By Paul Feeney, Founder and Chief Executive Officer, Otivo
9 July 2026
On 25 June 2026, the biggest rewrite of Australia's investor tax rules in a generation passed both houses of parliament — and by the next day, it had royal assent. If you earn a wage, own an investment, or plan to do either, the ground rules just shifted. Here's what's locked in, what's still coming, and the quiet detail most of the coverage skipped: superannuation came through almost untouched.
The core tax package from the 2026–27 federal budget became law on 26 June 2026. A $1,000 instant deduction applies from 2026–27, a $250 worker tax offset from 2027–28, and from 1 July 2027 the 50% capital gains discount is replaced by inflation indexation with a 30% minimum rate, and negative gearing is limited to new builds.
What's now law from the federal budget?
The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 locks in four changes — call them the four pillars of the package. Two arrive quickly and put money back in workers' pockets. Two arrive in July 2027 and reshape how investments outside super are taxed.
A $1,000 instant deduction, starting this financial year
From the 2026–27 income year, Australian tax residents who earn income from work can claim up to $1,000 in work-related expenses without keeping a single receipt. Anyone whose expenses run higher than $1,000 can still itemise them with records, exactly as before, and deductions like donations sit on top. The first returns to include it are 2026–27 returns, lodged from July 2027. According to the government's budget fact sheet, around 6.2 million workers are expected to benefit, with an average saving of about $205.
A permanent $250 tax offset for workers, from 2027–28
The Working Australians Tax Offset gives eligible workers up to $250 off their tax bill each year, applied automatically at lodgement — no forms, no separate claim. It covers wages, salaries and sole-trader income, starting with the 2027–28 income year. The government estimates 13.3 million workers stand to benefit, with 97% expected to receive the full $250. It also stacks with the income tax cuts already legislated for July 2026 and July 2027.
Capital gains tax moves from a discount to indexation, from 1 July 2027
This is the structural centrepiece. Today, individuals who sell an investment held for more than a year are taxed on only half the gain. From 1 July 2027, that 50% discount is replaced for individuals, trusts and partnerships. Instead, the purchase price of an asset is adjusted for inflation, so tax applies only to the real gain — and a minimum 30% rate applies to that gain.
Three protections were built in. Gains that accrued before 1 July 2027 keep the current treatment, so the new rules apply only to growth from that date forward. The family home remains completely exempt, as it always has been. And super funds keep their existing capital gains treatment — the changes apply outside super, not inside it.
Negative gearing narrows to new builds, from 1 July 2027
Anyone who owned or had contracted to buy an investment property before 7:30pm AEST on budget night (12 May 2026) keeps their existing arrangements until they sell. For established homes bought after that time, net rental losses can no longer be deducted against salary from July 2027 — they can only offset other residential property income, or be carried forward against future residential income or capital gains. Newly built homes keep full negative gearing, because the government wants investment flowing into new housing supply.
What isn't law yet?
One headline measure from the budget is still an announcement rather than an act of parliament. The proposed 30% minimum tax on discretionary trust income is slated to start from 1 July 2028, but the legislation hasn't been introduced. The government has flagged a second bill later this year to deal with carve-outs and technical details, including how the capital gains rules treat jointly owned assets after a death or divorce. If a family trust is part of your world, this is one to watch rather than act on.
What do the changes mean for your super?
Here's the part most coverage has skipped. While the tax on investments outside super got tougher, the settings inside super held steady. Earnings inside super are still taxed at up to 15% while you're working, and can be tax-free once a retirement income stream starts. From July 2027, a real capital gain outside super could face a minimum 30% rate. The gap between the two just got wider — and it's one reason many Australians are looking again at how much of their long-term investing happens inside super.
Separately to the tax package, the super system had its own 1 July 2026 refresh. The concessional contributions cap — which covers employer super guarantee, salary sacrifice and personal deductible contributions combined — rose from $30,000 to $32,500 for 2026–27, following indexation to average weekly earnings, according to the ATO. The non-concessional cap rose to $130,000 for 2026–27. And under payday super, employers must now pay super within seven business days of each payday rather than quarterly, so contributions start compounding sooner.
Working out whether extra contributions could leave you better off is exactly what Otivo's contributions advice is built for — it weighs up your income, age, employer contributions and the caps. When customers follow Otivo's advice in full on optimised contributions, they could be better off on average by $180,356 in today's dollars by retirement.
Frequently asked questions
When can the $1,000 instant deduction be claimed?
It applies to the 2026–27 financial year, which started on 1 July 2026. It's claimed on that year's tax return, lodged from July 2027 onwards. It isn't available on 2025–26 returns lodged this year.
Do the capital gains changes affect the family home?
No. The main residence exemption is unchanged. The new rules apply to investments such as shares and investment properties held by individuals, trusts and partnerships, and only to gains accruing after 1 July 2027.
What happens to an investment property bought before the budget?
Properties owned or under contract before 7:30pm AEST on 12 May 2026 are grandfathered — existing negative gearing treatment continues until the property is sold. The new limits mainly affect established properties bought after that time.
Did anything change inside super?
The tax package left super's tax settings alone. Separately, from 1 July 2026 the contribution caps rose, payday super began, and a new additional tax now applies to earnings on the portion of super balances above $3 million, which affects a small number of people.
Is the trust tax definitely going ahead?
It was announced in the budget with a planned start of 1 July 2028, but the legislation hasn't been introduced to parliament yet, so the final design could still change.
Where to from here
The tax rules for investing outside super moved. The rules inside super held their ground. For most Australians, the practical takeaway is that the long-term case for building wealth inside super just got stronger — and the window before the new capital gains and negative gearing rules start on 1 July 2027 is a natural moment to check how your own money is positioned. As a licensed digital financial adviser (Otivo Pty Ltd holds AFSL and Australian Credit Licence No. 485665), Otivo can show you what the numbers look like for your income, your goals and your super.
Sources
- Australian Government, Budget 2026–27, Tax reform: budget.gov.au/content/04-tax-reform.htm
- Australian Government, Budget 2026–27, New tax cuts for Australian workers fact sheet: budget.gov.au/content/factsheets/download/tax-explainers-new-tax-cuts-workers.pdf
- Parliament of Australia, Treasury Laws Amendment (Tax Reform No. 1) Bill 2026: aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=r7493
- Australian Taxation Office, Tax reform — reforming negative gearing and capital gains tax: ato.gov.au/about-ato/new-legislation/in-detail/individuals/tax-reform-boosting-home-ownership-reforming-negative-gearing-and-capital-gains-tax
- Australian Taxation Office, Contributions caps: ato.gov.au/tax-rates-and-codes/key-superannuation-rates-and-thresholds/contributions-caps
Disclaimer
The information in this communication is current as at July 2026 and has been prepared by Otivo Pty Ltd ABN 47 602 457 732, AFSL and Australian Credit Licence No. 485665. This content is general information only and has been prepared without taking into account your objectives, financial situation or needs. It is not personal financial or taxation advice and should not be relied on as such. Before acting on any information, you should consider its appropriateness having regard to your personal circumstances. This material must not be reproduced in whole or in part, or posted on any social media platform, without the prior written consent of Otivo Pty Ltd.