Everything you need to know about Labor’s latest tax changes

After a last‑minute agreement with the Greens, Parliament has passed wide‑ranging tax reforms that reshape how Australians are taxed on investments, property, and work-related expenses. The package closes a borrowing loophole for self-managed super funds, overhauls capital gains tax settings, winds back negative gearing on established properties, and introduces new offsets and deductions for workers. Here’s a clear, concise guide to what’s changed and when it happens.

How the deal passed — and the SMSF borrowing loophole

• The government required crossbench support in the Senate and secured it with the Greens, who sought several amendments and an eight-week delay to planned changes to the NDIS.
• A key amendment removes a loophole that allowed self-managed super funds (SMSFs) to borrow to buy single assets such as residential property via specific loan structures. While these loans account for a small share of all mortgages, the change aims to prevent a shift toward SMSFs as other property investment avenues tighten.
• The government also agreed to drop a clause that could have enabled it to reverse the reforms later without fresh legislation.

Investment tax changes

Capital gains tax (CGT) from 1 July 2027

• The 50% CGT discount on profits from the sale of assets will no longer apply to most investors.
• Instead, capital gains will be adjusted using a cost-based indexation approach and subject to a minimum 30% tax rate.
• The government has flagged potential carve-outs for startup founders, employee shareholders, and early investors to reflect the sector’s reliance on equity upside; these carve-outs are under consultation.
• Businesses with annual turnover under $10 million will remain eligible for the 50% CGT discount.

Negative gearing on established properties

• Negative gearing for established residential properties is being abolished, in line with the government’s May budget commitments.
• A transition rule sets a 7:30pm AEST, 12 May 2026 cutoff for purchases or contracts. New builds and certain government housing programs will continue to be eligible for negative gearing.

Wins for workers

• From 1 July 2027, all workers will automatically receive the $250 Working Australian Tax Offset. This effectively lifts the tax‑free threshold by $1,800 to $19,985.
• For the 2026–27 financial year, there will be a $1,000 “instant” deduction available for work‑related expenses, replacing the current $300 receipt‑free limit.

Key dates at a glance

• 12 May 2026, 7:30pm AEST: Transition cutoff for negative gearing changes on established properties.
• 1 July 2026 (FY 2026–27): Introduction of the $1,000 instant work‑related expense deduction.
• 1 July 2027: New CGT framework (indexation plus minimum 30% rate) takes effect; $250 Working Australian Tax Offset begins, lifting the effective tax‑free threshold.

What this could mean for you

• Property investors: Established-property negative gearing is being wound back, with a transition cutoff in May 2026. New builds retain eligibility, which may shift investor demand toward construction and eligible housing programs.
• Share and asset investors: The removal of the 50% CGT discount from mid‑2027 changes after‑tax return calculations. Longer holding periods and asset selection may need reassessment under indexation and the minimum 30% rate.
• Small businesses (under $10m turnover): The 50% CGT discount remains available, preserving current planning strategies for eligible disposals.
• Startup ecosystem: Potential carve‑outs for founders, employees with equity, and early investors are under consultation; outcomes may materially affect compensation, fundraising, and exit planning.
• Employees and sole traders: The $250 offset from 2027 increases take‑home pay for many workers. The $1,000 instant deduction in 2026–27 simplifies small out‑of‑pocket work expenses.

Practical next steps

• Review investment and property plans against the 12 May 2026 transition date and the 1 July 2027 CGT changes.
• Model after‑tax returns under the new CGT rules; consider timing of disposals and the impact of indexation versus the old discount.
• For property strategies, compare the post‑reform economics of established properties with the continuing benefits available to new builds and eligible programs.
• For workers, keep receipts for the 2026–27 year to make the most of the $1,000 instant deduction, and check eligibility for the $250 offset from 2027.

These measures are now law. As individual circumstances vary, consider seeking professional advice to optimise for the new settings and key dates.