Last night, Jim Chalmers presented the 2026/27 Federal Budget, marking his fifth as Federal Treasurer.

Our team provides commentary on several of the key measures announced in the Budget, offering our insights into what these changes may mean for individuals, business owners and investors.

We aim to assist our clients to unpack the technical details and highlight the potential real-world impacts across tax, superannuation, and wealth structures, with a focus on how to best position themselves in response to the evolving landscape.

Our comments

Cheree Woolcock, CEO & Director

From an income tax perspective, the 2026/27 Federal Budget contained more tax changes since CGT was introduced in 1985.

The government is selling their backflip on promises they made during the last election campaign, detailing how the budget is designed to level the playing field for workers, first home owners and to effectively reduce intergenerational inequity.

Significant changes were announced relating to:

• CGT
• Negative Gearing
• Taxation of Trust Distributions
• FBT

They are all proposed to have a significant negative impact on investors.

On the other hand, they announced a new $250 Working Australian Tax Offset (WATO), minor tax breaks and a $1,000 no-receipt instant tax deduction for wage earners.

There had been intensive speculation around the proposed budget changes, and as to whether or not they would be grandfathered, most of the changes are to take effect on 1 July 2027.

There is a long way to go until these changes are law, but as always, if these announcements affect you, it’s time to start planning. We are here to assist.

A quiet year for Superannuation

Daniel Shaw, Director & SMSF Specialist Adviser

Last night’s budget was pleasingly quiet on the superannuation front.

Superannuation funds were not impacted by the changes to negative gearing, through Limited Recourse Borrowing Arrangements (LRBAs), and they were spared from the CGT changes and will continue to have their net capital gains taxed at 33%.

Whilst it was quiet from a budget perspective, there is plenty of work to deal with in relation to Division 296, which was made law in March 2026.

Trust tax reform signals major structural shift for business and investment entities.

Tim Kelleher, Director

The 2026–27 Federal Budget confirms a structural shift in trust taxation with:

• A 30% minimum tax on discretionary trust income
• Applies from 1 July 2028
• Paid at trustee level, not as a beneficiary withholding
• Beneficiaries receive non‑refundable tax offsets for that tax
• Objective: to ensure effective tax on trust income ≥ 30%

This is effectively a hybrid entity taxation model, moving discretionary trusts closer to companies in tax outcome but without full flow through of imputation benefits always being available.

Discretionary Trust structures could now end up being taxed at a rate higher than the 25% rate paid by most small business companies and much higher if taxed trust income is distributed to corporate beneficiaries where no tax offset is available for the tax paid by the trust. The use of the ‘bucket company’ for receipt of residual income from discretionary trusts would appear to be dead in the water.

These measures will cause taxpayers to look closely at their current discretionary trust structures with a view to potentially restructuring out of these into fixed trust or company structures. The budget provides for CGT restructure rollover relief to facilitate these switches but other costs such as State based stamp duty and other restructuring costs will need to be factored in to any decision to restructure current arrangements.

This measure appears to be nothing short of a revenue grab and contrary of its stated intent to tax higher net worth individuals, will in fact negatively impact a very large number small businesses and medium income families who currently use discretionary trusts as part of their legitimate business and investment structures.

View the full reports

Given the breadth and complexity of these proposed changes, now is an important time to understand how the Budget may impact your personal, business and investment structures.

We encourage you to review our full commentary insights, as well our Tax & Superannuation report and our Federal Budget overview report (link below) for a broader summary of all measures announced.

These resources are designed to help you interpret what the reforms could mean in practice and begin considering any potential planning implications.

Please contact your DFK Benjamin King Money representative if you require clarification or have any concerns about last night’s Budget announcements.