proposal, many existing property owners will receive grandfathering protection.

Should I restructure my trust now?

Not necessarily. First, wait for more certainty around the final legislation.

Will trusts still be useful?

Yes. In many cases, trusts will continue to provide asset protection and estate planning benefits.

Seek Advice Before Making Major Decisions

Every taxpayer’s situation is different.

For example, one investor may benefit from grandfathering rules. Another may need to review future purchase plans.

Likewise, some business owners may benefit from a restructure, while others may not.

Professional advice can help you understand the options available and avoid costly mistakes.

What Should You Do Next?

The proposed 2026 Federal Budget tax changes could affect investors, business owners and families for years to come.

However, there is still time to prepare.

Now is the ideal time to review your position, understand the possible impact and plan ahead.

By taking action early, you can make informed decisions and respond with confidence as the legislation develops.

Need Help?

By working with us as your professional tax accountant and mortgage broker, you can be confident that your loans are structured to protect your tax position, maximise deductions, and avoid costly mistakes, giving you greater peace of mind and more control over your financial future.

Pitt Martin Group is a firm of Chartered Accountants, providing services including taxation, accounting, business consulting, self-managed superannuation funds, auditing and mortgage & finance. We spend hundreds of hours each year on training and researching new tax laws to ensure our clients can maximize legitimate tax benefit. Our contact information are phone +61292213345 or email info@pittmartingroup.com.au. Pitt Martin Group is located in the convenient transportation hub of Sydney’s central business district. Our honours include the 2018 CPA NSW President’s Award for Excellence, the 2020 Australian Small Business Champion Award Finalist, the 2021 Australia’s well-known media ‘Accountants Daily’ the Accounting Firm of the Year Award Finalist and the 2022 Start-up Firm of the Year Award Finalist, and the 2023 Hong Kong-Australia Business Association Business Award Finalist.

Pitt Martin Group qualifications include over fifteen years of professional experience in accounting industry, membership certification of the Chartered Accountants Australia and New Zealand (CA ANZ), membership certification of the Australian Society of Certified Practising Accountants (CPA), Registered Australia Tax Agents, certified External Examiner of the Law Societies of New South Wales, Victoria, and Western Australia Law Trust Accounts, membership certification of the Finance Brokers Association of Australia Limited (FBAA), Registered Agents of the Australian Securities and Investments Commission (ASIC), certified Advisor of accounting software such as XERO, QUICKBOOKS, MYOB, etc.

This content is for reference only and does not constitute advice on any individual or group’s specific situation. Any individual or group should take action only after consulting with professionals. Due to the timeliness of tax laws, we have endeavoured to provide timely and accurate information at the time of publication, but cannot guarantee that the content stated will remain applicable in the future. Please indicate the source when forwarding this content.

By Alex Cramery @ Pitt Martin Tax