WHAT IS NOW LAW
Capital gains tax discount overhaul
From 1 July 2027, the flat 50% capital gains tax discount will no longer apply to new gains made by individuals, trusts and partnerships. Instead, cost bases will be indexed for inflation so that tax applies only to real gains, and a minimum rate of 30% will apply to those gains, with limited exemptions.
One detail worth flagging: the new rules also capture growth on pre-CGT assets from that date. Assets acquired before September 1985 have sat outside the CGT net entirely, so owners of long-held business assets should factor this into their planning.
Negative gearing changes
From 1 July 2027, negative gearing deductions for residential property will generally be available only for newly built homes purchased under the new rules. Investors who already own a rental property, or who purchased before 12 May 2026, are grandfathered under the current rules.
SMSF borrowing
New legislation has changed the rules for SMSF property borrowing. From 10 August 2026, SMSFs can no longer enter into new borrowing arrangements to acquire residential property. Existing residential borrowing arrangements are grandfathered, while SMSFs can still borrow to purchase eligible commercial or business premises.
IMPORTANT FOR SMALL BUSINESSES
Instant asset write-off made permanent
The $20,000 instant asset write-off is now permanent. Small businesses with turnover under $10 million can immediately deduct eligible assets costing less than $20,000. Previously the threshold was extended year by year, which brought uncertainty at each Budget.
Tax loss carry back
From 2026–27, companies with turnover up to $1 billion can use their tax losses to claim a refund of tax paid in the previous two income years.
The small business concessions survived
All four small business CGT concessions remain in place. For eligible owners, they can still reduce or remove tax altogether on a sale, a retirement, a restructure or a move into a new venture.
The turnover threshold for the 50% active asset reduction also rises from $2 million to $10 million from 1 July 2027. On Treasury’s numbers, that makes all of Australia’s 2.7 million active small businesses eligible for the reduction, and more than 90% eligible for all four concessions.
SUPERANNUATION UPDATES
Concessional contributions cap increase
From 1 July 2026, the concessional contributions cap increased from $30,000 to $32,500 through indexation. The non-concessional cap increased from $120,000 to $130,000.
Payday Super
Payday Super is now in full swing as of 1 July 2026. For tax practitioners and the business owners they advise, the ATO has cleared up two common myths.
Myth: Payday Super changes how super is paid for contractors. It does not change who is owed super, only when it is due. Where a contractor is deemed an employee for super purposes, super must be paid so that it reaches their fund within seven business days after their invoice is paid.
Myth: clearing houses will process payments faster under Payday Super. Not necessarily. Employers need to check their own provider’s processing times. The safest way to meet the seven-business-day requirement is to pay the contribution on the same day as the payday, which allows maximum time for processing. Small delays can now trigger non-compliance.
STILL IN PROPOSAL
A new CGT concession for start-ups
Under the proposal being considered, founders and early-stage investors, including employees who hold shares under an employee share scheme, will be able to choose a flat 50% discount instead of indexation. Conditions apply: the shares must be issued from 1 July 2027, the company must be unlisted and under ten years old (with longer allowed for slower-to-commercialise sectors such as biotech), its turnover must be under $50 million, and the shares must be held for at least five years. Discounted gains are capped at $10 million over a lifetime.
Proposed 30% minimum tax on trust distributions
Under the confirmed design, the tax would apply at the trustee level, with individual beneficiaries receiving a non-refundable tax credit for the tax the trustee has paid. Corporate beneficiaries (including bucket companies) would not be entitled to this credit.
Some carve-outs are also confirmed. Primary production income would be exempt, fixed trusts sit outside the measure, and the exemption for testamentary trusts now covers trusts established for genuine estate purposes rather than only those already in existence. Treasury still expects more than 90% of active small businesses to be unaffected in any given year.
A consultation paper on the detail is expected shortly, with draft legislation to follow. The Government has committed to a restructure window, from 1 July 2027 to 30 June 2030, in which assets can be moved out of discretionary trusts into other structures with relief from the tax a restructure would normally trigger. Eligibility will be settled through consultation.
MARTINCO TAKEAWAYS
For individuals and business owners considering a business sale, trust restructure, succession plan or property transaction, now is an appropriate time to review your position. While the CGT and negative gearing changes have now been legislated, the trust reforms are still being finalised. Understanding how the confirmed and proposed measures interact will be important before implementing significant structural changes.
- If you own business assets or are selling: growth before 1 July 2027 keeps the current treatment.
- If you own a residential investment property: anything bought before 12 May 2026 keeps negative gearing. Check any purchase plans against the new-build rule.
- If you run an SMSF with existing residential borrowing: no action needed. Your arrangement is grandfathered.
- If you are buying residential property through an SMSF: from 10 August borrowing not allowed
- If you operate through a discretionary trust: the minimum tax is still only proposed. Watch the consultation before making structural changes.
- If you are adding to super: the higher contribution caps apply from 1 July 2026.
If any of these is you, now is the time to check what it means for your position. Contact our team to arrange an appointment.