06 Jul Government’s tax reform package

The Government has recently legislated several of the tax reform measures announced in the 2026 Federal Budget (and in later media releases).  These include, among other things:  

• Replacing the CGT discount with cost base indexation and a 30% minimum tax on gains accruing from 1 July 2027 (including gains on pre-CGT assets);
• Increasing the small business turnover threshold for the 50% active asset reduction from $2 million to $10 million;
• Limiting negative gearing for residential property to new residential dwellings from 1 July 2027 (subject to transitional rules); and
• Introducing the Working Australians Tax Offset from 1 July 2027, and the $1,000 instant tax deduction for work-related expenses from 1 July 2026.

After a round of consultation, the Government has also announced further proposed measures, broadly including (among others):

• A new targeted CGT discount for investors in innovative start-ups;
• Barring SMSFs from utilising future limited recourse borrowing arrangements (‘LRBAs’) to acquire residential property; and 
• Exempting income of discretionary testamentary trusts from the minimum tax proposed for trusts.