Key Federal Budget tax measures pass Parliament
Two bills* implementing key tax reform measures announced in the Federal Budget, passed
both houses yesterday and awaits royal assent.
Federal Budget announcements included in the bills:
– Replacement of 50% CGT discount – indexed cost base method will apply to
capital gains accrued from 1 July 2027
– Introduction of a minimum 30% tax rate – will apply to realised capital gains
accrued from 1 July 2027
– Negative gearing residential property – restricted to new-build properties from 1
July 2027
– Working Australians Tax Offset – commences 1 July 2027
– $1,000 standard deduction – applies for work related expenses from 1 July 2026
Additional amendments to the bills include:
– Small business CGT concessions – turnover threshold for the 50% active asset
reduction will increase from $2 million to $10 million from 1 July 2027
– Prohibition on Limited Recourse Borrowing Arrangements (LRBA) – SMSFs
cannot enter new LRBA arrangements in real property, except where the asset
qualifies as business real property (commencing 45 days after royal assent)
– Deductible gifts and donations – can reduce capital gains subject to the minimum
30% tax from 1 July 2027
– Income support payments – list of payments that qualify for an exemption from the
minimum 30% CGT tax rate from 1 July 2027
Further amendments
In a Treasury media release, the Government indicated it will continue to implement
further tranches of legislation as they roll out the full tax reform package in the
months ahead.
Media reports indicate the Government will implement measures to prevent jointly
owned investment properties, that transfer to a co-owner due to death or divorce,
from losing access to the 50% CGT discount on gains accrued before 1 July 2027
and the ability for established properties to negatively gear (if purchased before
Budget night).
