From grandfathered CGT to tougher rules on trusts, bucket companies and negative gearing, the 2026 Federal Budget will reshape how wealth is built and passed on. In this article, Tony Dormer shares his steady, practical take on the changes and outlines the key moves he believes clients should consider now.
The 2026 Budget: What It Means for Your Wealth, Your Business, and Your Family
The Federal Budget has landed, and while no one loves tax changes, the good news is that with the right planning, most of our clients can navigate this one effectively.
“I think it could have been a lot worse,” says Tony Dormer, Principal at Cuthberts Business Advisory. “I think they were quite conservative in the way they approached it, and I think we can work with it quite well.” That’s a measured verdict from someone who has helped clients through many a budget cycle , and it’s a useful starting point for breaking down what matters most.
Act Now on Capital Gains
The single most time-sensitive issue in this budget is capital gains tax (CGT). The rate is going up , but here’s the key detail: grandfathering applies. Only the growth in asset values after the budget date is subject to the higher rate. Everything you’ve built up to this point is protected.
That means there is a clear and immediate action step: get valuations done. Whether formal or informal, establishing the value of your businesses, properties, and other significant assets as at 30 June 2026 creates a defensible baseline. We can assist you with this process , and we strongly encourage you to act before the end of the financial year.
Negative Gearing: Time to Reassess
For individuals who’ve used negative gearing as a wealth-building strategy, the budget accelerates a question that was already worth asking. “Negative gearing only works if the asset goes up in value,” Tony notes, “and property is stagnating, and the share market is all over the place.”
The budget’s proposal to limit negative gearing to new builds was not something Tony views as a catastrophe. In fact, he sees a potential upside for younger Australians trying to enter the housing market. If you currently hold negatively geared investments, this is a good time to revisit that strategy with your financial advisor.
Family Trusts and Bucket Companies
This is where things get more complex , and where the need for proactive advice is greatest.
The proposed changes to discretionary trusts include a minimum 30% tax rate on distributions to adult individual beneficiaries, along with a credit mechanism (use it or lose it in the year it’s paid , unlike franking credits). More significantly, bucket companies that receive trust distributions may face a penalty tax rate of approximately 60%.
It’s important to note: these proposals are not yet law. They will need to pass through Parliament, including the upper house, and negotiations may yet change the final shape of the legislation. Small business concessions have survived in the current announcements, which is meaningful protection for many of our clients.
If your structure involves a family trust distributing to a corporate beneficiary, or if you use a bucket company for investment purposes, now is the time to review that arrangement with us.
Estate Planning Just Got More Important
Some commentators have called the trust changes a “de facto death duty.” Tony thinks that characterisation goes too far , but agrees it raises the stakes on estate planning. “You’ll have to focus more on good estate planning and consider the use of testamentary trusts,” he says.
Testamentary trusts, which are created through a will and activated on death, will be affected to some degree by the new environment. Australia is still a long way from the UK model , where estates can face up to 45 cents in the dollar , but careful structuring of your estate will matter more than it did before.
Three Wins for Business
Amid the complexity, there are genuine positives for business owners worth highlighting:
- Tax loss carry-back returns for companies from the 2026–27 tax year, allowing current-year losses to be offset against tax paid in the previous two years , a fair and practical measure for businesses navigating a volatile trading environment.
- R&D cash refund threshold increases from $20 million to $50 million, opening up meaningful cash-back opportunities for a broader range of innovative companies.
- The $20,000 instant asset write-off for small businesses becomes more permanent and is extended to businesses with turnover up to $10 million , a welcome boost.
Superannuation: Still Your Best Tool
Despite the noise, Tony’s view on superannuation is unchanged: it remains the most effective long-term wealth-building vehicle available to individuals. “Accumulating money in super is still a very good investment strategy,” he says. For those under the $3 million threshold, the environment is essentially unchanged , and the tax-free pension at retirement remains a compelling outcome.
What Should You Do Now?
The budget changes the planning environment more than it changes day-to-day business conditions. Tony’s bottom line: “I don’t think it’ll affect business trading conditions really.” What it does do is put a premium on having proactive, well-informed advisors around you.
We will be in contact with clients to discuss structural changes and planning opportunities , particularly for businesses with trust or corporate structures. If you’d like to get ahead of it, or if you have questions about superannuation, investment strategy, or capital gains valuations, please reach out to us directly. The window for certain actions, particularly around valuations, is short.
The information in this article is general in nature and does not constitute financial or legal advice. Please contact our office to discuss your specific circumstances.