--- title: "Australian Budget 2026-27" slug: "australian-budget-2026-27" jurisdiction: "Commonwealth of Australia" jurisdiction_code: "commonwealth" collection: "budget" status: "in force" making_date: "2026-05-12" version_date: "2026-05-12" compilation: "2026-27" register_id: "budget-2026-27" canonical_url: "https://zoelaw.ai/legislation/australian-budget-2026-27" date_modified: "2026-06-03" source: Zoe (https://zoelaw.ai) --- # Australian Budget 2026-27 Official source: https://budget.gov.au Released: 2026-05-12 ## Budget home Source: https://budget.gov.au/index.htm # Resilience and reform Building an economy that works for all Australians The Treasurer delivered the Federal Budget on Tuesday 12 May 2026 ## [Budget documents](/content/documents.htm) Papers detailing planned revenue and spending for the coming financial year ## [Overview](/content/overview/index.htm) Overview documents highlighting the key measures for this Budget ## [Calculator](/content/calculator.htm) Estimate your tax cut by entering your annual taxable income in to the calculator ## Budget themes ![](dist/img/themes/icon-fuel.png) ### [Fuel supply and security](content/01-fuel-supply-and-security.htm) Responding to the global oil shock ![](dist/img/themes/icon-col.png) ### [Cost of living](content/02-cost-of-living.htm) Taking pressure off Australians ![](dist/img/themes/icon-productivity.png) ### [Productivity](content/03-productivity.htm) Making our economy more productive ![](dist/img/themes/icon-tax.png) ### [Tax reform](content/04-tax-reform.htm) Tax reform for workers, businesses and future generations ![](dist/img/themes/icon-care.png) ### [Care and opportunity](content/05-care-and-opportunity.htm) Strengthening care and broadening opportunity ![](dist/img/themes/icon-security.png) ### [Security and investment](content/06-security-and-investment.htm) Building a resilient and secure Australia ## Budget priorities Use this tool to show the most relevant measures for the topic selected Individuals Households Business Industry Regional International ### [New tax cuts](content/02-cost-of-living.htm#m1) More tax cuts to all Australian taxpayers, with additional tax cuts in 2026 and 2027 Individuals Households Business Industry Regional International ### [Boosting fuel and fertiliser security](/content/01-fuel-supply-and-security.htm#m1) Securing fuel now and building reserves for the future Individuals Households Business Industry Regional International ### [Relieving pressure on fuel users](/content/01-fuel-supply-and-security.htm#m1) Interest-free loans to help manufacturing and logistics businesses Individuals Households Business Industry Regional International ### [Tax cut for Australian workers](/content/04-tax-reform.htm#m1) $250 Working Australians Tax Offset to help with cost of living Individuals Households Business Industry Regional International ### [Cheaper medicines](/content/02-cost-of-living.htm#m4) Cutting the cost of life-saving medicines Individuals Households Business Industry Regional International ### [Building housing infrastructure](/content/02-cost-of-living.htm#m3) Local housing infrastructure to support up to 65,000 new homes Individuals Households Business Industry Regional International ### [Reducing red tape](/content/03-productivity.htm#m2) Cutting regulatory burden by $10.2 billion per year Individuals Households Business Industry Regional International ### [Lowering taxes for businesses](/content/04-tax-reform.htm#m2) New measures lowering taxes for businesses and start-ups Individuals Households Business Industry Regional International ### [Helping more home owners](/content/02-cost-of-living.htm#m3) Reforms to support an additional 75,000 homeowners Individuals Households Business Industry Regional International ### [Record funding for hospitals](/content/05-care-and-opportunity.htm#m3) $25 billion additional investment for public hospitals Individuals Households Business Industry Regional International ### [Better aged care](/content/05-care-and-opportunity.htm#m2) More beds, more support packages and better care for older Australians Individuals Households Business Industry Regional International ### [Funding boost for defence](/content/06-security-and-investment.htm#m2) A record additional $53 billion investment in defence Individuals Households Business Industry Regional International ### [Significant road and rail projects](/content/06-security-and-investment.htm#m3) $8.6 billion for nationally significant road and rail projects Individuals Households Business Industry Regional International ### [Reserving gas exports](/content/01-fuel-supply-and-security.htm#m3) Reserving 20 per cent of gas exports for Australians Individuals Households Business Industry Regional International ### [Accelerating approvals](/content/03-productivity.htm#m1) Faster environmental and foreign investment approvals Individuals Households Business Industry Regional International ## Budget documents Source: https://budget.gov.au/content/documents.htm # Budget documents The Treasurer delivered the Federal Budget on Tuesday 12 May 2026 ## Budget papers ### [Budget Strategy and Outlook](bp1/index.htm) Budget Paper No. 1 ### [Budget Measures](bp2/index.htm) Budget Paper No. 2 ### [Federal Financial Relations](bp3/index.htm) Budget Paper No. 3 ### [Agency Resourcing](bp4/index.htm) Budget Paper No. 4 ### [Women's Budget Statement](womens-statement/index.htm) ## Media ### [Treasurer's speech to Parliament](https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/speeches/2026-27-budget-speech-parliament-house-canberra "Treasury portfolio ministers - Budget Speech 2026-27") ### [Ministerial media releases](media.htm) ## Ministerial statements ### [Ministerial statements](ministerial-statements/index.htm) ## Portfolio papers ### [Portfolio Budget Statements](pbs/index.htm) ## Resources ### [Overview](overview/index.htm) ### [Fact sheets](/content/downloads.htm#fact-sheets) ### [Downloads](downloads.htm) ### [Appropriation Bills](appropriation-bills/index.htm) ## Outlooks and outcomes ### [Mid-Year Economic and Fiscal Outlook](myefo/index.htm) ### [Final Budget Outcome](fbo/index.htm) ### [Portfolio Supplementary Additional Estimates Statements](psaes/index.htm) ## Downloads Source: https://budget.gov.au/content/downloads.htm # Downloads Budget Papers Publication/Part Downloads Budget Paper No. 1: Budget Strategy and Outlook [PDF 6.99 MB](/content/bp1/download/bp1_2026-27.pdf) Budget Paper No. 2: Budget Measures [PDF 1.96 MB](/content/bp2/download/bp2_2026-27.pdf) Budget Paper No. 3: Federal Financial Relations [PDF 4.81 MB](/content/bp3/download/bp3_2026-27.pdf) Budget Paper No. 4: Agency Resourcing [PDF 5.92 MB](/content/bp4/download/bp4_2026_27_consolidated.pdf) Women’s Budget Statement [PDF 0.97 MB](/content/womens-statement/download/womens-budget-statement-2026-27.pdf) Budget Papers chart data [ZIP 291 kB](/content/download/chart-data-final.zip) Overview Publication/Part Downloads Budget overview - Resilience and reform [PDF 14.7 MB](/content/overview/download/budget-overview-2026-27.pdf) [DOCX 1.62 MB](/content/overview/download/budget-overview-2026-27.docx) Fact sheets Publication/Part Downloads Productivity Package [PDF 944 kB](/content/factsheets/download/factsheet-productivity.pdf) [DOCX 1.15 MB](/content/factsheets/download/factsheet-productivity.docx) Backing small businesses to grow, compete and build resilience [PDF 1.11 MB](/content/factsheets/download/factsheet-backing-small-business.pdf) [DOCX 2.29 MB](/content/factsheets/download/factsheet-backing-small-business.docx) Whole-of-Government Regulatory Reform Agenda [PDF 0.97 MB](/content/factsheets/download/factsheet-regulatory-reform.pdf) [DOCX 1.42 MB](/content/factsheets/download/factsheet-regulatory-reform.docx) Tax explainer - Minimum tax on discretionary trusts [PDF 358 kB](/content/factsheets/download/tax-explainers-minimum-tax-discretionary-trusts.pdf) [DOCX 170 kB](/content/factsheets/download/tax-explainers-minimum-tax-discretionary-trusts.docx) Tax explainer - Negative Gearing and Capital Gains Tax Reform [PDF 432 kB](/content/factsheets/download/tax-explainers-negative-gearing-capital-gains-tax.pdf) [DOCX 182 kB](/content/factsheets/download/tax-explainers-negative-gearing-capital-gains-tax.docx) Tax explainer - New tax cuts for Australian workers [PDF 432 kB](/content/factsheets/download/tax-explainers-new-tax-cuts-workers.pdf) [DOCX 253 kB](/content/factsheets/download/tax-explainers-new-tax-cuts-workers.docx) Tax explainer - Small business Capital Gains Tax and Discretionary Trusts [PDF 466 kB](/content/factsheets/download/tax-explainers-cgt-trusts-impacts.pdf) [DOCX 735 kB](/content/factsheets/download/tax-explainers-cgt-trusts-impacts.docx) ## Overview Source: https://budget.gov.au/content/overview/index.htm # Overview ## Resilience and reform The conflict in the Middle East has severely disrupted global oil supplies and is contributing to higher inflation, slower growth and extreme economic uncertainty at home and abroad. At the same time, there are big structural changes unfolding in areas like energy and technology, and longstanding challenges when it comes to productivity, intergenerational equity and access to home ownership that demand our attention. This Budget is about getting us through the global oil shock and taking pressure off Australians, while continuing to build a stronger economy, better tax system, fairer housing market and a more sustainable budget. Publication Download Budget overview - Resilience and reform [PDF 14.7 MB](/content/overview/download/budget-overview-2026-27.pdf) [DOCX 1.62 MB](/content/overview/download/budget-overview-2026-27.docx) ## Budget themes ### [Fuel supply and security](/content/01-fuel-supply-and-security.htm) Responding to the global oil shock ### [Cost of living](/content/02-cost-of-living.htm) Taking pressure off Australians ### [Productivity](/content/03-productivity.htm) Making our economy more productive ### [Tax reform](/content/04-tax-reform.htm) Tax reform for workers, businesses and future generations ### [Care and opportunity](/content/05-care-and-opportunity.htm) Strengthening care and broadening opportunity ### [Security and investment](/content/06-security-and-investment.htm) Building a resilient and secure Australia ## Budget Paper 1: Budget Strategy and Outlook Source: https://budget.gov.au/content/bp1/index.htm # Budget Paper No. 1 Budget Strategy and Outlook ![](/dist/img/covers/budget 2026-27_cover_bp1.png) Publication/Part Downloads **Budget Paper No. 1: Budget Strategy and Outlook** [PDF 6.99 MB](/content/bp1/download/bp1_2026-27.pdf) Preliminaries [PDF 275 kB](/content/bp1/download/bp1_prelims.pdf) [DOCX 162 kB](/content/bp1/download/bp1_prelims.docx) Statement 1: Overview [PDF 640 kB](/content/bp1/download/bp1_bs-1.pdf) [DOCX 644 kB](/content/bp1/download/bp1_bs-1.docx) Statement 2: Economic Outlook [PDF 533 kB](/content/bp1/download/bp1_bs-2.pdf) [DOCX 1.63 MB](/content/bp1/download/bp1_bs-2.docx) Additional data: Nominal GDP (online only) [XLSX 21 kB](/content/bp1/download/bp1_s2-data-nominal-GDP.xlsx) Statement 3: Fiscal Strategy and Outlook [PDF 830 kB](/content/bp1/download/bp1_bs-3.pdf) [DOCX 1.44 MB](/content/bp1/download/bp1_bs-3.docx) Statement 4: Tax reform for workers, businesses and future generations [PDF 861 kB](/content/bp1/download/bp1_bs-4.pdf) [DOCX 2.34 MB](/content/bp1/download/bp1_bs-4.docx) Statement 5: Revenue [PDF 641 kB](/content/bp1/download/bp1_bs-5.pdf) [DOCX 546 kB](/content/bp1/download/bp1_bs-5.docx) Table 1: Australian Government (cash) receipts (online only) [CSV 5 kB](/content/bp1/download/bp1_s5-online_t1.csv) Table 2: Major categories of (cash) receipts as a proportion of gross domestic product (online only) [CSV 5 kB](/content/bp1/download/bp1_s5-online_t2.csv) Table 3: Australian Government (accrual) revenue (online only) [CSV 5 kB](/content/bp1/download/bp1_s5-online_t3.csv) Table 4: Major categories of (accrual) revenue as a proportion of gross domestic product (online only) [CSV 3 kB](/content/bp1/download/bp1_s5-online_t4.csv) Statement 6: Expenses and Net Capital Investment [PDF 788 kB](/content/bp1/download/bp1_bs-6.pdf) [DOCX 521 kB](/content/bp1/download/bp1_bs-6.docx) Statement 7: Debt Statement [PDF 399 kB](/content/bp1/download/bp1_bs-7.pdf) [DOCX 426 kB](/content/bp1/download/bp1_bs-7.docx) Statement 8: Forecasting Performance and Sensitivity Analysis [PDF 356 kB](/content/bp1/download/bp1_bs-8.pdf) [DOCX 1.63 MB](/content/bp1/download/bp1_bs-8.docx) Statement 9: Statement of Risks [PDF 754 kB](/content/bp1/download/bp1_bs-9.pdf) [DOCX 269 kB](/content/bp1/download/bp1_bs-9.docx) Statement 10: Australian Government Budget Financial Statements [PDF 1.08 MB](/content/bp1/download/bp1_bs-10.pdf) [DOCX 811 kB](/content/bp1/download/bp1_bs-10.docx) Statement 11: Historical Australian Government Data [PDF 649 kB](/content/bp1/download/bp1_bs-11.pdf) [DOCX 330 kB](/content/bp1/download/bp1_bs-11.docx) Notes [PDF 149 kB](/content/bp1/download/bp1_notes.pdf) [DOCX 51 kB](/content/bp1/download/bp1_notes.docx) ## Budget Paper 2: Budget Measures Source: https://budget.gov.au/content/bp2/index.htm # Budget Paper No. 2 Budget Measures ![](/dist/img/covers/budget 2026-27_cover_bp2.png) Publication/Part Downloads **Budget Paper No. 2: Budget Measures** [PDF 1.96 MB](/content/bp2/download/bp2_2026-27.pdf) Preliminaries [PDF 327 kB](/content/bp2/download/bp2_01_prelims.pdf) [DOCX 263 kB](/content/bp2/download/bp2_01_prelims.docx) Part 1: Receipt Measures Part 2: Payment Measures [PDF 1.43 MB](/content/bp2/download/bp2_02_receipt_payment.pdf) [DOCX 494 kB](/content/bp2/download/bp2_02_receipt_payment.docx) Notes [PDF 142 kB](/content/bp2/download/bp2_03_notes.pdf) [DOCX 52 kB](/content/bp2/download/bp2_03_notes.docx) ## Budget Paper 3: Federal Financial Relations Source: https://budget.gov.au/content/bp3/index.htm # Budget Paper No. 3 Federal Financial Relations ![](/dist/img/covers/budget 2026-27_cover_bp3.png) Publication/Part Downloads **Budget Paper No. 3: Federal Financial Relations** [PDF 4.81 MB](/content/bp3/download/bp3_2026-27.pdf) Preliminaries [PDF 278 kB](/content/bp3/download/bp3_01_prelims.pdf) [DOCX 133 kB](/content/bp3/download/bp3_01_prelims.docx) Part 1: Australia’s Federal Relations [PDF 357 kB](/content/bp3/download/bp3_02_part_1.pdf) [DOCX 250 kB](/content/bp3/download/bp3_02_part_1.docx) Part 2: Payments for specific purposes [PDF 297 kB](/content/bp3/download/bp3_03_part_2_overview.pdf) [DOCX 74 kB](/content/bp3/download/bp3_03_part_2_overview.docx) Health [PDF 631 kB](/content/bp3/download/bp3_04_part_2_health.pdf) [DOCX 190 kB](/content/bp3/download/bp3_04_part_2_health.docx) Education [PDF 329 kB](/content/bp3/download/bp3_05_part_2_education.pdf) [DOCX 82 kB](/content/bp3/download/bp3_05_part_2_education.docx) Skills and workforce development [PDF 253 kB](/content/bp3/download/bp3_06_part_2_skills.pdf) [DOCX 68 kB](/content/bp3/download/bp3_06_part_2_skills.docx) Community services [PDF 308 kB](/content/bp3/download/bp3_07_part_2_community.pdf) [DOCX 84 kB](/content/bp3/download/bp3_07_part_2_community.docx) Affordable housing [PDF 285 kB](/content/bp3/download/bp3_08_part_2_affordable.pdf) [DOCX 75 kB](/content/bp3/download/bp3_08_part_2_affordable.docx) Infrastructure [PDF 600 kB](/content/bp3/download/bp3_09_part_2_infrastructure.pdf) [DOCX 163 kB](/content/bp3/download/bp3_09_part_2_infrastructure.docx) Environment, energy and water [PDF 616 kB](/content/bp3/download/bp3_10_part_2_environment.pdf) [DOCX 180 kB](/content/bp3/download/bp3_10_part_2_environment.docx) Contingent payments [PDF 208 kB](/content/bp3/download/bp3_11_part_2_contingent.pdf) [DOCX 53 kB](/content/bp3/download/bp3_11_part_2_contingent.docx) Other payments [PDF 471 kB](/content/bp3/download/bp3_12_part_2_other.pdf) [DOCX 130 kB](/content/bp3/download/bp3_12_part_2_other.docx) Part 3: General revenue assistance [PDF 317 kB](/content/bp3/download/bp3_13_part_3.pdf) [DOCX 73 kB](/content/bp3/download/bp3_13_part_3.docx) Appendix A: Parameters and further information [PDF 262 kB](/content/bp3/download/bp3_14_appendix_a.pdf) [DOCX 58 kB](/content/bp3/download/bp3_14_appendix_a.docx) Appendix B: Total payments to the states by function (online only) [PDF 308 kB](/content/bp3/download/bp3_15_appendix_b_online.pdf) [DOCX 184 kB](/content/bp3/download/bp3_15_appendix_b_online.docx) Appendix C: Supplementary Tables (online only) [PDF 403 kB](/content/bp3/download/bp3_16_appendix_c_online.pdf) [DOCX 131 kB](/content/bp3/download/bp3_16_appendix_c_online.docx) Appendix D: Debt transactions (online only) [PDF 397 kB](/content/bp3/download/bp3_17_appendix_d_online.pdf) [DOCX 113 kB](/content/bp3/download/bp3_17_appendix_d_online.docx) Appendix E: Appropriations and conditions (online only) [PDF 219 kB](/content/bp3/download/bp3_18_appendix_e_online.pdf) [DOCX 158 kB](/content/bp3/download/bp3_18_appendix_e_online.docx) Notes [PDF 158 kB](/content/bp3/download/bp3_18_notes.pdf) [DOCX 42 kB](/content/bp3/download/bp3_18_notes.docx) ## Budget Paper 4: Agency Resourcing Source: https://budget.gov.au/content/bp4/index.htm # Budget Paper No. 4 Agency Resourcing ![](/dist/img/covers/budget 2026-27_cover_bp4.png) Publication/Part Downloads **Budget Paper No. 4: Agency Resourcing** [PDF 5.92 MB](/content/bp4/download/bp4_2026_27_consolidated.pdf) Preliminaries [PDF 230 kB](/content/bp4/download/bp4_01_prelims.pdf) [DOCX 154 kB](/content/bp4/download/bp4_01_prelims.docx) Preface [PDF 332 kB](/content/bp4/download/bp4_02_preface.pdf) [DOCX 158 kB](/content/bp4/download/bp4_02_preface.docx) Introduction and Guide to Budget Paper No. 4 [PDF 1.03 MB](/content/bp4/download/bp4_03_introduction_and_guide.pdf) [DOCX 1.37 MB](/content/bp4/download/bp4_03_introduction_and_guide.docx) Part 1: Agency Financial Resourcing [PDF 209 kB](/content/bp4/download/bp4_04_agency_financial_resourcing.pdf) [DOCX 53 kB](/content/bp4/download/bp4_04_agency_financial_resourcing.docx) Agency resourcing table [PDF 1.97 MB](/content/bp4/download/bp4_05_agency_resourcing_tables.pdf) [DOCX 490 kB](/content/bp4/download/bp4_05_agency_resourcing_tables.docx) Special appropriations table - overview [PDF 131 kB](/content/bp4/download/bp4_06_special_appropriations_table_overview.pdf) [DOCX 41 kB](/content/bp4/download/bp4_06_special_appropriations_table_overview.docx) Special appropriations table [PDF 358 kB](/content/bp4/download/bp4_07_special_appropriations_table_tables.pdf) [DOCX 84 kB](/content/bp4/download/bp4_07_special_appropriations_table_tables.docx) Special accounts table - overview [PDF 131 kB](/content/bp4/download/bp4_08_special_accounts_table_overview.pdf) [DOCX 44 kB](/content/bp4/download/bp4_08_special_accounts_table_overview.docx) Special accounts table - summary [PDF 131 kB](/content/bp4/download/bp4_09a_special_accounts_table_summary.pdf) [DOCX 58 kB](/content/bp4/download/bp4_09a_special_accounts_table_summary.docx) Special accounts table [PDF 610 kB](/content/bp4/download/bp4_09b_special_accounts_table.pdf) [DOCX 167 kB](/content/bp4/download/bp4_09b_special_accounts_table.docx) Part 2: Staffing of Agencies [PDF 320 kB](/content/bp4/download/bp4_10_staffing_of_agencies.pdf) [DOCX 82 kB](/content/bp4/download/bp4_10_staffing_of_agencies.docx) Part 3: Expenses and Net Capital Investment [PDF 385 kB](/content/bp4/download/bp4_11_expenses_and_net_capital_investment.pdf) [DOCX 85 kB](/content/bp4/download/bp4_11_expenses_and_net_capital_investment.docx) Appendix A: Agency Outcome Statements [PDF 408 kB](/content/bp4/download/bp4_12_app_a.pdf) [DOCX 85 kB](/content/bp4/download/bp4_12_app_a.docx) ## Fuel supply and security Source: https://budget.gov.au/content/01-fuel-supply-and-security.htm # Fuel supply and security Responding to the global oil shock Print or save page On this page ## Boosting Australia’s fuel security The crisis in the Middle East has disrupted global oil supply. The Government is strengthening Australia’s fuel supply now and into the future through our $14.8 billion Strengthening Australia’s Fuel Resilience Package. ### Securing fuel and fertiliser now The Government has secured more than a billion extra litres of fuel so far for March to June by: - relaxing the Minimum Stockholding Obligation - underwriting additional cargoes, and - adjusting fuel standards, enabling more Australian‑produced fuels to be used here. Fuel and fertiliser shipments are en route to Australia through the new $7.5 billion ($5 billion USD) Fuel and Fertiliser Security Facility. So far, Export Finance Australia has secured over 450 million litres of additional diesel and around 100 million litres of additional jet fuel through this facility. ### Building up reserves for the future - We are expanding the Minimum Stockholding Obligation with an additional 10 days’ supply for diesel, jet fuel and petrol. - We are establishing the $3.2 billion government‑controlled Australian Fuel Security Reserve, which will hold around 1 billion litres of diesel and jet fuel to provide an additional buffer during any future crisis. Together through these efforts, Australia will increase its diesel and jet fuel reserves to 50 days. - We have strengthened the Fuel Security Services Payment to protect the future of our two refineries and committed $10 million for feasibility studies into expanding our domestic refining capacity. - We are also providing $34.7 million to manage Australia’s fuel security framework, including oversight of the Fuel Security Services Payment and the Minimum Stockholding Obligation. ### Ensuring a coordinated national response The Government is facilitating an orderly response to the international supply chain disruptions, coordinating planning across states and territories and strengthening our trading partnerships. The National Fuel Security Plan agreed by National Cabinet establishes a coordinated four‑stage approach to safeguarding Australia’s fuel supply, supported by the Fuel Supply Taskforce. To raise awareness of the National Fuel Security Plan and to help Australians feel prepared and supported, the Government has launched the National Fuel Security Campaign. The campaign encourages Australians to adopt simple, practical behaviours to use less fuel, helping our supply go further and saving fuel for our truckies, farmers and essential services. ### Relieving immediate pressure on fuel users - To keep our trucks, trains and planes moving and critical production online, the Government is helping manufacturing and logistics businesses manage cashflow pressures with interest‑free loans from the National Reconstruction Fund’s (NRF) $1 billion Economic Resilience Program. This complements the $5 billion committed to the NRF’s Net Zero Fund since last Budget. - We have also more than halved the fuel excise and reduced the heavy vehicle road user charge to zero for three months, and deferred full cost recovery arrangements for agricultural export services. - To support supply chain efficiency, the Government will streamline the Australian Competition and Consumer Commission’s (ACCC) powers to allow industry to better coordinate during exceptional circumstances. - The Government has also empowered the Fair Work Commission to make orders to support more timely adjustments to fuel terms in road transport contracts, supporting small business. To support businesses’ and individuals’ purchasing options, the Government has increased reporting on fuel availability and prices through ACCC and Fuel Supply Taskforce reporting. We are also regularly engaging with industry through the Taskforce and other forums to ensure the policy response is timely, well targeted and appropriate. ## Strengthening supply chains Australia’s economy depends on secure and reliable supply chains. In a more volatile global environment, the Government is taking targeted action to keep essential goods moving while strengthening resilience for the future. This approach focuses on early action, close partnership with industry, and interventions that support markets rather than replace them. ### Strengthening partnerships with trading partners Since the conflict in the Middle East began, the Government has facilitated supply of 250,000 tonnes of agricultural urea for Australian farmers and signed landmark supply chain commitments with Japan, the Republic of Korea, Singapore, Malaysia and Brunei Darussalam, keeping critical goods flowing despite global instability. ### Improving freight resilience Moving more freight by rail or ship improves fuel efficiency and supply chain resilience. The Government is providing $55 million for a Transport Resilience and Capacity Kickstart pilot program to incentivise greater volumes of ship and rail freight. We will also progress improvements to interstate rail operations and connectivity, and biosecurity border processes will be streamlined to help get fertiliser to farms, faster. The Government will accelerate heavy vehicle reforms through National Competition Policy to increase heavy vehicle transport productivity and support the uptake of zero emissions heavy vehicles. ## Building resilience The Government is improving Australia’s longer‑term resilience to energy shocks, securing more affordable gas and shielding Australians from the worst impacts of climate change through our transition to net zero. Australians will have more choice in how they power their homes, businesses and vehicles, reducing their dependence on imported fuels and vulnerability to high global energy prices. ### Building energy sovereignty Australia continues to take steps to secure greater energy sovereignty, delivering: - 6.8 gigawatts of renewable energy in 2025, and more than 370,000 home batteries through the Cheaper Home Batteries program since 1 July 2025, providing over 10 gigawatt hours of new capacity. - Over 4 million households currently generate their own solar energy, and two million are expected to have a battery by 2030. The Government is announcing a 20 per cent domestic gas reservation so that LNG exporters supply a proportion of production to the domestic market. The domestic reservation scheme will commence on 1 July 2027, with final consultation on legislation throughout June and July. This will ensure Australian gas users have access to a stable and affordable supply of energy and will grow our energy resilience and industrial capabilities. Alongside implementation of a domestic gas reservation, the Government will streamline gas regulatory frameworks, with the reservation superseding the Australian Domestic Gas Security Mechanism and Heads of Agreements, and enabling further reform to the Gas Market Code. ### Making more clean fuels here Diversifying our energy supply away from imported fuels will improve our economy’s resilience to future oil shocks. - The Government is delivering the $1.1 billion Cleaner Fuels Program to provide production support to the domestic low carbon liquid fuels industry. - We are also progressing the $1 billion Round 2 of the Hydrogen Headstart program to provide revenue support for large‑scale renewable hydrogen projects. - We are continuing to develop a domestic low carbon liquid fuel industry, along with a green fuel bunkering strategy. Working with industry, we will introduce a demand measure that provides certainty for new Australian low carbon liquid fuel production and stimulates investment in new, clean fuel refining capacity. This will reduce our reliance on imported fuels, improving the resilience of our domestic transport industry. ### Electrifying freight and transit - The Government will transition the arrangements to support electric cars to a permanent 25 per cent fringe benefits tax (FBT) discount for eligible electric cars costing over $75,000 from 1 April 2027, and for all eligible electric cars from 1 April 2029. - Electric cars costing up to $75,000 will continue to receive a full FBT exemption, provided the arrangement commences before 1 April 2029. Existing arrangements will not be affected. - All eligible cars will retain the FBT discount in place when the fringe benefit arrangement starts, for the life of the arrangement. These changes reflect the recommendations of the statutory review of the electric car discount policy and will further incentivise the supply of more affordable electric cars, while moving to more sustainable settings for the future. We are supporting Australia Post to electrify its delivery fleet with a further $40.5 million investment. This adds to work underway to make it easier for Australians to charge their electric vehicles by committing $40 million to install more kerbside and regional chargers. ## Budget themes Fuel supply and security [Cost of living](02-cost-of-living.htm) [Productivity](03-productivity.htm) [Tax reform](04-tax-reform.htm) [Care and opportunity](05-care-and-opportunity.htm) [Security and investment](06-security-and-investment.htm) [Back to top](#masthead-top) ## Cost of living Source: https://budget.gov.au/content/02-cost-of-living.htm # Cost of living Taking pressure off Australians Print or save page On this page ## New tax cuts to help with the cost of living ### A new tax cut for every Australian worker The Working Australians Tax Offset (WATO) provides an additional tax cut of up to $250 for working Australians on top of the tax cuts in the 2024-25 Budget and the two upcoming rounds announced in the 2025-26 Budget. This will benefit over 13 million Australian workers. The WATO is a permanent, annual tax offset of up to $250 from the 2027-28 income year for all Australian workers. This increases the effective tax‑free threshold for Australian workers by nearly $1,800 to $19,985 (or up to $24,985 for workers eligible for the Low Income Tax Offset). Of the 13 million Australian workers who receive the WATO, 97 per cent are expected to receive the full $250 offset. ### Tax cuts for every taxpayer starting 1 July 2026 The Government is rolling out two more tax cuts for every Australian taxpayer. - From 1 July 2026, the 16 per cent tax rate on taxable income between $18,201 and $45,000 will drop to 15 per cent. - From 1 July 2027, the tax rate will drop to 14 per cent. Every Australian taxpayer will receive a tax cut of up to $268 from 1 July 2026, then up to $536 every year from 1 July 2027, compared to the 2024-25 tax settings. ### Lower, simpler taxes with a $1,000 instant tax deduction The Government is also introducing a $1,000 instant tax deduction to deliver lower and simpler taxes for workers from 2026-27. 6.2 million workers, or 42 per cent of taxpayers, will benefit from an average tax saving of $205 for 2026-27. The instant tax deduction allows workers to lower their taxable income from work by $1,000 without keeping receipts when they lodge their tax return. It will make tax time simpler and deliver more cost‑of‑living relief for workers from 2026-27. ![](/dist/img/cameos/cameo-kerry-matt.jpg) ### Case study: Instant tax deduction Kerry and Matt both work and share looking after their young daughter. Kerry is a cyber security engineer earning $140,000 a year. She incurs $800 in self‑education costs to keep her skills current. Matt is a pharmacy nurse earning $90,000. He sometimes drives his car to home visits and incurs $450 in work‑related car expenses. Thanks to the instant tax deduction, from 2026-27 onwards they both receive a $1,000 deduction without needing to keep records of their work‑related expenses. Their combined tax bill for 2026-27 falls by $254. ### Combined benefits of five tax cuts The Government is cutting taxes five times to help workers keep more of what they earn. Combined with the first round of tax cuts from 1 July 2024 and the additional tax cuts from 1 July 2026 and 1 July 2027, the WATO will mean an Australian worker on average earnings ($81,245) will receive a tax cut of $1,978 in 2026-27 and $2,496 from 2027-28, compared to 2023-24 tax settings. Combined with the $1,000 instant tax deduction, an Australian worker on average earnings who receives the average benefit from the instant tax deduction would be $2,701 better off in 2027-28. If this worker received the maximum benefit from the instant tax deduction, they would be $2,816 better off after the five rounds of tax cuts. An Australian worker on average earnings is expected to pay up to $38,977 less tax from 2024-25 to 2036-37, relative to 2023-24 tax settings. ### Case study: Combined benefits of five tax cuts Dean is a mechanic and has taxable income of $70,000 per year, after claiming $300 in work‑related expenses. He received a tax cut of $1,429 in both 2024-25 and 2025-26 from the first round of tax cuts, compared with the 2023-24 tax settings. When combined with the new $250 WATO and the two upcoming rounds of tax cuts, his saving will grow to $2,215 per year from 2027-28. Dean will further reduce his tax by $224 per year by using the $1,000 instant tax deduction. ![](/dist/img/cameos/cameo-dean.jpg) ## Helping with the cost of fuel ### Taking the sting out of fuel prices The Government has delivered a $2.9 billion package to more than halve the fuel excise and reduce the heavy vehicle road user charge to zero for three months from 1 April 2026. Excise on petrol and diesel has fallen from 52.6 to 20.6 cents per litre. The states and territories will provide the Commonwealth up to $400 million to support the fuel excise reduction. ### A fair go for consumers and small businesses The Government has directed the ACCC to undertake weekly reporting on retail fuel prices. We have also doubled the maximum penalties for major breaches of competition and consumer laws to $100 million and are providing more resourcing for enforcement. The Government is also introducing penalties for breaches of the Oil Code of Conduct. ### Support for businesses The ATO is streamlining access to temporary relief from tax obligations for eligible businesses until 30 June 2026. This includes more generous payment plans, remission of interest and penalties, support in varying pay as you go (PAYG) instalments where there has been a reduction in taxable income, and a new dedicated channel for businesses to access relief. Some compliance actions will also be limited across the worst affected industries, and debt collection actions may be paused where appropriate. ![](/dist/img/cameos/cameo-anjali.jpg) ### Case study: Helping with the cost of fuel Anjali is a teacher and drives to work in her small petrol hatchback. On average, she needs to fill her 40‑litre tank once a week. Under the changes, Anjali saves around $14 in excise and GST per tank and around $170 over the three‑month period. ## More homes and a fair go for first home buyers ### Helping more Australians own their own home In this Budget the Government is reforming negative gearing and capital gains tax concessions. These tax changes are estimated to support an additional 75,000 homeowners over the decade. ### Building more homes The Government is establishing a new $2 billion Local Infrastructure Fund to help local governments and state utilities build essential infrastructure to support new housing - including by connecting essential services such as water, power, sewerage and roads. This funding will support up to 65,000 homes over the decade and brings the Government’s total investment in housing‑enabling infrastructure to $6.3 billion. ### Banning foreign investors from buying existing homes The Government is extending the ban on foreign buyers purchasing established homes until mid‑2029. ### Making renting fairer and more affordable The Government is continuing to work with states and territories to harmonise and strengthen renters’ rights across Australia through A Better Deal for Renters. The Government has also delivered the first back‑to‑back increases in Commonwealth Rent Assistance (CRA) in more than 30 years and continues to support over 1.4 million renters through CRA. ### Securing more housing for Australians doing it tough The Government is investing $59.4 million to help Community Housing Providers provide social housing for over 4,000 young people aged 16-24 who are at risk of or experiencing homelessness. This Budget also releases a further $100 million from the Housing Australia Future Fund to improve the quality of housing for First Nations Australians in remote communities. ## More affordable and accessible healthcare ### Cheaper medicines The Government is investing $5.9 billion in this Budget to list new medicines on the PBS, including treatments for cystic fibrosis, chronic kidney disease, various cancers and more. This includes permanently cutting the cost of COVID‑19 oral antiviral medicines. Since 1 July 2022, the Government has funded 437 new or amended PBS medicines. The Government is also providing $449.3 million to list the respiratory syncytial virus (RSV) vaccine Arexvy® for eligible older Australians on the National Immunisation Program to protect against respiratory infection caused by RSV. ### Record funding for public hospitals The Government is delivering a landmark $25 billion in additional funding for state and territory hospitals to reach a record $220.3 billion over five years. ### Investing in Medicare Urgent Care Clinics The Government is investing $1.8 billion and $580.2 million each year ongoing to secure the future of Australia’s 137 Medicare Urgent Care Clinics - making them a permanent feature of Australia’s health system. ### Case study: Cheaper medicines Ken has severe asthma. Now that the vaccine for RSV is available to eligible older Australians through the National Immunisation Program, he can receive this important vaccination for free when he goes to the GP, an immunisation clinic or a participating pharmacy. This will help protect him, his family and his community from severe disease caused by this common illness. ![](/dist/img/cameos/cameo-ken.jpg) ## Growing wages ### Increases to minimum and award wages For the current 2026 Annual Wage Review, the Government has recommended the Fair Work Commission award an economically sustainable real wage increase to Australia’s award workers. ### Addressing the gender pay gap The Government is supporting a historic review to address gender pay gaps. The Fair Work Commission has found historical gender undervaluation occurred in five priority modern awards across female‑dominated sectors such as child care, health (including First Nations workers) and social services. ### Adult age, adult wage The Fair Work Commission’s decision to phase out junior pay rates will help ensure young workers get fair and decent wages. Junior award rates of pay will be phased out for retail, fast food and pharmacy workers aged 18 to 20. ### Responding to changing fuel costs The Government has amended the _Fair Work Act 2009_ to allow the Fair Work Commission to make orders to deal with rising fuel prices. On 21 April 2026, an order came into effect to help road transport businesses and workers, by regularly adjusting the rates they are paid. This will help the many owner‑drivers and small transport operators recover costs from higher fuel prices. ## Budget themes [Fuel supply and security](01-fuel-supply-and-security.htm) Cost of living [Productivity](03-productivity.htm) [Tax reform](04-tax-reform.htm) [Care and opportunity](05-care-and-opportunity.htm) [Security and investment](06-security-and-investment.htm) [Back to top](#masthead-top) ## Productivity Source: https://budget.gov.au/content/03-productivity.htm # Productivity Making our economy more productive Print or save page On this page ## Delivering on our productivity agenda This Budget advances the reform directions set by the Treasurer’s Economic Reform Roundtable, delivering a significant package of practical reforms that will meaningfully boost productivity growth. Together, they will make it easier to build, easier to do business and easier to invest and innovate. ### Incentivising investment and innovation This Budget delivers landmark tax reforms that will encourage investment and innovation, including: - loss refundability - a permanent $20,000 instant asset write‑off, and - expanded tax incentives for venture capital. Reforms to the Research and Development (R&D) Tax Incentive will unlock $400 million per year in additional R&D by young firms. The annual superannuation performance test helps protect members from persistent underperformance. The Government will strengthen the test to help reduce unintended barriers to investment that supports member outcomes. A stronger Investor Council will support the Investor Front Door to prioritise investment proposals and identify opportunities for coordinated public financing; with up to $125 billion being deployed by the Government’s specialist investment vehicles. ### Reducing red tape The Government is reducing financial sector compliance costs by $780 million a year by progressing 14 legislative reforms, including increasing company reporting thresholds. Financial regulators are also taking 13 actions to streamline their data collections to reduce compliance costs. We will regularly introduce regulatory reform bills to improve and modernise regulation, building on the 60 measures legislated in 2025. #### Removing barriers to trade - The Government is abolishing another 497 nuisance tariffs from 1 July 2026, bringing the total abolished to around 1,000 and saving businesses $157 million a year in compliance costs. - The Government will also consult on abolishing additional tariffs to further cut costs for Australian businesses. - We are simplifying trade through the landmark Australia‑EU Free Trade Agreement, expanding the Australian Trusted Trader program and streamlining biosecurity border processes. #### Building a Single National Market - The Government will work with states on reforms to payroll tax administration, in addition to further improving labour mobility through national occupational licensing. - This will allow health practitioners to work to their full scope of practice, and enable a national approach to screening care workers. #### Making it easier to engage with Government The Government is implementing a ‘tell‑us‑once’ approach and investing $654.3 million to expand the use of Digital ID to safely verify identity, reduce data storage and improve access to government services online. A further $62 million is being invested into the Consumer Data Right, including finding new ways for customers to use their own data to save money and get better services. ### Accelerating approvals The Government is: - accelerating environmental, low‑risk foreign investment, resources and telecommunications approvals to make it easier to launch new projects - delivering stronger environmental outcomes through more than $500 million to implement approval reforms that deploy AI, cut duplication with states and fund more bioregional plans and strategic assessments - strengthening the Investor Front Door to help nationally significant projects. ### Building more homes The Government is funding last‑mile infrastructure to unlock up to 65,000 homes in states and territories that drive productivity in the housing sector, including by: - speeding up approvals - making more land ready for new homes, and - modernising the National Construction Code. The Government is also taking action to simplify building regulations and make it easier to build by providing free access to all standards referenced in Australian legislation. This will save small businesses and tradies up to $1,600 per year. The Government is also removing barriers to using modern methods of housing construction. ### Modernising energy markets The Government is working with states and territories to pursue the most significant reforms to our energy market since the 1990s. These upgrades will make our system more productive and competitive and for the first time allow household solar and battery systems to directly participate in the market. We are introducing a domestic gas reservation from 1 July 2027 to ensure Australian gas stays on our shores. This requires LNG producers to reserve 20 per cent of their export volumes for Australian users to reduce pressure on prices. ### Better recognising skills - The Government is investing $85.2 million to accelerate skills assessments for migrant trades workers and to accelerate occupational licensing, making it faster for them to enter the workforce. - The Government is also reforming the permanent migration points test to select better educated, higher‑skilled and younger migrants. - University students with relevant TAFE qualifications will benefit from quicker degrees through a National Credit Recognition Framework. ### Unlocking the data and AI opportunity The Government is providing up to $70 million for ‘AI Accelerator’ grants to boost AI development. It is also advancing use of AI in government, including to accelerate environmental and medicine approvals and make the National Construction Code easier to use. ### Investing in science and innovation The Government is investing $1.5 billion in our research and scientific institutions including: - CSIRO - the National Measurement Institute, and - the Square Kilometre Array. To maximise value from its innovation investment, the Government is establishing the National Resilience and Science Council to coordinate and align public innovation investments. The Government has also provisioned $508.5 million to increase disbursements for medical research from the Medical Research Future Fund. ## Reducing the regulatory burden The Government’s productivity reforms will reduce regulatory burden by $10.2 billion each year, boost long‑run GDP by around $13 billion a year, and progress 13 of the 17 reform areas identified by the Productivity Commission’s five pillar inquiries. ## Budget themes [Fuel supply and security](01-fuel-supply-and-security.htm) [Cost of living](02-cost-of-living.htm) Productivity [Tax reform](04-tax-reform.htm) [Care and opportunity](05-care-and-opportunity.htm) [Security and investment](06-security-and-investment.htm) [Back to top](#masthead-top) ## Tax reform Source: https://budget.gov.au/content/04-tax-reform.htm # Tax reform Tax reform for workers, businesses and future generations Print or save page On this page ## A better tax system for workers, first home buyers and future generations The Government is reforming the tax system to help more Australians realise the dream of home ownership, better encourage productive investment and help fund a new $250 tax offset for workers. ### Cutting taxes for working Australians - The Government is introducing a $250 Working Australians Tax Offset from 2027-28, providing an ongoing annual tax cut for over 13 million Australian workers. - This is on top of the three tax cuts the Government has already legislated and the $1,000 instant tax deduction. - For an Australian worker on average earnings, the combined benefit of the Government’s five tax cuts could be up to $2,816 per year, helping every Australian worker keep more of what they earn. Tax explainer - New tax cuts for Australian workers [PDF 432 kB](/content/factsheets/download/tax-explainers-new-tax-cuts-workers.pdf) [DOCX 253 kB](/content/factsheets/download/tax-explainers-new-tax-cuts-workers.docx) ### Negative gearing The Government will limit negative gearing to new builds from 1 July 2027, to focus tax support on new supply. Existing arrangements will remain unchanged for all properties held before Budget night, and investors who buy new builds will still be able to deduct losses from other income. Investors who buy established housing after Budget night will still be able to deduct losses against residential property income. They will be able to carry forward unused losses to future years but won’t be able to deduct them against other income like wages. Tax explainer - Negative Gearing and Capital Gains Tax Reform [PDF 432 kB](/content/factsheets/download/tax-explainers-negative-gearing-capital-gains-tax.pdf) [DOCX 182 kB](/content/factsheets/download/tax-explainers-negative-gearing-capital-gains-tax.docx) ### Capital gains tax The Government will replace the 50 per cent Capital Gains Tax (CGT) discount with a discount based on inflation and introduce a minimum 30 per cent tax on gains from 1 July 2027. This reform means that investors will only pay tax on their real capital gain, restoring the original intent of the CGT arrangements. The CGT reforms will only apply to gains arising after 1 July 2027. Investors in new builds will be able to choose the 50 per cent CGT discount or the new arrangements. ### Fairer tax arrangements for discretionary trusts The Government will introduce a minimum tax of 30 per cent on discretionary trusts from 1 July 2028 with some exceptions. Rollover relief will be provided for three years from 1 July 2027 to assist small businesses and others that wish to restructure. Tax explainer - Minimum tax on discretionary trusts [PDF 358 kB](/content/factsheets/download/tax-explainers-minimum-tax-discretionary-trusts.pdf) [DOCX 170 kB](/content/factsheets/download/tax-explainers-minimum-tax-discretionary-trusts.docx) Tax explainer - Small business Capital Gains Tax and Discretionary Trusts [PDF 466 kB](/content/factsheets/download/tax-explainers-cgt-trusts-impacts.pdf) [DOCX 735 kB](/content/factsheets/download/tax-explainers-cgt-trusts-impacts.docx) ## A better tax system for businesses ### Boosting resilience and dynamism The Government is reintroducing loss carry back to support business risk taking and resilience. From 2026-27, eligible companies that make a loss in the current income year will be able to use that loss to get a refund against tax paid in the prior two income years. This will benefit up to 85,000 companies, mostly small businesses. The Government is also introducing loss refundability to support new start‑up businesses. From 2028-29, small start‑ups in their first two years of operation will be able to get a refund for tax losses, up to the value of fringe benefits tax and withholding tax paid on employee wages. This will benefit up to 25,000 young companies each year, providing valuable cash flow support. The Government is also improving cash flow for small businesses by permanently extending the $20,000 instant asset write‑off from 1 July 2026. Small businesses with turnover up to $10 million will be able to immediately deduct eligible assets costing less than $20,000, helping them to make their investment decisions with confidence. This is estimated to improve cash flow for small businesses by around $890 million over the next five years. These reforms form part of the Government’s strategy to improve economic resilience, support productivity and promote employment. ![](/dist/img/cameos/cameo-dining-co.jpg) #### How small businesses can benefit from instant asset write‑off and loss carry back Dining Co runs a local restaurant with $1 million in turnover. It generated $50,000 in taxable profits and paid $12,500 tax in 2025-26 (at the 25% tax rate). In 2026-27, Dining Co decides to supply ready‑cooked meals to local supermarkets. It purchases new equipment for a total of $65,000, with each piece costing less than $20,000. Due to the instant asset write‑off , these items can be immediately deducted. Without these new investments, Dining Co would have reported a $50,000 profit in 2026-27. However, with the instant asset write‑off deductions, it reports a $15,000 tax loss and pays no tax. Further, Dining Co will now be able to carry back that tax loss to the previous year’s tax paid, generating a $3,750 tax refund ($15,000 × 25% tax rate). This provides timely cash flow to the company as it seeks to expand. ### Expanding venture capital incentives From 1 July 2027, the Government will expand venture capital tax incentives to align with modern company valuations. Changes to the Early‑Stage Venture Capital Limited Partnership and Venture Capital Limited Partnership programs will support start‑ups and high‑growth businesses to unlock greater access to capital and industry knowledge. ### Better targeting the Research and Development Tax Incentive The Government will better incentivise core R&D that benefits the broader economy, in response to recommendations of the Ambitious Australia Report. From 1 July 2028, the Government is: - Increasing the offset for experimental core R&D by around 25 to 50 per cent and removing eligibility for expenditure that only supports R&D. The intensity threshold will reduce to 1.5 per cent, providing higher offsets to firms undertaking substantial core R&D. - Providing greater support to young, fast‑growing firms by increasing the turnover threshold for the higher, refundable offset to $50 million. Refundability will be limited to firms operating less than ten years, with older firms eligible for an equivalent, non‑refundable offset. - Increasing the maximum expenditure cap to $200 million, encouraging more R&D onshore. - Improving assurance by increasing the minimum expenditure threshold to $50,000. R&D below this must be undertaken with a Research Service Provider or Cooperative Research Centre. ## A simpler and more sustainable tax system The Government is making Australia’s tax system simpler and more sustainable by making tax easier to manage for businesses and individuals. ### Making tax easier for workers and small businesses From 2026-27, a new instant tax deduction of up to $1,000 will simplify work‑related expense deductions. This will deliver 6.2 million workers an average tax benefit of $205 for 2026-27 and reduce compliance costs by around $380 million a year. The $20,000 instant asset write‑off for small business will be made permanent, simplifying tax obligations, improving cash flow and saving small businesses around $32 million per year in compliance costs. The Government is also boosting business cash flow by making it easier for businesses to change their pay as you go (PAYG) instalments when business conditions change, by: - providing businesses with flexibility to opt in to monthly PAYG instalments from 1 July 2027, and - expanding access to the ATO’s dynamic instalments pilot using business software to more accurately calculate PAYG instalments. The Government will work with states on reforms to payroll tax administration. ### More sustainable settings to support take‑up of electric cars The Government will transition the arrangements to support electric cars to a permanent 25 per cent fringe benefits tax (FBT) discount, for eligible electric cars over $75,000 from 1 April 2027 and for all eligible electric cars from 1 April 2029. Electric cars costing up to $75,000 will continue to receive a full FBT exemption provided the fringe benefit arrangement commences before 1 April 2029. ## Budget themes [Fuel supply and security](01-fuel-supply-and-security.htm) [Cost of living](02-cost-of-living.htm) [Productivity](03-productivity.htm) Tax reform [Care and opportunity](05-care-and-opportunity.htm) [Security and investment](06-security-and-investment.htm) [Back to top](#masthead-top) ## Care and opportunity Source: https://budget.gov.au/content/05-care-and-opportunity.htm # Care and opportunity Strengthening care and broadening opportunity Print or save page On this page ## Securing the NDIS for future generations ### Returning the NDIS to its original intent The NDIS was established to support people with permanent and significant disability. The reforms in this Budget will protect that original intent for current and future participants. The Government will implement reforms across four pillars to secure the future of the NDIS. 1. To ensure quality services and supports that meet the needs of participants, the Government will commission plan management and support coordination, and consult on a commissioning approach for home and living supports for Supported Independent Living participants so they receive the best supports and address provider viability challenges. 2. To set clearer eligibility requirements, the Government will put standardised, evidence‑based assessments of functional capacity at the core of determining access to the NDIS. 3. To slow cost increases, the Government will tighten criteria around plan reassessments and strengthen guidance about what are reasonable and necessary supports. Budgets for social, civic and community participation and capacity building daily activities will be reset, and New Framework Planning will deliver more equitable, consistent and sustainable participant plans from April 2027. 4. To fight fraud and stop rorts, the Government will increase oversight of providers and payments, strengthen the National Disability Insurance Agency’s investigative and enforcement capabilities, and introduce new regulatory controls to protect participants and the NDIS from exploitation. The Government is also providing $2 billion to establish the Thriving Kids program as part of the $5 billion Foundational Supports commitment to be matched by the states. These reforms are expected to save a total of $37.8 billion over the next four years. The NDIS will continue to grow each year and remain Australia’s largest social program outside of the Age Pension. ## Better care for older Australians This Government is investing $3.7 billion to deliver more beds, more packages and better care for older Australians to ensure they get the support they deserve. ### More aged care beds and Support at Home packages The Government is investing $1.7 billion to incentivise construction of up to 5,000 aged care beds a year and protect equity of access for those less well off. This investment includes $606.5 million to: - introduce new capital subsidies for aged care providers who build or expand residential accommodation - deliver up to 20 additional Specialist Dementia Care units, and - expand the Hospital to Aged Care Dementia Support program from 11 to 20 locations nationally. The Government is also provisioning $1.1 billion for future spending to increase and restructure the Accommodation Supplement and introduce an additional payment for homes with more than 60 per cent low‑means residents. An additional $565.1 million will improve sector quality, safety and viability. This builds on the Government’s first‑term measures to improve the quality of residential aged care, including by increasing minutes of care delivered to older Australians and strengthening regulatory oversight. The Government is providing $389.8 million to accelerate the release of Support at Home packages and make the program fairer and more affordable. ### Quality, affordable personal care for older Australians The Government is committing $1 billion to fully subsidise and remove co‑contributions for personal care services such as showering through the Support at Home program. These changes build on the Government’s landmark aged care reforms that have codified the rights of older Australians in law and established a system to deliver safe, dignified and high‑quality care for an ageing population. ## Strengthening Medicare ### Record funding for public hospitals The Government is delivering $25 billion in additional funding for public hospitals, to reach a record $220.3 billion over five years. The renewed National Health Reform Agreement will ensure Australians receive safe and high‑quality care. Reforms will also better meet the needs of First Nations people with a dedicated funding schedule. ### Investing in Medicare Urgent Care Clinics This Budget provides $1.8 billion to secure the future of Medicare Urgent Care Clinics as permanent features of Australia’s health system. This builds on previous investments to expand the total network to 137 clinics across Australia. The network has delivered almost three million free visits nationwide. By July 2026, four in five Australians will live within a 20‑minute drive of their local Medicare Urgent Care Clinic. ### More bulk billing The Government has invested $11.4 billion to incentivise bulk billing, with a goal of ensuring nine out of ten GP services are bulk billed by 2030. Since the Government’s recent bulk billing reforms commenced on 1 November 2025, 1,420 general practices across Australia that were previously mixed billing have become fully bulk billing. The national GP bulk billing rate has also risen to 81.4 per cent in the period between November 2025 and January 2026. This Budget also provides an additional $25.3 million in targeted funding to lift bulk billing rates in the Central Coast, Newcastle, Lake Macquarie and Hunter regions. ## Broadening opportunity and increasing equality ### Investing in First Nations communities and Closing the Gap The Government continues to work with First Nations communities to deliver Closing the Gap commitments. This Budget invests $1.2 billion, building on work already underway, including a 10-year, $4 billion joint investment to halve overcrowding in remote Northern Territory communities, and targeted investment in Indigenous Rangers programs, education, justice reinvestment, health, water and digital connectivity. #### Jobs and economic empowerment The Government is investing $299 million to double the successful Remote Jobs and Economic Development Program from 3,000 to 6,000 new jobs - delivering the dignity of work with decent pay and conditions in First Nations communities. #### Easing the cost‑of‑living for remote communities The Government has invested an additional $27.4 million to expand the Low‑Cost Essentials Subsidy Scheme to all 225 remote stores around Australia, reducing prices for 30 essential grocery items. The Store Efficiency and Resilience Package is also being expanded to 75 more remote stores, with $32.7 million to increase supplies of groceries and essentials in preparation for seasonal weather events. #### Investing in culturally‑safe healthcare The Government is continuing to invest in improving health infrastructure across Aboriginal Community‑Controlled Health Services with $144.1 million to expand on the more than 100 projects already delivered or underway. The Government is also supporting Birthing on Country with $44.4 million for culturally‑safe maternal care for 1,100 mothers, and providing $18.9 million to expand access to culturally‑safe crisis care through 13YARN. The Government’s investment in public hospitals also includes almost $250 million in dedicated funding for new, co‑designed programs to improve First Nations health outcomes, with $200 million matched by states and territories. #### Improving education outcomes The Government is investing $113 million to improve education outcomes, including extending the Clontarf Foundation’s young men’s program and the Indigenous Boarding Provider grants program. ### Continuing to support veterans and their families This Budget provides a further $583.4 million to implement recommendations from the Royal Commission into Defence and Veteran Suicide, and $169.7 million for allied health services for veterans. ### Supporting women and advancing gender equality The Government is improving the lives of Australian women by putting gender equality at the centre of decision making. The gender pay gap is at an historic low and women’s workforce participation reached record highs in 2025. #### A safer and more effective Child Support Scheme The Government is investing $182.6 million to make the Child Support Scheme safer so children get the financial support they need and women are protected from conflict and abuse. #### Supporting families and children The 3 Day Guarantee entitles eligible families to three days of subsidised child care per week. From July, government‑funded Paid Parental Leave will increase to a full six months. This Budget also provides $171.7 million for front line community services including through a new, simplified Children and Families Support program. #### Better healthcare for women This Budget will expand access to Keytruda®, a cervical cancer treatment, and support more long‑acting reversible contraceptives, while continuing the work to achieve universal perinatal mental health screening. #### Addressing violence against women, children and families Since 2022, the Government has invested over $4.4 billion to deliver the _National Plan to End Violence against Women and Children_. The Government is also investing $218.3 million to support delivery of Our Ways - Strong Ways - Our Voices, Australia’s first standalone plan to end violence against Aboriginal and Torres Strait Islander women and children. ## Budget themes [Fuel supply and security](01-fuel-supply-and-security.htm) [Cost of living](02-cost-of-living.htm) [Productivity](03-productivity.htm) [Tax reform](04-tax-reform.htm) Care and opportunity [Security and investment](06-security-and-investment.htm) [Back to top](#masthead-top) ## Security and investment Source: https://budget.gov.au/content/06-security-and-investment.htm # Security and investment Building a resilient and secure Australia Print or save page On this page ## Future Made in Australia ### Supporting resilient metals production The Government is capitalising on economic opportunities available through the net zero transition and working to ensure the continued success of our metals‑smelting capabilities into the future. This includes investing up to $1 billion in the Boyne Island Aluminium Smelter to secure its long‑term, lower emissions and renewables powered operations, with funding matched by the Queensland Government and unlocking almost $7.5 billion in private investment. The Government is partnering with state governments to support critical facilities that contribute to Australia’s economic prosperity. This includes $222.6 million in further funding to support the administration and ongoing operations of the Whyalla Steelworks, as well as support for employees of the Liberty Bell Bay manganese smelter, while work progresses to find new owners for both facilities. ### Securing critical minerals supply chains Growing Australia’s critical minerals industry will help create diverse, resilient and sustainable global supply chains. The Government has delivered on its commitment to establish a Critical Minerals Strategic Reserve. Future transactions under the Reserve will be led out of the Department of Industry, Science and Resources, in close partnership with Export Finance Australia. The Reserve will initially focus on antimony, gallium and rare earth elements which are crucial for clean energy and high‑technology manufacturing, as well as advanced military equipment. The Reserve will draw on $1 billion from the previously expanded $5 billion Critical Minerals Facility for transactions. The Government is also providing $150 million for selective stockpiling of minerals and $20.4 million to support the operation of the Reserve. To complement these efforts and ensure Australia can be a reliable supplier of critical minerals, the Government is providing $2.9 million to support delivery of Australia’s international critical minerals commitments. ## A record funding boost for defence ### Bolstering Australia’s defence capability The Government is delivering the defence capabilities Australia needs to ensure a secure and prosperous future. The 2026 National Defence Strategy provides an additional $53 billion over the next ten years through direct government investment and plans to leverage private sector funding. These investments will: - increase the ADF’s ability to deter and respond to threats - build a more self‑reliant ADF for the future - strengthen Australia’s sovereign defence industrial base - increase coordination with our regional partners. The 2026 Integrated Investment Program supports the National Defence Strategy by providing new and increased investment over the decade in high priority Defence capabilities, including: - up to $130 billion on enhanced undersea warfare capabilities, supported by a fleet of conventionally‑armed, nuclear‑powered submarines - up to $15 billion on autonomous and uncrewed systems, such as the Australian designed and built Ghost Bat and smaller, low‑cost drones for deployment in large numbers - up to $77 billion to deliver the enhanced surface combatant fleet and fleet support, including upgraded Japanese Mogami class frigates and Hunter class anti‑submarine frigates - an initial $12 billion to establish the Henderson Defence Precinct as a world class centre of excellence for naval shipbuilding and sustainment in Western Australia. ## Building infrastructure for the future ### Sustainable investment in transport infrastructure The Government is maintaining a rolling infrastructure pipeline of more than $120 billion over ten years, with short‑term profile adjustments in response to the effects of the Middle East conflict and potential constraints on capacity. This Budget includes over $8.6 billion for new and ongoing nationally significant projects. Working in partnership with every state and territory, the Government’s infrastructure pipeline will deliver the road and rail projects needed across our cities and communities. This includes: - $812.5 million in this Budget for the Bruce Highway upgrade between the Gateway Motorway and Dohles Rocks Road in Queensland - $45 million for safety improvements to the M1 in New South Wales - $500 million over ten years to continue the Active Transport Fund - $50 million to upgrade the Sydney to Canberra rail corridor. It also includes $3.8 billion for Victoria’s Suburban Rail Loop East, bringing the Government’s total commitment to $6.0 billion. This landmark project will enable more transport and homes in the right places - cutting travel times, reducing congestion and reshaping how Melbourne grows. In addition, the Government is making targeted freight and supply chain investments that will support the efficient movement of goods around the country. This includes $1.75 billion in equity for the Australian Rail Track Corporation to upgrade Australia’s rail freight network. ### Investing in communities The Government is providing a further $841.7 million in community infrastructure, including through the Thriving Suburbs, Growing Regions and Stronger Communities programs. This will fund projects such as libraries, parks, community centres and sport and cultural facilities that enhance liveability, bolster social cohesion and enrich quality of life at a local level. ### Support for disasters The Government continues to support communities impacted by disasters. Funding for natural disaster relief is expected to increase by $2.5 billion. ## Responding to the Bondi attack ### Supporting victims and impacted communities Together with the NSW Government, we have committed $21.7 million in Disaster Recovery Funding Arrangements to support the Bondi community. Support includes: - $2 million for Jewish community organisations - $1 million for legal services - up to $25,000 for local small businesses, and - $2.8 million for up to eight coordinators to support the local community and provide capacity building. The Government has invested $42.9 million in mental health supports for the Jewish community and the broader Bondi community, including an interim Medicare Mental Health Centre in Bondi, which is providing free, walk‑in mental health support. ### Countering hate speech, terrorism and violent extremism The Government is addressing hate speech, violent extremism and terrorism, committing $604.2 million to initiatives in response to the antisemitic Bondi terrorist attack. This includes: - $36.1 million for stronger hate crime and firearms laws - continued work to progress the National Gun Buyback Scheme through National Cabinet, and - more funding to disrupt politically and ideologically motivated violence and hate crimes. ### Support for Jewish Australians The Government accepted all recommendations relevant to the Commonwealth from the Interim Report of the Royal Commission on Antisemitism and Social Cohesion and has committed to working with states and territories on a nationally consistent approach to implementing all 14 recommendations. The Government adopted the Special Envoy to Combat Antisemitism’s Plan to Combat Antisemitism and is implementing the 13 recommendations in consultation with the Jewish Australian community and the Special Envoy. The Government is also providing $46.7 million in financial support to the wider Jewish community, including for security and infrastructure upgrades and grant opportunities to support priority projects, including for a Chabad of Bondi project. ## Budget themes [Fuel supply and security](01-fuel-supply-and-security.htm) [Cost of living](02-cost-of-living.htm) [Productivity](03-productivity.htm) [Tax reform](04-tax-reform.htm) [Care and opportunity](05-care-and-opportunity.htm) Security and investment [Back to top](#masthead-top) ## Tax explainer - Negative Gearing and Capital Gains Tax Reform Source: https://budget.gov.au/content/factsheets/download/tax-explainers-negative-gearing-capital-gains-tax.pdf | Negative Gearing and Capital Gains Tax Reform 1 Negative Gearing and Capital Gains Tax Reform The Government is helping more Australians get into the housing market and improving the efficiency and fairness of the tax system. Supporting home ownership with a fairer and more efficient tax system The Government is reforming negative gearing and capital gains tax (CGT) arrangements. These reforms will limit the benefits of negative gearing to new residential properties, re-introduce capital gains tax cost base indexation, and introduce a 30 per cent minimum tax on capital gains. Since 1999, housing prices have risen more than twice as fast as average full time earnings and, since 2001 to 2021, the home ownership rate for households 25 to 34 years old has declined by seven percentage points. These changes will help level the playing field for first home buyers, preserve the gains investors have made, and support investment in new housing supply. From 1 July 2027, the Government will: • limit negative gearing for residential property investments to new builds; and • replace the 50 per cent CGT discount for individuals, trusts and partnerships with cost base indexation and a 30 per cent minimum tax rate on capital gains. These changes will rebalance our tax system, allowing the Government to take pressure off wage earners and first home buyers. The impact of these changes on existing investments will be limited. Properties held before announcement (7:30pm AEST 12 May 2026) will be exempt from the negative gearing changes. The CGT reforms will only apply to gains accruing after 1 July 2027. Rental losses can only reduce income from residential properties Under current tax settings, losses from a rental property can be used to reduce other forms of taxable income (e.g. salary and wages). This encourages leveraged property investments that can lead to investors receiving greater tax advantages than those available to owner occupiers. From 1 July 2027, losses related to existing residential investment properties purchased from 7:30pm AEST 12 May 2026 will only be deductible against other income from residential properties, including capital gains. However, when an investor has excess losses, they will be able to carry forward that excess to offset residential property income in future years. Enabling losses to be carried forward ensures investors remain able to claim a deduction in the future for costs such as maintenance. These changes will apply to individuals, partnerships, companies and most trusts. Widely held trusts (for example, most managed investment trusts) and superannuation funds (including SMSFs) will be excluded. | Negative Gearing and Capital Gains Tax Reform 2 Cost base indexation The current 50 per cent CGT discount was introduced in 1999, allowing taxpayers to reduce their taxable capital gain by half rather than adjusting for inflation. As a result, the 50 per cent discount does not accurately approximate the inflation component of gains, meaning investors are undercompensated or overcompensated depending on their returns. Returning to indexation based on the Consumer Price Index (CPI) aligns with the original intent of the CGT regime and supports productivity over time by ensuring that investment decisions are taken for economic reasons, not due to tax outcomes. Indexation will be calculated using CPI in a similar manner to arrangements previously in place between 1985 and 1999. The ATO will provide guidance and tools to support calculation of this adjustment. These changes will apply to all CGT assets (including property and shares) held by individuals, partnerships and trusts for at least 12 months. Applying these changes broadly across assets ensures the CGT settings are broadly asset neutral with only targeted exemptions. Minimum tax on capital gains A minimum tax rate of 30 per cent will apply to real capital gains accruing from 1 July 2027 (with no impact until the income is realised). This will not affect people whose capital gains are already taxed at rates of at least 30 per cent. The introduction of the minimum tax reduces the benefit of taxpayers deferring capital gains realisation to years where their marginal tax rates are low. It ensures their gains are subject to a tax rate closer to the rate they faced during their working life and is commensurate with the tax rate paid by most workers. Recipients of means-tested income support payments, such as the Age Pension or JobSeeker, will be exempted from the minimum tax if they receive any payment in the financial year in which they realise the capital gain. Comparison of Returns, Inflation and Effective Rates Under these new arrangements, the effective tax rate on nominal capital gains would vary depending on an individual’s marginal rate, their returns and the inflation rate over the period the asset had been held. As shown below, if indexation had been in place over the past 20 years instead of the current arrangements, the effective discount would have ranged from 35-60 per cent on average for typical assets held for five or ten years. This equates to an effective tax rate on the nominal gain of between 13 per cent and 30 per cent. Table 1: Comparison of tax rates under indexation on average over past 20 years House Average capital growth(a) Discount for CPI(b) At 32c rate(c) At 47c rate(d) 5y hold 5.8% 42% 18.6 27.3 10y hold 6.1% 36% 20.5 30.1 continued on next page | Negative Gearing and Capital Gains Tax Reform 3 Table 1: Comparison of tax rates under indexation on average over past 20 years (continued) Unit Average capital growth(a) Discount for CPI(b) At 32c rate(c) At 47c rate(d) 5y hold 4.1% 59% 13.1 19.3 10y hold 4.8% 50% 16.0 23.5 Shares (S&P/ASX 200) Average capital growth(a) Discount for CPI(b) At 32c rate(c) At 47c rate(d) 5y hold 4.4% 53% 15.0 22.1 10y hold 4.3% 56% 14.1 20.7 a) Average annual return on an asset held for five or ten years and sold over the period, not including rental or dividend income or additional investor costs b) Average inflation share of nominal gain over holding period c) Effective tax rate on nominal gain at 32 cent marginal tax rate after indexation d) Effective tax rate on nominal gain at 47 cent marginal tax rate after indexation Source: Cotality Data, ASX and Treasury analysis; Budget Paper No. 1, Statement 4: Tax reform for workers, businesses and future generations. Transitional arrangements Transitional arrangements for negative gearing New builds can continue to be negatively geared before and after 1 July 2027. For established residential properties: • Properties held at announcement (including where a contract has been entered into, but not yet settled) will be allowed to be negatively geared in future years until sold. This ensures that arrangements for taxpayers who have already made investment decisions based on the existing negative gearing rules will not change. • Properties purchased between announcement and 30 June 2027 may be negatively geared during this period, but not from 1 July 2027. • Properties purchased from 1 July 2027 will not be able to be negatively geared. Transitional arrangements for capital gains tax For eligible CGT assets other than new residential properties: • There will be no changes in arrangements for assets purchased and sold prior to 1 July 2027. • Assets purchased after 1 July 2027 will be treated wholly under the new arrangements. • Assets owned prior to 1 July 2027 and sold after 1 July 2027 will be treated under current arrangements on gains made prior to this date, and under the new arrangements for gains made after this date (with no impact until gains are realised). The 50 per cent CGT discount will apply to the difference between the asset’s cost base and its value at 1 July 2027. Indexation and the minimum tax will be used to calculate the CGT on gains accruing from 1 July 2027 (using the asset’s value at 1 July 2027 as the asset’s cost base). | Negative Gearing and Capital Gains Tax Reform 4 An asset’s value at 1 July 2027 will be determined by taxpayers as part of their tax return in the year the asset is realised. Taxpayers can either: • seek a valuation of the asset as at 1 July 2027, which will include using quoted prices for assets such as shares; or • use a specified apportionment formula that estimates the asset’s value on 1 July 2027, based on its growth rate over the asset’s holding period. The ATO will provide tools to estimate this value for taxpayers. These transitional arrangements also apply to legacy assets, including those purchased before 1985. Gains on pre-1985 assets accrued before 1 July 2027 will continue to be exempt. New build exemption Investors who buy new builds will be able to choose either the 50 per cent CGT discount or indexation and the minimum tax when they sell the property. These investors will also continue to have access to negative gearing. This means if they make a rental loss on a new build, they can still use that loss to reduce their taxable income (including salary and wages). New builds are residential properties which genuinely add to supply (see Table 2). This will include: • dwellings constructed on vacant land, or • where existing properties are demolished and replaced with a greater number of dwellings. Knock-down rebuilds or substantial renovations that do not increase supply will not be eligible. A new build cannot have been previously sold, unless first owned by the builder and not occupied for more than 12 months. Subsequent purchasers of the dwelling will not be able to access the 50 per cent CGT discount or negative gearing in relation to that property. This is similar to how stamp duty exemptions apply to new builds under some state-based arrangements. Other exemptions The main residence will continue to be exempt for CGT purposes. The four small business CGT concessions will also be unchanged. The existing 60 per cent CGT discount applying to qualifying affordable housing will be fully retained to preserve incentives to invest in those assets. Given the unique characteristics of the tech and start up sector the Government will consult on the interaction of the capital gains tax reforms and incentives for investment in early-stage and start-up businesses. Changes to negative gearing will only apply to residential property. Commercial property and other asset classes, such as shares, will remain subject to existing arrangements. Further exemptions to the negative gearing changes will also be available for private investors who support government housing programs, for example, through the provision of affordable housing. Policy impacts Changes to negative gearing arrangements Every existing property owner will be able to continue to negatively gear any properties held before the time of announcement (7:30PM AEST on 12 May 2026). All future investors will still be able to negatively gear property investments if they are new builds. Around 1 per cent of taxfilers acquire negatively geared properties each year. In 2022-23, this was around 230,000 individuals. | Negative Gearing and Capital Gains Tax Reform 5 Changes to capital gains tax arrangements The new arrangements will only apply to capital gains that accrue after 1 July 2027 when they are realised. Individuals may pay more or less tax than under current settings depending on investment returns (see Cameos: Different rates of return). Around 7 per cent of taxfilers report a net capital gain each year. In 2022-23, this was around 1.1 million individuals. Most of these taxfilers used the CGT discount (which is only available for assets held for more than 12 months). Market impacts The transitional arrangements minimise risks of asset market disruption. Properties held at announcement (including where a contract has been entered into, but not yet settled) will be allowed to be negatively geared in future years, meaning there will be no incentive to buy or sell properties before specific dates. Only capital gains accrued after the commencement of the policy will be subject to new arrangements, meaning there is no incentive to buy or sell assets before this date. Housing impacts These changes will support more first home buyers to enter the housing market over time, and form part of a package of reforms that will support supply overall. Treasury modelling suggests that the reforms will increase the owner occupier share of the housing market, resulting in around 75,000 additional owner-occupiers over the next decade. This is equivalent to reversing around 10 years of declines in the home ownership rate. The reduction in investor demand is expected to lead to a small and temporary slowing in house price growth, estimated to see prices grow by around 2 per cent less over a couple years relative to no tax policy change. Lower house price growth will have a small impact on housing supply, more than offset by the additional homes supported by housing supply measures in the Budget. The reforms are likely to have a small impact on rents, with an expected increase of less than $2 per week for a household paying the current median rent. The combination of the Government’s policies in this Budget will add to housing supply, which will exert downward pressure on rents over time. The Government’s increases to Commonwealth Rent Assistance in 2023 and 2024 total more than $20 per week for a single person receiving the maximum rate, and renters can also benefit from the Government’s tax cuts. International comparisons In its most recent country report on Australia, the OECD recommended cutting or eliminating the capital gains tax discount and phasing out negative gearing to improve Australia’s tax system. Countries tax capital gains and treat rental deductions in a range of different ways, so direct comparisons depend on specific circumstances. In particular, headline tax rates applying to nominal and real gains are not directly comparable. The effective tax rate on nominal gains in Australia under the new indexation arrangements will depend on the nominal return, inflation and marginal tax rate. As highlighted above, over the past 20 years nominal tax rates on average returns could have been in the order of 20 to 30 per cent for someone on the top marginal tax rate, though in some cases the effective rate could be higher where real returns are large. While there are difficulties in comparing tax arrangements across jurisdictions, similar rates apply across many OECD countries. | Negative Gearing and Capital Gains Tax Reform 6 Table 2: New builds comparison table The changes target the benefit of negative gearing to newly constructed properties that genuinely add to housing supply. Eligible new build Not an eligible new build A newly constructed apartment bought off-the-plan. An established property that has recently been extended to add additional bedrooms. A duplex constructed through a knock-down rebuild replacing a single, free-standing house. A free-standing house constructed through a knock-down rebuild replacing an older, smaller free-standing house. Any residential construction on previously vacant land. A granny flat built adjacent to an established property that is not eligible for negative gearing. A newly built property which is occupied for less than 12 months before being first sold. A newly built property which is occupied for more than 12 months before being sold to a subsequent investor. 1 This is roughly the average negative gearing loss in 2022-23 for an individual in the top tax bracket ($14,390) and is equivalent to the loss with a 3.1 per cent rental yield and 5.7 per cent interest rate on a $1 million property. Cameos Impacts on existing property investors Michael owns an investment property purchased before 12 May 2026 that is negatively geared. He can continue to negatively gear this property in future years by using losses from his investment property against other income. Michael sells the property two years after the policy commences for $560,000. Michael still receives the 50 per cent CGT discount for the capital gain he makes on the property between the purchase date and 1 July 2027. He uses ATO tools to determine its value on that date was $500,000. After adjusting for two years of inflation of 2.5 per cent, his taxable capital gain for the period after 1 July 2027 is $34,688, slightly more than if he had applied a 50 per cent discount (which would have resulted in a taxable capital gain of $30,000). Assuming a 47 per cent tax rate, the tax on his gain since 1 July 2027 is $16,303 (instead of $14,100 with a 50 per cent discount). Michael does not pay any tax on the capital gain until he sells his property. Carrying forward losses for future property investors A person buying a new build property can continue to negatively gear as per current arrangements. For an individual purchasing an existing property after the announcement, the impact depends on the size of their rental loss and how much other income they have. For example, assuming a rental loss of $14,810: 1 • For a person with $80,000 in other income this deduction would be worth $4,761. • For a person with $210,000 in other income this deduction would be worth $6,961. This person will instead carry forward their $14,810 loss to use against future property income. The tax value of this future deduction will also depend on their other income at the time. continued on next page | Negative Gearing and Capital Gains Tax Reform 7 Cameos (continued) Negative gearing an existing residential property bought after announcement Yoonseo earns an income of $100,000 and buys an existing residential investment property for $519,000 (including stamp duty) after the policy start date, rents it out and sells it ten years later for $814,447. Over the first five years that she owns the property she has net rental losses and accumulates $22,879 of carry forward losses. In the following five years, Yoonseo applies most of these carried forward losses to reduce her positive net rent over this period from $18,079 to zero. In the year she sells the property she uses the remaining carried forward losses to reduce her real estate capital gain from $150,083 to $145,284. Overall, she pays $186 more in nominal tax over the years of her investment compared to previous settings. Had Yoonseo bought a new build property, she would not pay additional tax as negative gearing and the existing capital gains tax discount would still be available for this property. Cost base indexation Zoe purchases shares in a company for $100 on 1 July 2027. She then sells her shares on 1 July 2032 for $125, having made a nominal gain of from this investment of $25, with an investment return of 4.6 per cent per year. As the shares were purchased after 1 July 2027, Zoe’s capital gains are subject to cost base indexation. Inflation is 2.5 per cent each year Zoe holds the assets and, using ATO tools, Zoe can work out that the indexed cost base of the shares is $113. Zoe's taxable capital gain is reduced from $25 to $12 under cost base indexation. This is slightly less than the taxable capital gain of about $13 under the 50 per cent discount, meaning she will pay slightly less tax. Transitional CGT arrangements Jane purchases an asset on 1 July 2022 for $800,000. She sells the asset on 1 July 2032 for $1,600,000 earning a 7.2 per cent annual return. Using ATO tools, Jane determines that the asset was worth $1,131,371 at commencement of the policy (1 July 2027). Under the transitional rules, Jane calculates her taxable capital gain by adding: • Taxable capital gains of $165,685 earned before commencement, which is equal to gross capital gains of $331,371 with the 50 per cent CGT discount; plus • Taxable gains of $319,958 earned after commencement, which is equal to the gain of $468,629 less cost base indexation. Her total taxable capital gain is $485,643. This is more than the $400,000 that would have been calculated if a 50 per cent discount applied to the gain overall. Assuming a 47 per cent tax rate, the tax on her gain is $228,252 (compared to $188,000 with a 50 per cent discount). continued on next page | Negative Gearing and Capital Gains Tax Reform 8 Cameos (continued) Different rates of return People will be affected differently depending on the rate of return on their assets. For example, assuming 2.5 per cent inflation, an asset purchased for $500,000 in July 2027, a holding period of 10 years, and $100,000 in other income per year: • David earns an annual rate of return of 5 per cent, similar to longer term returns on residential real estate. He will have a taxable capital gain of $174,405 under cost base indexation compared to $157,224 under the current 50 per cent discount. He will pay an extra $8,075 in tax due to the reforms. • Ben earns a lower 2.5 per cent annual return. As Ben does not earn a positive return on his investment after inflation, he will not have a taxable capital gain under cost base indexation. Under the 50 per cent discount his taxable capital gain would have been $70,021. He will pay $24,858 less in tax due to the reforms. • Kate earns a higher 7.5 per cent annual return. She will have a taxable capital gain of $390,474 under cost base indexation compared to $265,258 under the current 50 per cent discount. She will pay an extra $58,851 in tax due to the reforms. Minimum tax on capital gains Jack has a taxable income before capital gains of $25,000 in 2029-30 and realises a capital gain of $10,000 on an asset that he purchased in 2027-28. Jack does not receive an income support payment so is not exempt from the minimum tax. • The tax on Jack's capital gain of $10,000 is $1,400, or a tax rate of 14 per cent (excluding the Medicare levy). As this is lower than 30 per cent, Jack pays an additional $1,600 in tax to bring the tax rate on his capital gain up to 30 per cent. Jack may have tax offsets available to reduce the minimum tax and would be exempt from the minimum tax if he received an income support payment in that year. ## Tax explainer - New tax cuts for Australian workers Source: https://budget.gov.au/content/factsheets/download/tax-explainers-new-tax-cuts-workers.pdf | New tax cuts for Australian workers 1 New tax cuts for Australian workers The Government is delivering new tax cuts for every working Australian taxpayer from the 2027-28 income year. Working Australians Tax Offset The Government will deliver new tax cuts for every working Australian taxpayer by introducing a $250 Working Australians Tax Offset (WATO). Over 13 million Australian workers will benefit from the WATO for income earned from 1 July 2027. This is on top of the first round of tax cuts that were rolled out in 2024 and two further tax cuts already coming into effect over the next two years. The WATO will provide a permanent annual tax offset of up to $250 for income earned by Australian workers from 1 July 2027, increasing the effective tax-free threshold for workers by nearly $1,800 to $19,985 (or up to $24,985 for workers eligible for the Low Income Tax Offset). This is the largest permanent increase in the effective tax-free threshold since 2012-13. The WATO will reduce tax on income from work - helping workers keep more of what they earn. The WATO will be available automatically after workers lodge their tax return. The WATO will also be available to sole traders running their own business. $1,000 Instant Tax Deduction The Government is also introducing a $1,000 instant tax deduction for work-related expenses to offset employment income. The instant tax deduction will make tax time simpler and deliver more cost-of-living relief for workers from the 2026-27 income year. Around 6.2 million workers (42 per cent of taxpayers) will benefit in 2026-27, with an average tax saving of $205. The instant tax deduction allows employees to reduce their taxable income by up to $1,000 without keeping receipts when they lodge their tax return. Taxpayers claiming more than $1,000 in work-related deductions will still be able to do so in the usual way. Charitable donations, union and professional association membership fees and other non‑work related deductions can still be claimed on top of the instant tax deduction. Helping Australian workers keep more of what they earn These changes provide further cost-of-living relief and allow Australian workers to keep more of what they earn. An Australian worker on average earnings would receive a combined benefit of $2,496 from the 2027-28 income year from the WATO and three rounds of tax cuts relative to 2023-24, as well as up to $320 from the instant tax deduction, for a total benefit of up to $2,816. These reforms are part of a tax package which, as a whole, is broadly revenue neutral over the forward estimates so will not add to the outlook for inflation. | New tax cuts for Australian workers 2 Related measures Increasing Medicare levy low-income thresholds The Government will also increase the Medicare levy low-income thresholds by 2.9 per cent for singles, families, and seniors and pensioners from 1 July 2025. This increase means over 1 million Australians on lower incomes will continue to be exempt from paying the Medicare levy or pay a reduced levy rate. Participation impacts The Government’s already legislated tax cuts are estimated to increase labour supply by 1.3 million hours a week, compared to 2023-24 settings. The WATO builds on these reforms, providing further modest support to labour supply from lower-income taxpayers, likely part-time workers and women. By only targeting income from work, the cost is lower than a comparative tax cut that also lowers taxes on non-labour income. Average tax rates The Government’s tax cuts return bracket creep by lowering average tax rates for working Australian taxpayers, especially for low- and middle-income workers. An Australian worker on average earnings is expected to pay up to $38,977 less tax from 2024-25 to 2036-37, relative to 2023-24 settings. The new tax cuts provide further protection against bracket creep and lower average tax rates for working Australian taxpayers, with the average tax rate across all taxpayers falling from 25.5 per cent in 2023-24 to 24.7 per cent in 2027-28. The average tax rate for a worker on average earnings who receives the average benefit from the instant tax deduction will fall from 21.9 per cent in 2023-24 to 20.2 per cent in 2027-28, and is not expected to exceed 2023-24 levels until 2032-33 - three years later than under 2024-25 settings. Claire is employed as an occupational therapist and Hugh is employed as a high school teacher. They both have taxable income of $90,000 per year, after claiming work-related expense deductions (Claire claims $400 and Hugh claims $600). As a result of new decisions announced in this Budget, they will collectively pay $320 less in tax for the 2026-27 income year and $820 from 2027-28. Combined with the Government’s previously announced tax cuts, Claire and Hugh will collectively pay $5,750 less tax from the 2027-28 income year, compared to 2023-24 tax settings. Mark is a chef who earns $75,000 per year. Under the first round of tax cuts, Mark paid $1,554 less tax in 2024-25 and 2025-26, compared to 2023-24 tax settings. When combined with the new tax cuts, the WATO and the instant tax deduction, this tax saving will grow to $2,142 for the 2026-27 income year and $2,660 from 2027-28, assuming he has no work-related expenses. The decisions announced in this Budget mean that Mark will receive an additional tax benefit of $570 per year from 2027-28. | New tax cuts for Australian workers 3 Average tax rates for a worker on average earnings20 22 2 2 2 verage tax rate 202 2 tax settings 202 25 tax settings 202 2 udget settings Note: Prior to 2026-27, the worker on average earnings is assumed to have taxable income equal to annualised estimates of average weekly earnings (AWE) after incorporating an annual deduction for work-related expenses of $359. From 2026-27 onwards, the worker’s taxable income is further reduced by the instant tax deduction (providing a tax benefit of $205). From 2027-28 the worker is assumed to benefit from the full Working Australians Tax Offset. Forecasts for AWE are as at the 2026-27 Budget. Average tax rate is defined as the ratio of tax payable to taxable income. Tax payable is calculated accounting for basic tax rates and thresholds and the Medicare levy. Source: Treasury Combined annual tax cut compared to 2023-24 tax settings Income from work 2026-27 Two tax cuts 2027-28 onwards Combined benefit with instant tax deduction 2027-28 onwards Three tax cuts + WATO 2027-28 onwards Combined benefit with instant tax deduction Full-time national minimum wage - $49,296 $1,179 Up to $1,514 $1,697 Up to $2,032 Median income - $74,100 $1,800 Up to $2,120 $2,318 Up to $2,638 Average income - $81,245 $1,978 Up to $2,298 $2,496 Up to $2,816 Average full-time income - $106,657 $2,613 Up to $2,933 $3,131 Up to $3,451 Note: This table presents stylised cameos on the assumptions that an individual is an Australian tax resident, only has income from work and has work-related expenses of less than $1,000 from 2026-27. The reduction in tax liability is calculated by only taking into account the basic tax scales, Low Income Tax Offset (as applicable) and Medicare levy. The instant tax deduction benefit for an individual on the full-time national minimum wage includes additional benefit from the Low Income Tax Offset due to the reduction in their taxable income. Source: Fair Work Ombudsman; ABS, Employee earnings, Aug 2025; ABS, Average Weekly Earnings, Nov 2025. | New tax cuts for Australian workers 4 Key facts and figures • After three rounds of tax cuts, the WATO and the instant tax deduction, an Australian worker on average earnings could receive a combined benefit of up to $2,816 from the 2027-28 income year relative to 2023-24 tax settings. • Around 13 million Australian workers, including 6.3 million women, will receive the WATO for the 2027-28 income year, of whom 97 per cent are expected to receive the full $250 offset. • The Government’s combined tax cuts are lowering average tax rates for all working Australian taxpayers, with the average tax rates across all taxpayers falling from 25.5 per cent in 2023-24 to 24.7 per cent in 2027-28. • The Government’s combined tax cuts are expected to keep average tax rates for an Australian worker on average earnings who receives the average benefit from the instant tax deduction below 2023-24 levels until 2032-33 - three years later than under 2024-25 settings. • The WATO builds upon the Government’s already legislated tax cuts which are estimated to increase labour supply by 1.3 million hours per week, relative to 2023-24 settings. • Around 6.2 million workers will benefit from the instant tax deduction with an average saving of $205 for 2026-27. | New tax cuts for Australian workers 5 Combined annual tax cut compared to 2023-24 tax settings ($) Income from work 2026-27 Two tax cuts 2027-28 onwards Combined benefit with instant tax deduction 2027-28 onwards Three tax cuts + WATO 2027-28 onwards Combined benefit with instant tax deduction 20,000 - - - - 30,000 673 Up to 923 1,041 Up to 1,281 40,000 872 Up to 1,092 1,340 Up to 1,550 50,000 1,197 Up to 1,532 1,715 Up to 2,050 60,000 1,447 Up to 1,782 1,965 Up to 2,300 70,000 1,697 Up to 2,017 2,215 Up to 2,535 80,000 1,947 Up to 2,267 2,465 Up to 2,785 90,000 2,197 Up to 2,517 2,715 Up to 3,035 100,000 2,447 Up to 2,767 2,965 Up to 3,285 110,000 2,697 Up to 3,017 3,215 Up to 3,535 120,000 2,947 Up to 3,267 3,465 Up to 3,785 130,000 3,647 Up to 3,967 4,165 Up to 4,485 140,000 3,997 Up to 4,387 4,515 Up to 4,905 150,000 3,997 Up to 4,387 4,515 Up to 4,905 160,000 3,997 Up to 4,387 4,515 Up to 4,905 170,000 3,997 Up to 4,387 4,515 Up to 4,905 180,000 3,997 Up to 4,387 4,515 Up to 4,905 190,000 4,797 Up to 5,187 5,315 Up to 5,705 200,000 4,797 Up to 5,267 5,315 Up to 5,785 Note: This table presents stylised cameos on the assumptions that an individual is an Australian resident, only has income from work and has work-related expenses of less than $1,000 from 2026-27. The reduction in tax liability is calculated by only taking into account the basic tax scales, Low Income Tax Offset (as applicable) and Medicare levy. The tax cut benefit for an individual with taxable income of $30,000 includes the increase in the Medicare levy low-income thresholds from 2024-25 and 2025-26; their Medicare levy phases in at 10 cents per dollar above the Medicare levy low-income threshold. The instant tax deduction benefit for an individual with taxable income between $40,000 and $60,000 includes additional benefit from the Low Income Tax Offset due to the reduction in their taxable income. ## Tax explainer - Minimum tax on discretionary trusts Source: https://budget.gov.au/content/factsheets/download/tax-explainers-minimum-tax-discretionary-trusts.pdf | Minimum tax on discretionary trusts 1 Minimum tax on discretionary trusts The Government is improving the fairness of the tax system by introducing a 30 per cent minimum tax on discretionary trusts. Expanded rollover relief will be available for small business and others to support restructuring out of discretionary trusts. 30 per cent minimum tax on discretionary trusts Minimum tax on discretionary trusts The Government is introducing a 30 per cent minimum tax on discretionary trusts from 1 July 2028. The tax will be paid by the trustee as it is the trustee who controls distributions. Beneficiaries will still need to declare their trust income in their tax returns, but beneficiaries, other than corporate beneficiaries, will receive non-refundable credits for the tax payable by the trustee. The introduction of a 30 per cent minimum rate will mean a fairer rate of tax paid on discretionary trust income, better aligning the tax rate on trust income with the tax rates paid by workers. Growing use of discretionary trusts is increasingly unsustainable Since 2001-02, the number of discretionary trusts in Australia has doubled, exceeding the growth in companies (which have grown by 70 per cent). Australia now has over one million trusts, of which around 840,000 (80 per cent) are discretionary trusts. In 2022-23, discretionary trusts distributed $142.4 billion in income to other entities, with average annual growth in income of 7.8 per cent since 2011-12. The majority of trust income flows to the top earning 10 per cent of families and approximately 90 per cent of total private trust wealth is held by the wealthiest 10 per cent of households (those with net worth above around $2.3 million). Better aligning the tax rate on trust income with the tax rate paid by workers Trusts, including discretionary trusts, can assist with asset protection and succession planning. However, discretionary trusts also allow lower tax rates to be achieved through ‘income splitting’, where trustees of discretionary trusts allocate all or part of their income to others who have a lower marginal tax rate, while often retaining the income. Treasury analysis shows that in 2022-23, on average, families with discretionary trusts faced an average tax rate around 4 percentage points lower compared with families with similar incomes who do not use a trust. This flexibility is not available to individuals without a trust, including workers who pay tax on wages at marginal rates. Numerous reviews of the tax system over the past 50-years have raised concerns that different structures used to hold assets or earn an income can result in different tax outcomes for people with similar levels of income (see Table 1). Introducing a 30 per cent minimum tax brings the tax outcome on income earned in a discretionary trust closer to that of wage and salary earners who pay a 30 per cent marginal rate on incomes between $45,001 and $135,000. This improves the fairness and sustainability of the tax system. | Minimum tax on discretionary trusts 2 Table 1: Tax reviews raising discretionary trust concerns Review Key concerns Asprey Report (1975) Income splitting through trusts undermines tax integrity. Review of Business Taxation (1999) Inconsistent tax treatment between trusts, companies and other entities. Australia’s Future Tax System (2009) Trusts remain a source of tax avoidance and complexity. Re:think (2015) Discretionary trusts offer tax advantages to individuals who share the income from savings. How it works Trustees currently pay tax on any income that is retained in the trust, as well as paying tax on behalf of particular beneficiaries (including children). The trustee determines which beneficiaries are to be made presently entitled to the income of the trust and the beneficiary pays tax based on that entitlement at their marginal tax rate. Under these changes, the trustee of a discretionary trust will continue to determine the trust income that beneficiaries are entitled to each year, and beneficiaries will continue to be responsible for including trust distributions in their income tax returns. However, the trustee will now pay 30 per cent tax on the taxable income of the trust (unless higher rates apply). Individuals and other non-corporate beneficiaries will receive non-refundable tax credits for the tax payable by the trustee, which reduces their income tax payable. This recognises the tax already paid, while ensuring the tax paid on that income is not lower than 30 per cent. Trustees will be required to calculate, report and pay the minimum tax, as well as to notify beneficiaries of their entitlements and associated tax credits. The mechanism for collecting the minimum tax will be subject to consultation, but is expected to be consistent with established collection mechanisms. To ensure the use of refundable franking credits does not undermine the minimum tax: • trustees that receive franked dividends will be required to use their franking credits to pay the minimum tax; and • corporate beneficiaries will not receive non-refundable credits for tax payable by the trustee, to avoid them converting these to refundable franking credits to avoid the minimum tax. Key aspects of the changes will be finalised following consultation with stakeholders. As well as the mechanism for collecting the minimum tax, stakeholder views will also be sought on how the trustee uses franking credits that exceed the minimum tax liability, and on the rollover relief provided to support restructuring. Rollover relief Rollover relief will be available to assist small businesses and others that wish to restructure out of a discretionary trust into other arrangements, such as a company or a fixed trust. This will provide expanded relief from income tax consequences, including capital gains tax, for those who choose to restructure, and will be available for three years from 1 July 2027. From 1 January 2027, the Australian Small Business and Family Enterprise Ombudsman will be available to assist small businesses to understand the options available to them and where they can get further advice. Specific arrangements will be put in place by the Australian Securities and Investments Commission to support small businesses that wish to incorporate. | Minimum tax on discretionary trusts 3 Exclusions The minimum tax will not apply to other types of trusts such as fixed and widely held trusts, complying superannuation funds, special disability trusts, deceased estates and charitable trusts. Some types of income such as primary production income, certain income relating to vulnerable minors, amounts to which non-resident withholding tax applies, and income from assets of testamentary trusts existing at announcement will also be excluded. Policy impact Trustees and individuals All trustees of discretionary trusts in scope will be required to pay the minimum tax, but where a trust is already distributing to non-corporate beneficiaries with a tax rate of 30 per cent or higher there will be no overall increase in tax paid. Around half of discretionary trusts are not expected to be affected in any given year. Those that are affected may restructure into a company or fixed trust structure not subject to the minimum tax, or make different decisions about the distribution of income to beneficiaries to reduce their tax liability. More than 95 per cent of individual taxfilers will not be affected by these changes in any given year. Around 810,000 adults, or 5 per cent of individual taxfilers, received distributions from discretionary trusts in 2022-23, plus 120,000 non-filers, who are predominantly minors. Since the financial benefit of income splitting goes to the primary earner in most cases, the minimum tax will primarily align the tax rates of the high-income primary earner more closely to wage and salary earners on similar incomes. Small businesses Around 350,000 active small businesses (less than 15 per cent of all active small businesses) operate through a discretionary trust structure. Of these, 40 per cent (140,000) are not expected to pay additional tax or need to restructure in any given year. As a result, more than 90 per cent of all small businesses in any given year will not be affected by these changes. Small businesses sometimes use trust structures for tax reasons, despite the drawbacks of trusts for running a business. For example, trusts do not provide a simple way to retain earnings and have more difficulties accessing debt financing or attracting equity finance. Small businesses will be able to reduce the impact of the minimum tax by employing beneficiaries working in the business, rather than paying them a trust distribution. Payments of salary or wages to employees will not attract the minimum tax. Alternatively, small businesses could choose to restructure their operations, for example into a company or a fixed trust. Rollover relief will facilitate restructuring by ensuring there are no income tax consequences, including capital gains tax, for those that wish to move out of discretionary trust structures. Small businesses that choose to restructure into a company will benefit from access to dividend imputation and a lower 25 per cent corporate tax rate where their aggregated annual turnover is less than $50 million and no more than 80 per cent of their assessable income is passive income. Companies also provide simpler ways to retain earnings, to access debt financing and to introduce new equity. Restructuring into a fixed trust will allow a business to retain the benefits of a trust structure while providing beneficiaries with more certain entitlements. | Minimum tax on discretionary trusts 4 Corporate beneficiaries Trusts can distribute to corporate beneficiaries that have access to corporate tax rates and franking credits, and which can be used to defer tax for underlying shareholders, who are often also trust beneficiaries. Under the minimum tax, corporate beneficiaries will be assessed based on the trust income to which they are entitled, without being able to claim credits for tax payable by the trustee. This will ensure the minimum tax cannot be avoided by cycling income through a ‘bucket’ company. Around 94 per cent of companies did not receive a distribution from a discretionary trust in 2022-23. Australian Taxation Office data indicates that of the 80,000 companies receiving distributions, 83 per cent did not have evidence of business activity, suggesting they operate primarily for tax purposes. The introduction of the minimum tax will reduce the incentive for trustees to distribute to corporate beneficiaries set up just to receive trust distributions from discretionary trusts. This will discourage the use of structures that add complexity to the tax system and compliance costs for taxpayers. International comparisons Australia has a high use of trusts compared with jurisdictions with similar tax systems. In 2022-23, there were more than one million trusts in Australia, or around 40 trusts per 1,000 people. By comparison, the UK is estimated to have around 2 trusts per 1,000 people, and the US around 9 trusts per 1,000 people. New Zealand has higher use of trusts, estimated at around 44 trusts per 1,000 people. While different jurisdictions use different tax structures for different purposes, the combination of the high use of trusts in Australia, and the availability of the discretionary trust structure to more flexibly tax income at marginal rates, presents challenges for the fairness and sustainability of the tax system. | Minimum tax on discretionary trusts 5 Cameo - using a discretionary trust can result in a lower rate of tax compared to an ordinary worker Ying is a youth worker earning $80,000 in 2028-29. Ying will pay $15,602 in tax, with a marginal rate of 30 per cent (plus Medicare levy) and an average tax rate of 19.5 per cent. Steven earns $200,000 of income from investments through a family discretionary trust. Steven as trustee is able to split the taxable income of $200,000 among his family members. Steven chooses to make himself and each of his three family members, who have no other income, entitled to $50,000 of the trust’s income. In total, Steven’s family pays $24,008 tax, an average tax rate of around 12 per cent. If Steven had not used a discretionary trust to split his income with his family, he would have paid $59,602 in tax. By using a discretionary trust, Steven has reduced his tax liability by $35,594 and achieved a tax rate significantly lower than Ying. Cameo - comparison to equivalent wage income In 2028-29, Angela has $200,000 in wage income, equal to Steven’s $200,000 in investment income in the example above. Angela receives her income as a salary and will pay $59,352 in tax, an average tax rate of around 30 per cent. With a minimum tax in place, Steven’s trust would pay 30 per cent tax on the $200,000 of investment income, regardless of how this income was distributed. This would bring the total tax paid on Steven’s income to around the amount of tax paid by Angela. Cameo - comparison of tax outcomes of different business structures In 2028-29, Kurt and Loretta each earn $300,000 operating small businesses. Loretta provides her services through a company. Loretta pays herself a salary as an employee of $100,000 and retains the remaining income in the company to build the business. The company pays the small business rate of 25 per cent on this profit. Overall, $72,002 of tax will be paid. Kurt provides his services through a family discretionary trust with himself as the trustee. The trust pays Kurt a salary of $100,000 as an employee and has remaining taxable income of $200,000. Kurt makes four of his extended family members, who have no other income, each entitled to $50,000, while retaining the money in the trust to build the business. In total, Kurt’s family will pay $42,010 in tax. With a minimum tax in place, the trust would pay 30 per cent tax on the $200,000 of income not paid as wages, regardless of how this income was distributed. Overall, $86,002 of tax will be paid if Kurt does not change the distributions made to his family members. Kurt would pay less tax operating through a company than a trust, once the minimum tax is in place, by accessing the small business tax rate.