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.