What You Need to Know
The Australian Government has introduced several significant tax reforms that will affect many Australians from 1 July 2027 and beyond. These changes impact property investors, business owners, individuals with capital gains, and families using discretionary trusts.
Understanding these changes now can help you make informed financial decisions, minimise tax, and avoid unexpected outcomes in the future.
Important: While many of these measures have now been legislated, some are still subject to further legislation or implementation details. Tax laws can change, so professional advice should always be obtained before making significant financial decisions.
1. Capital Gains Tax (CGT) Changes
One of the most significant tax reforms in decades is the change to the way capital gains are taxed.
What’s changing?
From 1 July 2027, the current 50% Capital Gains Tax discount for individuals and trusts will be replaced with a new cost base indexation system for future capital gains.
Under the new rules:
· Capital gains will generally be calculated using an inflation-adjusted cost base rather than the existing 50% discount.
· A minimum effective tax rate of 30% will apply to net capital gains for individuals and trusts.
· The main residence exemption remains unchanged.
· Existing small business CGT concessions continue to apply.
· Transitional rules will apply for assets owned before 1 July 2027, meaning gains accrued before this date may be treated differently from gains accruing afterwards.
What does this mean for you?
If you own investment property, shares, cryptocurrency or other investments that may be subject to Capital Gains Tax, it may be worthwhile reviewing your investment strategy before the new rules commence.
Every situation is different, and careful planning could potentially reduce your future tax liability.
2. Negative Gearing Changes for Property Investors
The Government is changing the tax treatment of established residential investment properties purchased after 12 May 2026.
What’s changing?
From 1 July 2027:
· Rental losses on newly purchased established residential properties can no longer reduce your salary or wage income.
· Rental losses will instead be quarantined and can only offset:
o future rental income from that property; or
o future capital gains made on the same property.
· New residential builds continue to qualify for full negative gearing.
· Existing investment properties owned before the changes remain protected under grandfathering provisions.
What does this mean for you?
If you’re planning to purchase an investment property, the tax benefits may differ significantly depending on whether the property is an established home or a new build.
Obtaining advice before purchasing could save you thousands over the life of your investment.
3. Proposed 30% Minimum Tax on Discretionary Trusts
The Government has announced a 30% minimum tax on discretionary trust income from 1 July 2028. While this measure has been announced, further implementation details are still being developed.
The proposal includes:
· A minimum 30% tax paid by the trustee.
· Beneficiaries receiving a non-refundable tax credit for tax already paid.
· Exemptions for:
o Fixed trusts
o Testamentary trusts
o Deceased estates
o Charitable trusts
o Certain other excluded trust types.
What does this mean for you?
Families and small businesses using discretionary trusts should review their trust structure and future distribution strategies well before these rules commence.
4. Electric Vehicle (EV) Fringe Benefits Tax (FBT) Changes
From 1 April 2027, new long-term Fringe Benefits Tax rules will apply to electric vehicles.
What does this mean for you?
If your employer provides an electric vehicle, or you salary package one through work, your tax treatment may change.
Businesses operating vehicle fleets should review their salary packaging arrangements and tax modelling to determine the most tax-effective approach.
5. Foreign Investment Restrictions
Foreign investors continue to face restrictions when purchasing established residential property in Australia.
What does this mean?
Anyone who is not an Australian citizen or permanent resident should ensure they comply with the Foreign Investment Review Board (FIRB) requirements before purchasing residential property.
6. Increased ATO Compliance Activity
The Australian Taxation Office continues to expand its data matching and compliance programs.
During the 2027–28 financial year, the ATO will continue to focus on:
· Rental property deductions
· Airbnb, Stayz and other short-term accommodation
· Mixed-use properties
· Contractor reporting (TPAR)
· Motor vehicle claims
· Work-related expense claims
· Cryptocurrency transactions
· Investment income
The ATO now receives information directly from banks, employers, financial institutions, government agencies and digital platforms, making it easier to identify incorrect or omitted information.
What does this mean for you?
Good record keeping has never been more important.
Keeping accurate documentation and claiming only legitimate deductions will help reduce the risk of ATO reviews, audits, penalties and interest charges.
Planning Ahead Can Save Tax
Although these reforms introduce new challenges, they also create planning opportunities.
Whether you’re considering selling an investment, purchasing property, reviewing your trust structure, or planning for retirement, obtaining professional advice before making major decisions can often produce better long-term tax outcomes.
Every taxpayer’s circumstances are different, and strategies that work for one person may not be suitable for another.
How MAS Tax Accountants Joondalup can help
We help individuals, investors and business owners understand complex tax legislation and develop practical strategies that suit their personal circumstances.
Our team can assist you to:
· Understand how these tax changes affect you.
· Review your investment or trust structure.
· Plan Capital Gains Tax events before or after 1 July 2027.
· Maximise legitimate rental property deductions.
· Prepare for future trust taxation changes.
· Develop tax-effective strategies for your investments and business.
Please Note
The information in this article is general in nature and is based on legislation and announcements available at the time of publication. Tax laws, Government policy and ATO guidance may change as further legislation is introduced or additional clarification is provided.
If you become a client of MAS Tax Accountants Joondalup, we will keep you informed of any significant tax changes that may affect your personal or business circumstances and provide tailored advice to help you remain compliant while taking advantage of any available tax planning opportunities.
