The 2026-27 Federal Budget: What It Really Means for Adelaide Investors and Business Owners

Treasurer Jim Chalmers sat down at 7:30 pm last night and delivered what he called "the most important and ambitious budget in decades." For most Australians, those kinds of lines wash over them. But buried inside the 2026-27 Federal Budget are tax changes that will materially affect how much money Adelaide property investors and business owners keep from their hard work, and the window to act is shorter than most people realise.

This is not a political commentary. We are not here to tell you whether the changes are good policy. What we are here to do is tell you exactly what changed, what stayed the same, and what, if anything, you should be thinking about doing before the rules shift on 1 July 2027.

For a link to the official budget tax reform documentation, the 2026-27 budget tax reform page on budget.gov.au has the full confirmed details.

The three changes that actually matter

Most budget coverage throws everything at the wall. Here is what genuinely matters for the investors and business owners we work with in Adelaide:

The 50% capital gains tax discount is being replaced. Negative gearing on established residential property is being restricted for new buyers. And the $20,000 instant asset write-off for small businesses is finally becoming permanent.

Everything else in the budget is either background noise for most people or so far away (2028, 2029) that it is premature to act on. We will deal with those where relevant. But those three changes are what you actually need to understand.

Capital gains tax: the biggest reform since 1999

The 50% CGT discount, the rule that meant you only paid tax on half your capital gain if you had held an asset for more than 12 months, has been part of the Australian tax system since John Howard introduced it in 1999. From 1 July 2027, it will be replaced with an inflation-based indexation model. A 30% minimum tax on capital gains will also apply after that date.

What does that mean in practice? Instead of halving your gain and paying tax on the result, you will reduce your gain by the amount of inflation that occurred during your ownership period, and then pay tax on what remains, but at least 30%. In a low-inflation environment, that could produce a similar or even better result than the old 50% discount. In a high-inflation environment or for assets with large real gains, the new model will generally produce worse results.

The keyword here is "could." Whether you are better or worse off under the new rules depends entirely on the specific numbers for your specific asset when you bought it, what you paid, the inflation during your ownership, and your marginal tax rate. There is no general answer. There is only your answer.

The 50% CGT discount is being replaced. Whether you are better or worse off depends entirely on your specific numbers. That is exactly why you need to model it before you sell, not after.

Capital Gains Tax on Inherited Assets

Capital Gains Tax is the primary way Australians incur tax liabilities from inherited assets. The Australian Taxation Office (ATO) confirms that no CGT is triggered at the point of inheritance; the tax event occurs only when the beneficiary eventually sells or disposes of the asset.

Here is what is protected, and it is important

Before anyone panics, the grandfathering in this budget is significant. The government is not trying to retroactively tax gains you have already made. Here is the framework:

The 30 June 2027 window and why it matters

Here is the practical reality. If you hold an investment property, a share portfolio, or a business asset, and you were already thinking about selling in the next two to three years, the timing of that decision is now a tax questio

For most assets with significant gains, selling before 1 July 2027 and accessing the 50% discount will produce a better after-tax result than selling after that date under the new rules depending on the inflation rate that gets applied. For assets where inflation during your ownership period was high, the indexation model might actually produce a similar or better result. You cannot know without modelling it for your specific asset.

Negative gearing: restricted, not abolished

This one has attracted the most media noise, so let's be precise. Negative gearing the ability to deduct investment property losses against your other income has not been abolished. Not for you, if you already own property. Not for anyone buying commercial property, shares, or new residential builds. It has been restricted in one specific area: established residential property purchased after budget night.

Here is the exact change. If you buy an established residential property after 7:30pm AEST on 12 May 2026 and it generates a loss, you can still offset that loss against other residential property income. You can carry unused losses forward to future years. What you cannot do, from 1 July 2027, is offset those losses against your wages or other non-property income.

For existing owners, there is no change whatsoever. If you bought your investment property any time before budget night, your negative gearing arrangements are grandfathered and protected permanently. Nothing changes for you.

Every property you owned before 7:30pm on 12 May 2026 is fully grandfathered. Your negative gearing arrangements do not change.

What the restriction means if you are buying now

If you are in the market for an established residential investment property right now, or planning to be soon, this changes your after-tax return calculation. The loss that you could previously deduct against your wages and the associated tax saving is no longer available for established properties you buy from here.

That does not mean the investment cannot still make financial sense. It means the return needs to be modelled on the new basis, and the decision to buy needs to be made with accurate numbers, not the numbers from the old tax rules.

New residential builds are unaffected. Buying a new apartment, townhouse, or house-and-land package? You can still negatively gear it against any income. That is a deliberate government choice to incentivise new housing supply.

Commercial property offices, industrial, retail, and medical suites are also completely unaffected. No restriction, no change, negative gearing fully available against any income.

For property investment tax advice, see our property investor tax returns page. For a broader portfolio strategy, see our wealth management page.

The instant asset write-off is finally permanent

Now for the good news. If you run a small business in Adelaide, this is the best thing in the budget for you.

The $20,000 instant asset write-off, which allows small businesses with turnover under $10 million to immediately deduct the full cost of eligible business assets under $20,000 rather than depreciating them over years, has been made permanent from 1 July 2026. It is no longer a temporary measure that needs to be re-legislated every year.

This matters more than it might sound. Every year for the past decade, small businesses have faced the same situation: the write-off is available this year, but will the government extend it next year? Many businesses delayed investment decisions because of that uncertainty. Waiting to buy equipment until they knew whether the rules would still apply. Holding off on technology upgrades because the tax treatment might change.

That stops now. The $20,000 threshold is permanent. You can plan ahead with confidence.

The write-off has been in place in some form since 2015, but always as a temporary measure. Making it permanent gives Adelaide small businesses the certainty to invest with confidence, not just when a budget extension happens to land in time.

What qualifies and how it works

The rule is straightforward. If your business has an aggregated turnover under $10 million and you buy an eligible business asset costing less than $20,000, you can deduct the full cost in the year you first use or install it. The $20,000 limit applies per asset, not in total, so you can buy multiple qualifying assets in the same year and deduct each one in full.

Both new and second-hand assets are eligible. The private-use portion must be excluded; only the business-use portion is deductible. Assets costing $20,000 or more are placed in the small business simplified depreciation pool and depreciated at 15% in the first year and 30% thereafter.

Tax-Dependent vs Non-Dependent Beneficiaries

Tax-dependent beneficiaries: The deceased’s spouse or former spouse, children under 18, anyone in an interdependency relationship with the deceased, and anyone who was financially dependent on the deceased at the time of death.

Non-dependent beneficiaries: Adult children (over 18) who were not financially dependent, parents, siblings, grandchildren, and other relatives.

The other measures worth knowing about

Beyond the three headline changes, the budget included a handful of other measures that affect different groups of TK clients.

The $1,000 tax deduction for workers

From the 2026-27 financial year, which means the tax return you lodge in 2027, Australian workers can deduct up to $1,000 of work-related expenses without needing to keep receipts. About 6.2 million Australians will benefit, with an average tax saving of $205 in the first year. Workers with legitimate claims above $1,000 can still claim the actual amount, with receipts, in the normal way.

This is a simplification measure as much as a tax cut. The receipt-keeping requirement for smaller work expense claims has always been a compliance burden. Removing it for claims under $1,000 will make the tax return process simpler for most employees.

Loss carry-back for companies

From 2026-27, eligible companies that make a loss in the current year can carry that loss back against tax paid in the prior two income years and receive a cash refund. For a business that paid $40,000 in company tax last year and makes a $30,000 loss this year, the carry-back produces a $7,500 cash refund. This is meaningful cash flow support for businesses going through a difficult period.

For company tax return advice, including loss carry-back assessment, see our company tax return page.

Discretionary trusts: watch this space

The budget announced a proposed 30% minimum tax on income distributed through discretionary trusts from 1 July 2028. About one million family and small business trusts across Australia could be affected.

However and this is important no draft legislation has been released. However, and this is important, no draft legislation has been released. What we do know is that the government has flagged a three-year rollover relief window opening on 1 July 2027, designed to let affected business owners restructure out of discretionary trusts into companies or fixed trusts without triggering CGT or other income tax consequences. The details of that rollover, like the tax itself, are awaiting legislation. The details are unknown. Before making any decisions about your family trust structure based on a budget announcement with no accompanying legislation, speak to our team. Trust structures are complicated enough that restructuring prematurely could create more problems than it solves.

$250 Working Australians Tax Offset

A new permanent $250 tax offset applies to over 13 million workers from the 2027-28 financial year. It is automatically applied to tax returns and effectively increases the tax-free threshold. This is on top of the already legislated reduction of the second marginal rate from 16% to 15%, which takes effect on 1 July 2026, with a further reduction to 14% from 1 July 2027. Together, these deliver a meaningful if modest ongoing tax reduction for workers.

If you have an SMSF, you are largely unaffected

One of the questions we have already had from clients since the budget landed is whether their SMSF is caught by the CGT reform. The answer is no.

The CGT changes specifically exclude superannuation funds. The 15% tax on capital gains in accumulation phase and 0% tax in pension phase are both unchanged. The 33.33% CGT discount available to SMSFs in accumulation phase is also unchanged. The negative gearing restriction does not apply to SMSF property holdings. The proposed discretionary trust minimum tax specifically excludes superannuation funds.

In short, the 2026 budget is relatively benign for SMSF investors. Your fund's position is essentially unchanged.

For SMSF administration and strategic advice, see our SMSF administration page.

So what should you actually do?

Budget night has passed. The measures are confirmed. Here is our honest advice for different groups of clients.

If you own investment property

Your existing properties are grandfathered. Your negative gearing arrangements for those properties are unchanged. Relax on that front.

If you were already planning to sell an investment property in the next two to three years, call us. The window before 1 July 2027 is real, and for many clients it will produce a materially better tax outcome. Whether it does for you depends on the specific numbers for your specific property. Get those numbers before you make a decision.

If you are thinking about buying an established residential investment property, model the return under the new rules first. The deal that looked attractive under the old negative gearing rules may still stack up or may not. Knowing which is true before you sign is the difference between a good investment decision and an expensive mistake.

If you run a small business

The permanent write-off is genuinely good news. If you have been holding off on equipment or technology purchases, waiting to see whether the write-off would be extended again, the uncertainty is gone. Plan your capital purchases with confidence.

If your business made a loss in 2025-26, ask us about the loss carry-back. A cash refund against prior year tax paid is meaningful cash flow support, and it is available now.

If you hold business assets and are considering a sale or succession, the small business CGT concessions remain unchanged. The 15-year exemption, in particular, is one of the most valuable tax concessions in the Australian system, and it remains fully intact.

See our small business tax return page and our business advisory page for where to start.

If you hold a family trust

Do nothing structural right now. The trust tax proposal lacks legislative backing. We will watch it carefully and reach out to clients when there is something concrete to act on. In the meantime, run your trust distributions and tax returns as normal.

If you are an individual taxpayer

The $1,000 instant work expense deduction applies to your 2026-27 tax return. Keep your usual records for any claims above $1,000. For claims under $1,000, you no longer need individual receipts, but you still need to have genuinely incurred the expenses.

For your individual tax return, see our Adelaide tax return page.

The bottom line

The 2026-27 Federal Budget has introduced the most significant CGT reform in 26 years, restricted negative gearing for new established residential property buyers, and in a piece of good news permanently locked in the $20,000 instant asset write-off for small businesses.

For existing property investors, the grandfathering is real and the negative gearing change does not affect you. But if you were already thinking about selling in the next two to three years, the window before 1 July 2027 is now a material tax planning consideration that deserves a proper conversation.

For small business owners, plan your asset purchases with confidence. For trust holders, wait for the legislation before doing anything structural.

And for everyone: the right answer is not the general one. It is the one that comes from looking at your specific numbers with someone who understands the rules. That is what we are here for.

Book a consultation with our team at thekalculators.com.au or call (08) 7480 2593. Monday to Friday 9:00am to 6:00pm.

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