The latest tax reforms in Australia
Today I want to discuss the latest tax reforms in Australia and what they could mean for you, your investments, your superannuation, and your retirement planning.
There have been several important changes announced and legislated during 2026. Some are already in effect, while others are scheduled to begin over the next few years.
Let’s discuss and simplify those tax changes and focus on the reforms that may have the biggest impact on Australians.
Personally, I believe that most people do not even realise how much of the impact those changes will have on your savings, your planning, and the future of Australia.
TAX CUTS FOR ALL AUSTRALIANS
What’s changing?
From 1 July 2026, the tax rate applying to income between $18,201 and $45,000 has reduced from 16% to 15%.
Then from 1 July 2027, that same rate will reduce further to 14%. These changes have now become law.
What does that mean?
For most workers, this means:
- Lower tax withheld from salary
- Higher take-home pay
- Additional cost-of-living relief
The actual benefit varies depending on your income, but virtually every taxpayer receives some benefit from these changes.
SUPERANNUATION TAX CHANGES
One of the most talked-about reforms is the introduction of the new Division 296 tax.
Who is affected?
The changes target Australians with very large superannuation balances.
In 2026, legislation introduced additional taxation on earnings attributable to super balances above specific thresholds. This represents one of the most significant superannuation tax reforms in recent years.
What should retirees know?
For most Australians, these changes won’t affect them directly.
However, clients with substantial self-managed super funds, family wealth structures, or long-term estate planning goals should review their strategies to ensure they remain tax-effective.
SMALL BUSINESS TAX RELIEF
For business owners, there is some good news.
The Government has announced reforms designed to simplify business taxation and improve cash flow.
Measures include:
- Making the $20,000 instant asset write-off permanent
- Simplification initiatives for business tax reporting
- Reforms aimed at reducing administrative burdens for small businesses.
If you operate a small business, it may be worthwhile reviewing planned equipment purchases and business investment decisions with your accountant.
PROPOSED PROPERTY TAX CHANGES
Let’s talk property.
Several significant proposals have been announced that could impact property investors from 1 July 2027.
Negative Gearing
The Government has proposed limiting negative gearing benefits primarily to new residential developments.
Existing investment properties held before the changes would generally maintain current arrangements under proposed grandfathering rules.
Capital Gains Tax
Another proposal would replace the traditional 50% Capital Gains Tax discount with a different system linked to inflation.
These proposed reforms are intended to change how future capital gains are taxed and could influence investment decisions for property owners and investors.
Important: Some of these measures still require legislative implementation and are proposed for future commencement dates.
TRUST AND WEALTH STRUCTURING REFORMS
Another important area is discretionary trusts.
The Government has proposed introducing a minimum tax rate for certain discretionary trust arrangements beginning in future years.
These reforms are aimed at simplifying the tax system and addressing income distribution arrangements commonly used in family groups.
If your family operates through a trust structure, professional advice will become increasingly important.
WHAT DOES THIS MEAN FOR RETIREES?
If you are retired or preparing for retirement, here are my key takeaways:
- Review your super strategy
Particularly if you have large balances or multiple retirement structures.
- Review investment ownership
The way your assets are owned may become increasingly important as future tax reforms unfold.
- Consider the long term
Many of these reforms won’t affect your tax return immediately, but they may influence long-term wealth accumulation and estate planning strategies.
- Seek advice before making major decisions
Tax legislation is constantly evolving, and what looks like a simple decision today may have significant consequences tomorrow.
CONCLUSION
Are those changes for our benefit?
No, and this is a big NO!.
Tax cuts for all Australians as Albanese calls it, give us all some scraps.
Tax reduction by 1% is meaningless maximum tax saving of $268per annum.
Compare this to the introduced Capital Gains Tax of 30% tax from $1 regardless of your income. You could be a retiree with no income earned, if you sell a property, shares or any other asset held for long term, you will be paying 30% tax on all asset increase value.
For example, if you sell an asset and you made a profit of $100,000, and you have no other income, your Capital Gains Tax based on the last year tax calculations with 50% discount, would be $6,520 including Medicare, leaving you about $93,480 after tax as your money to enjoy.
Under the new system, the minimum 30% tax will apply, therefore your tax bill will be $30,000 leaving you only $70,000, so $23,480 less.
So now you can see the difference of this general tax reduction by 1% meaning $268pa saving in your pocket, (I am being sarcastic now), but taking 30% of your capital, on sale of your investments.
Personally, I think this tax reforms will introduce many problems for us all.
- Most people will start investing around tax-minimisation, rather than for long term growth.
- Lots of people will start questioning the idea of building wealth, as the government will take more than a half of it in taxes. It is much better, easier and safer to just save basics in super, as for now tax is unchanged, and rely on government support in retirement.
- There will be no incentive to build a business. Not only employment legislation is so complex, difficult and costly that most small businesses are suffering today already, now the introduction of the new tax system will remove any benefits of long-term business building. Running your own business is the biggest risk you could take with your life and your savings. So why bother, why risk it, why live in constant worry and stress if you are going to be penalised for all your efforts. There are better places in the world for building businesses, and I am worried that most young people will recognise this and leave Australia.
- As the new tax introduces tax penalty for growth investing, most people will stop investing into shares, especially smaller growth-oriented companies, therefore most of the new business and inventions will leave Australia or will be overtaken by international investors or major overseas corporations. This is not a good prognosis to Australia’s future.
- None of the introduced ideas are helping young people get into housing, as Albanese gives scraps with one hand and take twice that much with the other. Young people want to invest to be able to save for their first home. Most young people invest into EFTs as a form of building a diversified growth portfolio. But the new tax that penalises growth investing will see on average a delay in home ownership more than 4 years, based on latest findings.
- Obviously investing via super is the best option, but no young person wants to lock away money for 30-40 years, especially considering government’s constant policy changes in relation to the superannuation system in Australia. And remember my article explain the new tax on all super account with balances $3Mil or more. Most young people will be faced with this dilemma, so planning is essential.
So now, it is even more important than ever to introduce proper planning, if you still wish to build and protect your wealth in a tax-effective manner.
If you’d like help understanding how these reforms may affect your personal situation, please contact our office. It is essential to speak with a qualified financial adviser and tax professional.
By: Katherine Isbrandt CFP®
Money Strategist & Retirement Planner
Principal of About Retirement
