The May 2026 Australian budget has quite a few things in it, namely:

 

Workers

WATO (aka Working Australians’ Tax Offset) is a $250 tiny amount, which has been strategically delayed.  It comes in on the 2027-28 tax year, just in time for the government to say how generous they are during the May 2028 Federal election.  That amount equates to $4.81 a week.  You have to be a wage earner, not retired and not an investor.  There will also be a $1K instant tax deduction for work-related expenses; although it’s to be determined how that will actually work.  But remember, that’s a deduction, so if you’re on say 14% tax rate level, that’s about $140 in saved tax.   Additionally, for all (not just workers), there will be a 1% tax drop for the bracket $18,201 to $45,000.  When you do the math, that equates to a saving of $268 (or $5 a week).

 

Business

The $20K immediate asset write off (which we’ve had off and on since 2015) has been made permanent from 1.7.26, but is only available for smaller businesses with a $10M turnover.  It’s available for new and second-hand items.  The government has also promised a cut in the cost of compliance (few specifics seem to be available) and there is a two year carry back losses scheme available.

 

Investors

A major overhaul has occurred.  Capital Gains Tax (CGT) is a tax when you sell an asset (house, crypto, share or even collectible items like art).  Currently if you hold it more than 12 months, you get a 50% discount.  It’s being replaced with a discount which is based on inflation and it’s expected that investors will always pay at least 30%.  It appears that pensioners and those on income support will be exempt.

Negative Gearing is also being ditched.  Now I should say, I’ve never been a fan of this.  To me, investing is like business; you don’t go into business to make a loss.  However, having said that many people utilised this to build their wealth and the new rules mean that people (like our children) are having that option taken from them.  This means, any new investors will need to ensure their property is positively geared; which will mean housing rental prices will probably have to be higher; especially as costs go up, like insurance, rates and other holding fees.  Interesting, the government ‘thinks’ rent will only go up $2 a week; I’m no economist, but I believe that figure will be much higher.

New Builds only will be exempt from both, and existing properties (held as of 7:30pm on 12.5.26) will be grandfathered.  Additionally, Self-Managed Super Funds (SMSFs) will be exempt from all three changes (tax on trusts, negative gearing and CGT).

When it comes to buying or selling, you will absolutely need to consult your accountant and financial advisor first; this isn’t so simple and you will need to have a strategy in place.  The CGT rules seem to apply from gains made after 1.7.27 BUT find out about that date; is that date of contract, or date of settlement?  A small detail which could make a big difference.  Noted also foreign investors will have a 2-year ban from buying property; but ‘new’ homes won’t be included in that ban.

 

Trusts

Labor is introducing a min 30% tax on trusts from 1.7.28.  Family Trust used to distribute to family members are exempt.  Under this new rule, the trust will pay the tax before distributions are made, then the beneficiary declares that income.  It appears (but again, confirm with your accountant) that it’s not double taxed if the beneficiary is an individual, BUT if the beneficiary is a ‘bucket company’ aka Company, it will be double taxed!  Isn’t that called ‘double dipping’?

Now what is an issue is that some families have setup testamentary trusts for their children’s inheritance, and yep, the Labor government (after you’ve worked yourself to the bone for your kids) will put their hand out as a pseudo death tax and take at least 30% of that inheritance.  Again, talk to your solicitor and/or accountant as I suspect some people will need to revisit their structures.

 

Migrants a Winner

Whilst many Aussies are losing out in this budget, the Labor government will be maintaining 185,000 places in the next financial year for migrants.  Oversea migration is expected to rise by just under 1 million people between the next and following financial year.  Did you know that a number of migrants to Australia get access to healthcare, public hospitals for free, cheaper prescribed medicines, social security, family assistant, NDIS, subsidised education, income support (like Jobseeker), and settlement packages, often without having to fiscally contribute to the country prior, as is often a requirement by other countries?

 

The Elderly a Loser in Some Areas

The elderly (those over 65) will lose their private health insurance subsidy.  This will save the government money, but I do wonder how many of those people will select to simply stop their private health insurance and burden the public system even more.  Remember, we’ve got potentially a million extra migrants accessing the system as well.  Having said that, more beds are being allocated in aged care facilities and more funding is going to hospitals which in Queensland includes the PA Hospital, Coomera, Bundaberg, Toowoomba, Townsville, Cairns, Mt Isa and Redcliffe.  Redland City missed out.  Funds have been allocated for older seniors for the RSV Vaccine, that protects from life threatening respiratory illnesses.  Free if you’re over 75, or 60 years if you’re indigenous.

 

Defence / NDIS / Fraud / Green Hydrogen / Smokers / EVs

Defence gains at extra $53 billion.  I do hope that money is spent wisely and not wasted.  Conversely NDIS will be ‘massively’ reigned in, a scheme which costs $50 billion a year; four times what was initially expected!  There is a crack down on fraudsters of NDIS, Medicare and PBS … tightening the rules severely on those who try to abuse tax funded services.  It’s believed that 10% of invoices are inflated re NDIS alone.  Additionally, funding is being stripped from green hydrogen programs including solar, battery and other renewables.  Illegal smokes and vapes are costing the government a tonne in lost revenue, but seems a budget adjustment is all that is happening.  EVs (I’m somewhat surprised) will be losing their tax discounts.

 

The Outlook

With the impact of the Middle East War, amongst other things, it’s predicted that inflation will peak at 7.25%.

 

This information is general information only and does not constitute tax or financial advice; I very highly recommend you liaise with your accountant, financial advisor and even solicitor relating to many of the items above; particularly where your structure may become disadvantaged.  Don’t leave seeking that advise until the last minute, as time is often required to setup or restructure things.