The 2026 Federal Budget has delivered one of the most significant packages of tax and economic reform seen in many years. Since Budget night, several measures have progressed through Parliament, while others remain proposals that will continue to be debated and refined. Over the past month the Chamber team have had many robust discussions with our members around the announcements, which are creating a great amount of uncertainty, especially when coupled with the current business climate and ongoing world events. The common theme we are receiving and passing on is to be informed, be prepared, but don’t panic. Much of the detail is still emerging, and professional advice will be critical as the reforms take shape.
For many businesses, the Budget contained some slight positive outcomes. The main positive outcome being the $20,000 instant asset write-off has been made permanent, providing greater certainty for investment decisions, as well as some changes to the research and development tax incentives.
At the same time, changes to capital gains tax, negative gearing arrangements and the taxation of discretionary trusts have generated significant discussion within the business and professional community. Importantly, the changes to capital gains tax and negative gearing changes have now passed Parliament while the taxation of discretionary trusts and other changes are subject to future commencement dates and ongoing implementation work. The proposed changes to the taxation of discretionary trusts are creating considerable discussion across the business community, particularly among family-owned businesses and primary producers who commonly use trust structures.
Capital gains tax (CGT) and negative gearing
From 1 July 2027, the current 50% CGT discount will be replaced with an indexation-based approach combined with a minimum 30% tax rate on capital gains, while negative gearing on residential property investments will generally be restricted to new housing projects. Importantly, existing property owners receive transitional protection, with properties held at the time of the Budget announcement largely exempt from the negative gearing changes and the new CGT rules applying only to future gains accrued after the commencement date. While these reforms have now been passed into law, there are still practical implications and strategic considerations that investors, business owners and property holders will need to work through. A valuation of investments at 30 June 2027 will be a requirement.
Discretionary trust taxation
Under the Government’s current proposal, a minimum 30% tax rate would apply to many discretionary trust distributions from 1 July 2028, although important exemptions and transitional arrangements are expected to apply. While the policy intent has been outlined, significant uncertainty remains around how the rules will operate in practice, what exceptions may ultimately be available, how family groups will be affected, and what restructuring options may be appropriate. At this stage, many businesses are understandably seeking answers, but the reality is that further legislative detail, guidance and interpretation will be required before the full impact can be assessed.
The challenge for businesses right now is that the reform environment is moving quickly. Some measures are already law, others are still subject to further legislation, and many practical details are yet to be finalised. This creates uncertainty, but it should not create fear.
The Chamber’s recommendation is simple – engage with your accountant, financial adviser and business advisers before making significant decisions. These professionals are working through the implications of the reforms themselves and will be best placed to provide guidance as legislation, regulations and ATO interpretation continue to evolve. If you need assistance, The Chamber have several members equipped to help you navigate these changes who we would be very happy to introduce you to.
The Toowoomba business community has successfully navigated change before. While the 2026 Budget introduces new considerations for businesses, investors and SMSF members, there is still time to understand the changes properly and plan accordingly. Stay informed, seek advice, and remember that good business decisions are rarely made in response to headlines alone.