Devenny Payne Budget 2026-27 Update
We have put together the attached summary to help you understand what has been announced and, importantly, what it means for your situation. These are announcements only at this stage - legislation is still required to give effect to most of the measures. We will continue to keep you updated as things progress.
Please note the key dates listed throughout, as some changes have already taken effect and others require action before they commence.
Federal Budget 2026-27 Client Update - What the Changes Mean for You - PDF
Big Picture Economic Settings
- Underlying cash deficit: approx $28–31 billion in 2026–27, smaller than earlier forecasts due to $63.8bn in savings and reprioritisations
- Spending: ~$833 billion in 2026–27
- Debt: Still rising, but stabilising as a share of GDP over the forward estimates
- Framing: The government explicitly positions this as the biggest tax and housing reform since 2000, prioritising fairness over short‑term political comfort
Tax and Cost of Living Measures (Households)
✅ Workers
- $250 Working Australians Tax Offset (WATO)
- Permanent annual offset
- Starts 2027–28 income year (felt in 2028 tax returns)
- Applies to wage and salary income only
- Benefits 13+ million workers
- $1,000 instant tax deduction
- No receipts required
- From 2026–27
- Average saving approx $200 per worker
- Stage 3+ tax cuts proceed as legislated
- 16% bracket drops to 15% from 1 July 2026
- Drops again to 14% from 1 July 2027
- Medicare levy thresholds increased, lifting more low‑income earners out of the levy
Housing and Property Tax Reforms (Major Shift)
❌ Property Investors
- Negative gearing limited to new builds only
- Applies from 1 July 2027
- Existing investments purchased before 7:30pm, 12 May 2026 are grandfathered
- Capital Gains Tax overhaul
- 50% CGT discount abolished from 1 July 2027
- Replaced with:
- Inflation‑indexed cost base
- Minimum 30% tax rate on real gains
- Gains accrued before July 2027 still receive the 50% discount
Purpose: Redirect capital towards productive investment and owner‑occupied and new housing stock.
Trusts and Investment Structures
- Discretionary trusts face a new minimum tax
- 30% tax on distributions from July 2028
- Targets income splitting
- Expected to raise $4.5 billion over five years
- Three‑year restructuring window (from July 2027)
- Allows rollover relief to companies or fixed trusts
Small Business Measures
- ✅ $20,000 instant asset write‑off made permanent
- For businesses with turnover under $10m
- From 1 July 2026
- ✅ Loss carry‑back scheme reintroduced
- Improves cash flow during investment or downturns
Health, Care and Social Spending
- Aged care: ~$3–3.7bn
- 5,000+ new beds
- Dementia and quality‑of‑care upgrades
- NDIS and foundational supports: ~$3bn outside core NDIS
- Medicines: Reduced PBS costs for key medications
Defence, Infrastructure and Energy Security
- Defence: $53 billion extra over 10 years
- Road and rail: $8.6 billion
- Fuel and gas security
- 20% domestic gas reservation
- Strategic fuel supply investments
Clear Winners and Losers
Winners
- Wage and salary earners
- First‑home buyers (indirectly via housing reform)
- Small businesses investing in assets
- Older Australians needing aged care
- Defence and infrastructure sectors
Losers
- Property investors relying on negative gearing
- Trust‑heavy income splitting structures
- Passive capital gain strategies
Bottom Line (Advisor View)
This Budget:
- Prioritises structural tax reform over cash splashes
- Explicitly trades off investor concessions to fund fairness and housing access
- Signals a multi‑year shift in how wealth, property and trusts are taxed
- Will materially change advice strategies for:
- Property investors
- Family trust clients
- Business succession and structure planning