Australia’s Federal Budget 2026-27: What You Need to Know

1.  Personal Income Tax - Five Rounds of Tax Cuts

Income Tax Rate Reductions

The 16% tax rate on income between $18,201 and $45,000 drops to 15% from 1 July 2026, then to 14% from 1 July 2027. Every taxpayer receives up to $268 in year one, rising to $536 per year from 2027.

Working Australians Tax Offset (WATO)

A new permanent $250 annual tax offset from 2027–28 will benefit over 13 million Australian workers, 97% of recipients receive the full amount. This effectively raises the tax-free threshold by nearly $1,800 to $19,985 (or up to $24,985 with the Low-Income Tax Offset).

$1,000 Instant Tax Deduction (from 2026–27)

Workers can now reduce their taxable income by up to $1,000 for work-related expenses without keeping receipts. Around 6.2 million workers (42% of taxpayers) benefit, saving an average of $205 each. Annual compliance costs fall by an estimated $380 million.

2.  Superannuation

The Budget touched several superannuation settings, including concessional contribution arrangements and the continued implementation of Division 296 — the 15% additional tax on earnings for total superannuation balances above $3 million. Many of our SMSF clients will be directly affected, and early planning before 30 June 2026 is critical to managing contributions and tax exposure.

Lynden Group Action: If you hold an SMSF or your total super balance is approaching $3 million, contact us now to review your contribution strategy and assess your Division 296 position before year end.

3.  Personal Services Income & Tax Residency

This Budget forms part of what advisers are calling a 'seismic tax reset' — and personal services income (PSI) rules and tax residency settings are among the areas flagged for reform. If you operate through a company or trust and derive income primarily from your own skills, or if you have international connections or divide time between Australia and overseas, these changes may significantly affect how your income is assessed and taxed.

Lynden Group Action: Speak with our advisory team if you have PSI arrangements, offshore income, or split tax residency - we can help you assess your exposure and restructure where appropriate.

4.  Business & Start-up Tax Measures

$20,000 Instant Asset Write-Off - Made Permanent (from 1 July 2026)

Small businesses with turnover up to $10 million can immediately deduct eligible assets under $20,000. Expected to improve cash flow by around $890 million over five years.

★ Example: Dining Co (turnover $1M) purchases $65,000 of new equipment, each item under $20,000. The instant write-off turns a projected $50,000 profit into a $15,000 tax loss. Under loss carry-back, it then claims a $3,750 cash refund from prior-year tax paid.

Loss Carry-Back (from 2026–27)

Eligible companies making a loss can claim a refund against tax paid in the prior two years — benefiting up to 85,000 companies, mostly small businesses.

Start-Up Loss Refundability (from 2028–29)

Small start-ups in their first two years can receive cash refunds for tax losses, up to the value of FBT and withholding tax paid on employee wages. Up to 25,000 young companies per year will benefit.

Discretionary Trust Minimum Tax (from 1 July 2028)

A minimum 30% tax rate applies to distributions from discretionary trusts, with a three-year rollover relief window for businesses wishing to restructure. We recommend early planning conversations for any clients operating through family trusts.

R&D Tax Incentive Reform (from 1 July 2028)

Higher offsets for experimental core R&D, expanded refundability for young fast-growing firms, and an increased expenditure cap of $200 million — a significant opportunity for innovative clients.

Venture Capital Expansion (from 1 July 2027)

ESVCLP and VCLP programs updated to reflect modern company valuations, unlocking greater capital for high-growth start-ups.

Cutting Red Tape

The Government is reducing the regulatory burden by $10.2 billion per year and accelerating environmental and foreign investment approvals to improve business confidence and investment conditions.

5.  Housing & Property

Negative Gearing Reform (from 1 July 2027)

Negative gearing will be limited to new builds. All properties held before Budget night are fully protected. Investors who purchase established homes after Budget night can still offset losses against rental income and carry them forward, but cannot deduct those losses against wages or other income.

Capital Gains Tax Reform (from 1 July 2027)

The 50% CGT discount is replaced by an inflation-adjusted discount with a minimum 30% tax on gains. Reforms apply only to gains arising after 1 July 2027. Investors in new builds can choose between the old and new arrangements.

Other Housing Measures

• $2 billion Local Infrastructure Fund supporting up to 65,000 new homes over the decade.

• Foreign buyer ban on established homes extended to mid-2029.

• Negative gearing and CGT reforms estimated to support an additional 75,000 homeowners over the decade.

Lynden Group Action: If you own investment properties or are planning to purchase, contact us urgently to review your structure ahead of the 1 July 2027 effective dates.

6.  Energy, Fuel & Cost-of-Living Relief

Fuel Excise Relief

The Government more than halved fuel excise from 52.6 cents to 20.6 cents per litre for three months from 1 April 2026. A $14.8 billion Strengthening Australia's Fuel Resilience Package secures ongoing supply.

Gas Reservation

A 20% domestic gas reservation requires LNG exporters to supply a proportion of production to the domestic market, commencing 1 July 2027. This is designed to stabilise energy costs for Australian businesses.

Electric Vehicles

A 25% FBT discount applies to eligible electric cars over $75,000 from 1 April 2027, and to all eligible electric cars from 1 April 2029, a planning opportunity for business owners and employees.

7.  Cyber Security & Digital Initiatives

The Budget includes targeted funding for Essential Eight uplift, critical infrastructure cyber resilience, and SMB digital security, reflecting the Government's recognition that cyber threats pose a direct risk to economic stability. For eligible businesses, these allocations may reduce the net cost of investment in compliance frameworks and security infrastructure.

Lynden Group's dedicated cyber advisory practice is uniquely placed to help clients assess their eligibility for government support, structure capital expenditure tax-efficiently, and align security investment with broader business planning.

Lynden Group Action: If your business is investing in cyber security or working toward Essential Eight compliance, contact our cyber team to explore how Budget measures can offset your costs.

8.  Defence, Infrastructure & Critical Minerals

The 2026 National Defence Strategy commits an additional $53 billion over ten years — the largest defence investment in Australia's history. A rolling pipeline of more than $120 billion in transport infrastructure investment over ten years includes significant Queensland projects such as the $812.5 million Bruce Highway upgrade.

The Government is investing up to $1 billion in the Boyne Island Aluminium Smelter and has established a Critical Minerals Strategic Reserve targeting antimony, gallium, and rare earth elements. These investments present supply-chain and investment opportunities for clients in resources and manufacturing.

9.  Healthcare & Social Investment

Record $220.3 billion over five years for public hospitals. $11.4 billion to incentivise bulk billing, aiming for nine in ten GP services bulk billed by 2030. $5.9 billion in new PBS listings including cystic fibrosis treatments, cancer therapies, and permanent COVID-19 oral antivirals. $3.7 billion in aged care, including 5,000 new beds per year.

NDIS reforms across four pillars are expected to save $37.8 billion over four years while the scheme continues to grow and remains Australia's largest social program outside the Age Pension.

Need tailored advice?

Every client's situation is different. Our team is ready to help you navigate these changes with practical, commercially focused guidance.

Email: info@lyndengroup.com.au

Yours sincerely,

The Lynden Group Advisory Team

Chartered Accountants & Business Advisers

info@lyndengroup.com.au