Big Changes Proposed for Property, Tax and Investing. Here’s What You Need to Know

From negative gearing and CGT to discretionary trusts, this is one of the biggest shake-ups to Australia’s tax and investment landscape we’ve seen in decades.

The announcements have already sparked plenty of debate, particularly around property investing, family structures, and long-term wealth creation. For many people, the big question is simple: what does this actually mean for me?

While many of the measures still need to formally pass through legislation, the Government appears committed to this direction, and several of the changes are likely to proceed in some form. Importantly, many of the proposed changes would not begin for a number of years, which means there is time to properly assess the impact and plan carefully rather than make rushed decisions based on headlines.

Below is our early view on the key announcements and what they may mean in practical terms.

Capital gains tax (CGT) changes

One of the most significant announcements from the Budget is the proposed reform of Capital Gains Tax from 1 July 2027.

Currently, individuals, trusts and partnerships may access a 50% CGT discount on assets held for more than 12 months. Under the proposed changes, this would be replaced with:

• Cost base indexation

• A 30% minimum tax on net capital gains

Importantly, transitional provisions are expected to apply.

The new rules are expected to apply only to gains accruing from 1 July 2027 onwards, meaning assets sold before this date would remain fully subject to the current rules.

For assets already owned before 1 July 2027 and sold after that date, gains accrued up to 30 June 2027 are expected to retain access to the current 50% CGT discount, with the new indexation method applying only to gains accruing from 1 July 2027 onwards.

Pre-CGT assets acquired before 20 September 1985 are also expected to lose their current exempt status. Instead, these assets are likely to assume a market value cost base as at 1 July 2027, with indexation applying from that point and the 30% minimum tax applying to gains accruing after that date.

What does this mean?

This represents a major shift in how long-term investment growth is taxed in Australia.

For many investors, assets that rely heavily on capital appreciation may become less tax-effective over time, particularly where strategies are built around long-term growth and eventual asset sales.

This could affect investment decisions across:

• Investment properties

• Shares and managed funds

• Business assets

• Other long-term growth investments

For example, under the current system, someone who makes a $500,000 capital gain on an investment held longer than 12 months may only pay tax on half of that gain.

Under the proposed system, the taxable amount would instead depend on how much of the gain is attributed to inflation indexation, with the 30% minimum tax also needing to be considered. In many cases, this could result in a higher tax bill than under the current rules.

The changes may also increase the appeal of investments that generate regular income rather than relying primarily on future capital growth. Dividend-paying shares, income-focused investments and cash-flow-producing assets may become more attractive under this type of environment.

There is no reason for investors to make rushed decisions immediately. However, these changes are likely to become an important consideration in future investment, tax and wealth planning discussions.

Property investment and negative gearing

Under the proposal, negative gearing concessions would only apply to newly built properties going forward. Existing investment properties are expected to be grandfathered under the current rules, meaning current owners are unlikely to be immediately affected.

Combined with the CGT changes, this represents one of the most significant changes to property investing Australia has seen in decades.

What does this mean?

The Government’s intention is to reduce investor demand for established housing and encourage more investment into new housing supply.

For property investors, this may reduce some of the tax advantages that have historically supported long-term property investment strategies. That does not necessarily mean property investing suddenly stops being worthwhile. Property is still likely to remain an important part of many people’s long-term wealth strategy. However, it may change:

• The types of properties investors target

• How investment properties are assessed

• The balance between growth and income

• How property fits within an overall investment portfolio

Over time, we may also see investors diversify more broadly across shares, superannuation, and other income-generating investments rather than relying so heavily on property alone.

Discretionary trusts and family structures

One of the less talked about, but potentially most significant announcements, was the introduction of a 30% minimum tax on discretionary trust income from 1 July 2028.

Discretionary trusts are widely used by business owners, investors, and families as part of broader tax planning, asset protection and wealth management strategies.

What does this mean?

For some family groups and business owners, trusts may become materially less tax-effective than they are under the current system. Depending on how structures are currently set up, some groups could face substantially higher effective tax rates if the rules proceed in their current form.

The changes may particularly affect:

• Business owners operating through family trusts

• Families distributing income across multiple beneficiaries

• Investment portfolios held inside trust structures

• Long-term intergenerational wealth planning strategies

Importantly, this does not mean trusts suddenly become irrelevant overnight. Trusts still provide a range of legal, asset protection, and estate planning benefits beyond taxation alone.

However, it does suggest many people may need to review how their investments, businesses, and family wealth structures are organised over the coming years.

These changes are not expected to begin until 1 July 2028, which means there is time for proper planning and strategic advice rather than reactive restructuring.

What about the share market and investment portfolios?

While much of the discussion has focused on property, these changes could also influence broader investment markets over time.

If property becomes less attractive from a tax perspective, it is reasonable to expect some investors may start looking more closely at alternative investments including:

• Shares

• Dividend-paying companies

• Infrastructure investments

• Income-focused portfolios

• Superannuation strategies

There may also be a broader shift towards investments that generate reliable cash flow rather than relying heavily on long-term capital appreciation.

At the same time, markets will continue responding to much larger economic forces including inflation, interest rates, global markets and economic confidence. The Budget is important, but it is only one part of a much bigger picture.

What about households and cost of living?

Alongside the larger structural changes, the Budget also included a range of smaller household support measures.

This included:

• A one-off Working Australians Tax Offset of up to $250 from 2027–28

• A $1,000 instant tax deduction from the 2026–27 financial year

While these measures may provide modest relief for some households, they are unlikely to materially change the broader cost-of-living pressures many Australians continue to face.

The more significant long-term impact of this Budget is likely to come from the structural changes to investment and taxation policy rather than the smaller household support measures.

So, what should you do now?

For existing Pathwise clients, our advice at this stage is simple: don’t panic and don’t rush.

The headlines are significant and there will no doubt be plenty of commentary over the coming weeks. However, there is time to properly assess the impact before making major financial decisions. Your adviser will contact you if there are any specific considerations relevant to your personal situation.

If you are not currently working with a financial planner and would like to understand how these changes could affect your investment strategy, retirement plans or broader financial position, you can book a conversation with the Pathwise team.