2026 Federal Budget tax alert
- 21 April 2026
- by BG Private
- 5-minute read
On 12 May 2026, the Federal Government will hand down its 2026/2027 Federal Budget. At this stage, the Federal Government has not made any firm statements relating to tax reform that will be enacted. However, there have been, and continue to be, sweeping rumours relating to what the Government may decide to do.
Based on current rumours, there is the possibility that the Federal Government may reduce the 50% CGT discount concession and may restrict the benefit of negative gearing
Speak with our experts today to review and understand your portfolio and optimise your returns for the future.
50% CGT discount concession
The current rules
At present, individual taxpayers and trusts get the benefit of a 50% CGT discount concession for capital gains from the sale of assets that have previously been held for more than 12 months. The CGT discount applies to all capital gains — both from the sale of real estate and other investment assets such as shares and managed funds.
What the rumours say
Based on current speculation, the 50% CGT discount concession may be reduced to possibly 33% — aligning it with the CGT discount rate currently available to superannuation funds. This would represent a significant shift, effectively increasing the taxable portion of any capital gain from 50% to 67%.
The critical question: existing or new assets?
If the 50% CGT discount is reduced to 33%, the key question becomes whether the changes will apply to CGT assets already owned at the date of the legislative change, or only to newly acquired assets purchased after that date. Based on our assessment of previous legislative changes of this nature, we believe it is most likely that the change will only apply to newly acquired assets — however, this is not yet confirmed and will depend entirely on the drafting of any legislation.
Note – at this stage, no proposed changes have been announced in relation to the application of Small Business CGT concessions, which can currently apply to the sale of business assets by those taxpayers that satisfy various threshold tests.
What this may mean for you — CGT
- Assets sold before any legislative change takes effect may likely retain the benefit of the current 50% discount.
- For assets you intend to hold long-term, the reduction (if applied to new acquisitions only) may influence decisions about new investment purchases made after any change.
- Small business owners should note that Small Business CGT concessions appear unaffected at this stage — but we will monitor this closely.
Negative gearing
The current rules
Currently, there are no restrictions on the number of assets (typically properties) that a taxpayer can negatively gear. If a taxpayer owns 10 negatively geared properties — where tax deductions exceed income generated — they can offset all of those losses against their other income, such as salary or wages.
What the rumours say
There is speculation that the Government may seek to cap the number of properties a taxpayer can negatively gear. The figure currently being discussed is 2 properties, though this may change as the Budget date approaches.
The unanswered questions
If a cap is introduced, two significant questions become:
- Will the changes apply to properties already owned at the date of the legislative change, or only to newly acquired properties?
- What is the mechanism for carrying forward losses on properties that cannot be claimed in the current year? For example — do those losses add to the cost base of the asset or can those losses be applied in a subsequent year?
What this may mean for you — negative gearing
- If you own more than 2 negatively geared properties, you may be directly impacted by any cap. Now is a good time to review your property portfolio with your advisor.
- If the changes apply only to newly acquired properties, your existing portfolio may be grandfathered — but this is far from certain and should not be assumed.
- The treatment of carry-forward losses will be critical — we will provide an update once the position is known.
What happens next?
As we get closer to Budget night on 12 May 2026, we will no doubt see further Government announcements in relation to the above tax reforms. BG Private will be monitoring developments closely.
In the meantime, we strongly encourage clients to speak with their advisor before making any significant decisions regarding the sale of assets or the acquisition of new investment properties.
Questions?
Whilst tax reform can feel unsettling, optimising your portfolio through the ever-changing economic landscape is paramount to future success. Reach out to our Tax Advisory Partner Tim Olynk or Jonathan Smarrelli, our Property Advisory Director – they are here to help you understand what these changes could mean for your specific situation and how your portfolio will benefit from strategic decision-making.
Our experts
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