Originally published 27 May 2026. Updated 14 September 2026 to reflect the Budget measures passing into law.

The May 2026 Budget delivered the most significant tax changes in decades, and most of it is now locked in. If you're earning $250,000 or more, have investments outside super, or use a family trust, this is worth reading carefully.

The Budget's core measures received Royal Assent on 26 June 2026. The changes to capital gains tax and negative gearing are now law, not proposals, and they directly affect high-income Australian professionals who invest outside superannuation. Super contribution caps have also increased, already in effect this financial year, and the super system itself came through largely untouched, in a good way. The one genuine exception still working through Parliament is the family trust tax, still in consultation. Here's what's actually confirmed, and what's still open.

Why this Budget matters more than most

Most federal budgets are incremental. This one isn't. The changes to capital gains tax and negative gearing are the most significant shift in Australian investment tax rules since the Howard government introduced the 50% CGT discount in 1999. The way Australians build wealth outside super changes from 1 July 2027, and that's no longer a maybe.

For my clients in Sydney, professionals in their late 30s to mid-40s with growing investment portfolios, mortgages, and complex financial lives, I had more calls than after any budget I can remember once this passed. The questions were all versions of the same thing: does this change what I should be doing? Here's my honest read.

The changes at a glance

• The 50% CGT discount is replaced with CPI indexation for assets acquired from 1 July 2027, with a 30% minimum tax rate on gains. Law.

• Property losses can no longer offset wages from 1 July 2027, for properties bought after Budget night (12 May 2026). Law.

• A 30% flat tax rate on discretionary trust distributions from 1 July 2028 is still a proposal, consultation on the exposure draft closes 18 September 2026.

• The concessional cap is $32,500 (up from $30,000). The non-concessional cap is $130,000 (up from $120,000). Law, already the caps for this financial year.

• The 16% marginal rate has dropped to 15% for taxable income between $18,201 and $45,000, already in effect. It drops again to 14% from 1 July 2027.

• Employers must pay super at the same time as wages, already in effect from 1 July 2026, closing a compliance gap that's cost workers billions.

Capital gains tax: the biggest change in a generation

Under the old rules, if you held an investment asset for more than 12 months, you only paid tax on 50% of the capital gain. That discount is gone for growth accruing from 1 July 2027 onwards, replaced with CPI indexation of the cost base and a 30% minimum tax rate on the gain.

Two things matter here. First, assets you already hold are transitionally protected, growth up to 30 June 2027 is still calculated under the old rules. Second, superannuation is exempt. The new rules apply to investments held personally, in a trust, or in some other structure, but not to assets inside your super fund or a company.

A share portfolio or investment property held in your personal name that you sell after 1 July 2027 will be taxed on more of its gain than under the old rules. At a 47% marginal rate with the old 50% discount, your effective rate on gains was about 23.5%. Under the new rules, a 30% minimum rate applies to the indexed gain. For most high earners, this makes outside-super investments meaningfully less attractive relative to holding assets inside super.

Negative gearing: only affects new purchases

If you already own an investment property, breathe. The negative gearing changes only apply to residential properties acquired after Budget night, 12 May 2026. Your existing portfolio is grandfathered, the old rules keep applying to it.

For properties purchased from 13 May 2026 onwards, losses from those properties are quarantined from 1 July 2027, meaning you can no longer use them to offset your salary. Losses carry forward to offset future investment income or gains from the same property. This doesn't make investment property impossible, but it substantially reduces the cash flow benefit of negatively geared property for high-income earners and changes the maths significantly for new purchases.

Commercial property and shares are unaffected. New builds are also exempt.

Family trusts: the one genuine proposal left, and it's got a deadline

Discretionary trusts, commonly used by professional families in Sydney to split income between family members and manage tax, are the one part of this Budget still actually up in the air. From 1 July 2028, trustee distributions would be taxed at a flat 30%, rather than at each beneficiary's marginal rate.

If you currently distribute trust income to a partner on a lower income, or to adult children, that strategy loses most of its tax advantage under this proposal. The government has flagged a three-year rollover relief period from 1 July 2027 for people wanting to restructure into other vehicles, including companies. Draft legislation is out, and public consultation stays open until 18 September 2026.

This one is still a proposal. Rushing to restructure an existing trust before it's finalised could be premature and costly. Watch the consultation process, and talk to your adviser and accountant together before making any structural changes.

The bright side: superannuation just got better

Against changes that make outside-super investments less attractive, the super system itself came through largely untouched, and actually improved. The concessional contribution cap has increased from $30,000 to $32,500 per person, in effect from 1 July 2026. The non-concessional cap has risen from $120,000 to $130,000. The transfer balance cap (the maximum you can hold in a tax-free pension phase) has increased from $2.0 million to $2.1 million.

I've argued for years that most high-income professionals should be maximising their super contributions before building outside-super investments. This Budget has made that argument significantly stronger. Super remains the most tax-effective long-term wealth vehicle in Australia, and it's now pulling further ahead.

"The 2026 Budget doesn't change the fundamentals of building wealth. It strengthens the case for using superannuation properly, and raises the stakes for getting your outside-super structures right."

What I'm actually telling clients right now

Here's the practical guidance I'm giving to professionals in Sydney right now.

• If you're undercontributing to super, use the full $32,500 concessional cap before building outside-super investments.

• If you hold a discretionary trust, don't restructure yet, the trust tax is still in consultation. Start the conversation with your accountant now so you understand your options once it's settled.

• If you're considering buying an investment property, model it carefully under the new rules, the maths has changed for new purchases. An existing property acquired before Budget night is fine.

• If you hold a significant share portfolio outside super, understand your cost base for assets already held. Review whether your ownership structure is still optimal now the CGT rules have changed.

• If you use negative gearing on an existing property, nothing changes for you.

Want to know what this Budget means for your specific situation? Every client's position is different. Book your first conversation and I'll walk through your super, your investment structures, and what, if anything, needs to change.