By Rachel Waterhouse, CEO, Australian Shareholders’ Association

The 2026/27 Federal Budget has been delivered at a significant time for Australian investors, with capital gains tax, negative gearing, discretionary trusts, housing, productivity, health, defence and regulation all in focus. 

For retail investors, the key question is whether the Budget supports confidence, certainty and long-term investment. 

Australian investors are already managing higher interest rates, cost-of-living pressure, market volatility and ongoing uncertainty about tax and retirement settings. Budget decisions affect millions of Australians who invest directly and indirectly through shares, ETFs, listed investment companies, managed funds and superannuation. 

Whether investors are starting out, building wealth, managing family finances or drawing retirement income, policy settings matter. Younger investors need practical pathways to build wealth outside property. Wealth accumulators need confidence to invest for the long term. Retirees and pre-retirees need stable settings that support retirement planning, income and confidence. 

Key Federal Budget 2026/27 announcements 

Treasury economic expectations 

The Budget papers set out the Government’s latest economic and fiscal forecasts, including: 

• a 2026/27 Budget deficit estimated at $31.5 billion  

• gross debt forecast to be $982 billion at the end of this financial year, with the Budget papers projecting debt over the forward estimates. 

• global growth expected to slow from 3.5 per cent last year to 3 per cent this year  

• inflation expected to peak at around 5 per cent in the middle of the year  

• nominal wages growth expected to remain above 3 per cent, with annual real wage growth expected to return from next year.  

Tax 

The main tax measures relevant to investors include: 

• replacing the current 50 per cent capital gains tax discount for individuals, trusts and partnerships with inflation-adjusted indexation and a 30 per cent minimum tax rate on capital gains  

• applying the CGT reforms only to gains accruing after 1 July 2027  

• applying the changes to CGT assets, including property and shares, held for at least 12 months, while retaining the main residence exemption. 

• applying the changes prospectively, with new builds retaining the option to use the 50 per cent discount  

• limiting negative gearing for residential property to new builds from 1 July 2027  

• allowing investors who buy established housing after Budget night to deduct losses against residential property income, but not against other income such as wages  

• introducing a minimum 30 per cent tax rate on discretionary trusts from 1 July 2028  

• providing rollover relief for three years from 1 July 2027 to assist small business and others that wish to restructure  

• introducing a $250 Working Australians Tax Offset, to begin from the second half of 2027 and be paid each year through tax returns  

• increasing the offset for experimental core research and development by around 25 to 50 per cent, removing eligibility for expenditure that only supports R&D, and reducing the intensity threshold to 1.5 per cent.  

Regulation 

The Government is increasing the ACCC’s enforcement resourcing and strengthening competition and consumer protections by doubling maximum penalties to $100 million for serious breaches of competition law and consumer law. 

Health and aged care 

The Budget includes: 

• $3 billion to deliver more beds, packages and aged care for older Australians  

• $25 billion for public hospitals  

• $5.9 billion to list more medicines on the Pharmaceutical Benefits Scheme  

• $1.8 billion over the next four years for Medicare Urgent Care Clinics  

• $25.3 million in targeted funding to lift bulk billing rates in the Central Coast, Newcastle, Lake Macquarie and Hunter regions.  

Housing 

Housing remains a major Budget focus. Measures include: 

• a $47 billion increase in total investment in housing  

• extending the ban on foreign investors buying existing homes to take pressure off the market  

• changes to negative gearing and capital gains tax.  

Productivity 

The Budget includes a productivity package aimed at reducing regulatory costs and simplifying government processes, including: 

• cutting regulatory costs by $10.2 billion every year, including $780 million in the financial sector  

• permanently reintroducing two-year loss carry back for companies with turnover of up to $1 billion from 1 July 2026  

• making government simpler to deal with through a “tell us once” approach and expanding Digital ID.  

Sectors 

Budget measures may affect listed sectors including defence, energy, fuel security, critical minerals, infrastructure, housing, health, aged care, technology and agriculture. 

Key measures include: 

• an additional $53 billion in defence spending over the next decade  

• $1.1 billion to support domestic production of low-emissions fuels  

• continued support for the Future Made in Australia agenda, including mining and processing through the Critical Minerals Strategic Reserve and investments in domestic smelting and manufacturing  

• a $10 billion investment in immediate fuel supplies and a permanent Australian Fuel Security Reserve for fuels and fertiliser  

• removal of 600 tariffs to reduce trade barriers, as well as expanding the Trusted Trader program and streamlining biosecurity for fertiliser imports  

• NDIS reforms projected to save $37.8 billion over the forward estimates. 

ASA does not make sector recommendations, but investors should consider how Budget measures may affect company earnings, costs, regulation, capital expenditure and long-term investment cases. 

ASA perspective 

ASA supports fair, transparent and well-designed tax reform. However, changes affecting shareholders, capital gains tax, discretionary trusts, retirement savings and long-term investment must be carefully designed, clearly communicated and implemented with appropriate transition arrangements. 

Retail investors need stable, understandable and fair policy settings across life stages, asset classes and investor structures. Reform should not discourage long-term share investment, penalise sensible portfolio decisions, or make it harder for younger Australians to build wealth outside property. 

ASA will assess the Budget measures against three principles: 

1. Consultation before significant tax changes are introduced  

1. Certainty for investors making long-term decisions  

1. Confidence that reforms will not undermine retirement planning, market participation or long-term investment in Australian companies  

ASA recognises the importance of intergenerational equity, housing affordability, budget sustainability and productivity. However, major tax changes that affect how Australians invest, save and plan for retirement must be clearly explained, properly consulted on and practical to comply with. 

Australians who invest need confidence that the rules for long-term investment will not change abruptly or unfairly. That includes younger investors building wealth outside the family home, working Australians investing for the future, and retirees who rely on investment income outside superannuation. 

Capital gains tax and shares 

Capital gains tax is one of the most significant Budget issues for many long-term shareholders. 

The recent Australian Shareholders’ Association Investor Sentiment Survey found that more than three-quarters of respondents, 75.9 per cent, said reducing or removing the current 50 per cent CGT discount on shares would either make them less likely to invest long term in shares, or that the impact would depend on the details. 

The Budget confirmed changes to capital gains tax, including replacing the 50 per cent CGT discount with inflation-adjusted indexation and introducing a 30 per cent minimum tax rate on capital gains. 

ASA supports the principle that investors should not be taxed on inflationary gains. However, replacing the current 50 per cent CGT discount with indexation and a minimum tax rate raises important questions about complexity, behavioural change and the impact on long-term investment. 

The changes affect Australians who invest directly and indirectly through shares, ETFs, listed investment companies, managed funds and other assets. These investors include younger Australians building wealth or saving for a first-home deposit, working Australians investing outside superannuation, and retirees drawing on long-held investments. 

Intergenerational fairness is an important objective, but reform needs to work in practice. Many younger Australians are investing in shares and ETFs because entering the housing market has become harder. Tax changes should not make one of the few practical pathways to long-term wealth creation less attractive without clear evidence, proper consultation and sensible transition rules. 

The design of CGT reform matters because different models produce different outcomes for long-term investors. Indexation may help ensure investors are not taxed on inflationary gains, but it may not address income bunching where many years of gains are realised in a single tax year. ASA is calling for any CGT reform to consider both indexation and a modern averaging mechanism. 

ASA would have preferred proper consultation before any major change was announced. At a minimum, the final design must be prospective, clearly explained, simple to comply with and supported by appropriate transitional arrangements before it is legislated and implemented. 

Discretionary trust tax changes 

ASA supports integrity measures that target artificial tax avoidance. However, broad or rushed changes to discretionary trusts risk affecting legitimate family, investment, estate planning and small business structures. 

Many Australians use trusts for practical and lawful reasons, including succession planning, investment management, asset protection and business continuity. Any reform should be carefully targeted, properly consulted on and designed to avoid unintended consequences for ordinary investors, small businesses and families. 

The announced transition period and rollover relief will be important, but affected investors and advisers will need clear guidance well before the changes commence. 

Negative gearing 

The Budget also includes changes to negative gearing for residential property. 

ASA’s focus is on retail investors, public markets and investment in Australian equities. ASA does not seek to lead the housing policy debate, but it is important that any reforms are clearly drafted, prospective and do not unintentionally affect legitimate deductions linked to earning income from shares, ETFs or other financial investments. 

Tax settings should not unintentionally push investors toward or away from particular asset classes without a clear policy rationale. A well-designed system should support diversification and long-term investment confidence. 

What investors should do 

Investors should avoid making rushed decisions based on Budget night announcements. 

Tax is important, but it is only one part of an investment decision. The fundamentals still matter: quality, valuation, diversification, balance sheet strength, income sustainability and long-term growth. 

Selling may crystallise a gain, reduce income, affect diversification and create costs. The impact of the Budget will vary depending on an investor’s stage of life, portfolio structure, tax position and use of trusts or other investment vehicles. 

Investors who may be affected by the announced CGT, negative gearing or discretionary trust changes should take time to understand the detail and consider seeking advice from a financial planner, accountant or lawyer before making significant changes. 

If you have a discretionary trust, it may be sensible to model what the announced changes could mean for the trust and beneficiaries before deciding on next steps. 

This is general information only and investors should consider their own circumstances before making decisions. 

What ASA will be watching 

ASA will continue to review the Budget measures and seek clarity on how the announced changes will apply across individuals, trusts, companies and superannuation. 

The key questions for investors are: 

• whether the rules are simple to understand and comply with  

• whether commencement dates and transition arrangements are fair  

• whether the reforms support long-term confidence in Australian public markets  

• whether the changes create unintended consequences for portfolio rebalancing, retirement planning, estate planning or investment in Australian companies.  

ASA will continue to explain what the Budget means for members and advocate for fair, transparent and stable policy settings that support retail investors, shareholders and long-term participation in Australia’s capital markets.