The Treasurer handed down the 2026-27 Federal Budget this month, under the banner of resilience and reform. For lawyers and law firm decision-makers, several measures cut directly across day-to-day practice: capital gains tax and negative gearing changes, a new minimum tax on discretionary trusts, a $10.2 billion reduction in regulatory burden, accelerated approval pathways, doubled competition and consumer law penalties, and a series of practice-area touchpoints across employment, family and criminal law. Source.
This article summarises the changes most relevant to corporate and commercial, property and construction, tax, employment, family, criminal, banking and finance, and health law practice. It is a general overview only.
Key Summary
- Capital gains tax: the 50 per cent CGT discount will be replaced with an inflation-based discount and a minimum 30 per cent tax on gains, applying to gains arising after 1 July 2027. (budget.gov.au)
- Negative gearing: limited to new builds from 1 July 2027. Existing arrangements remain unchanged for properties held before Budget night. (budget.gov.au)
- Discretionary trusts: a minimum 30 per cent tax from 1 July 2028, with some exceptions and a three-year rollover relief from 1 July 2027. (budget.gov.au)
- Regulatory burden: $10.2 billion in annual savings, including $780 million in financial sector compliance through 14 legislative reforms and 497 more nuisance tariffs abolished from 1 July 2026. (budget.gov.au)
- Enforcement: maximum penalties for major competition and consumer law breaches doubled to $100 million, with new penalties for Oil Code of Conduct breaches and ACCC weekly retail fuel reporting. (budget.gov.au)
- Practice-area touchpoints: $182.6 million Child Support Scheme reform (family law); $36.1 million for stronger hate crime and firearms laws plus a National Gun Buyback Scheme progressing through National Cabinet (criminal); $53 billion additional defence funding over 10 years (government contracts). (budget.gov.au)
Tax and Property: the Biggest Changes for Transactional Practice
The largest single block of legal-relevant change sits in the Tax reform theme. Three measures stand out for property, tax, corporate and private client advisors. Source.
Capital gains: inflation-based discount, 30 per cent minimum
The Government will replace the existing 50 per cent CGT discount with a discount based on inflation, and introduce a minimum 30 per cent tax on gains. The reform applies to gains arising after 1 July 2027. Investors in new builds will be able to choose between the existing 50 per cent CGT discount and the new arrangements. Budget materials describe this as restoring the original intent of the CGT regime, so that investors pay tax on real, not nominal, capital gain. Source.
Negative gearing: limited to new builds from 1 July 2027
Negative gearing will be limited to new builds from 1 July 2027. Existing arrangements remain unchanged for all properties held before Budget night, and investors who buy new builds will still be able to deduct losses from other income. Investors who buy established housing after Budget night will continue to deduct losses against residential property income, but not against other income such as wages. Unused losses can be carried forward. Source.
Discretionary trusts: 30 per cent minimum tax from 1 July 2028
From 1 July 2028, a minimum 30 per cent tax will apply to discretionary trusts, with some exceptions. Rollover relief will be provided for three years from 1 July 2027 to assist small businesses and others that wish to restructure ahead of the new regime. Source.
Foreign buyer ban extended; foreign investment approvals accelerated
The Government is extending the ban on foreign buyers purchasing established homes until mid-2029. Separately, low-risk foreign investment approvals are being accelerated as part of the productivity package. Source and Source.
Business tax: loss carry-back, refundability and a permanent $20,000 write-off
The Government is reintroducing loss carry-back, so that from 2026-27 eligible companies that make a loss in the current year can claim a refund against tax paid in the prior two income years. This is expected to benefit up to 85,000 companies, mostly small businesses. From 2028-29, loss refundability will be introduced for small start-ups in their first two years, up to the value of fringe benefits tax and withholding tax paid on employee wages, benefiting up to 25,000 young companies each year. The $20,000 instant asset write-off is being made permanent from 1 July 2026, available to small businesses with turnover up to $10 million. Source.
Practical read: tax, property and corporate advisory pipelines should see immediate inbound questions about timing, grandfathering, trust restructuring and new-build elections, well ahead of the 1 July 2027 and 1 July 2028 effective dates.
Regulatory Reform, Faster Approvals, and Stronger Enforcement
A $10.2 billion reduction in regulatory burden
The Government’s productivity reforms are designed to reduce regulatory burden by $10.2 billion each year, while progressing 13 of the 17 reform areas identified by the Productivity Commission’s five-pillar inquiries. Within that envelope, financial sector compliance costs are projected to fall by $780 million a year through 14 legislative reforms, including changes to company reporting thresholds. The Government has signalled a rolling approach of regulatory reform bills, building on the 60 measures legislated in 2025. Source.
Trade, occupational licensing and the Single National Market
From 1 July 2026, a further 497 nuisance tariffs will be abolished, bringing the total to around 1,000 and saving businesses about $157 million a year in compliance costs. The Government is also progressing the Australia-EU Free Trade Agreement, expanding the Australian Trusted Trader program, and streamlining biosecurity border processes. Federal and state work on payroll tax administration and national occupational licensing is intended to support a “Single National Market” approach across jurisdictions. Source.
Accelerated approvals and the Investor Front Door
Environmental, low-risk foreign investment, resources and telecommunications approvals are being accelerated, supported by more than $500 million for approval reforms that include AI-enabled assessment, reduced duplication with the states, and additional bioregional plans and strategic assessments. A strengthened Investor Council will support the Investor Front Door to prioritise nationally significant investment proposals, with up to $125 billion being deployed by the Government’s specialist investment vehicles. Source.
Stronger competition and consumer law enforcement
Maximum penalties for major breaches of competition and consumer laws have been doubled to $100 million, with additional resourcing for enforcement. The Government has also introduced penalties for breaches of the Oil Code of Conduct and directed the ACCC to undertake weekly reporting on retail fuel prices. Source.
Practice-Area Touchpoints and Tax Cuts for Lawyers as Wage Earners
Employment law
Several Budget measures touch directly on employment practice. The Government has amended the Fair Work Act 2009 to allow the Fair Work Commission to make orders dealing with rising fuel prices, with the first such order taking effect on 21 April 2026 for road transport businesses and workers. Junior award rates of pay will be phased out for retail, fast food and pharmacy workers aged 18 to 20, following the FWC’s “adult age, adult wage” decision. The Budget also references the FWC’s finding of historical gender undervaluation in five priority modern awards including child care, health (with First Nations workers specifically referenced) and social services, with a review now underway. For broader 2026 employment law context, see our earlier overview at Employment Law Changes in 2026: What to Know (Super, Parental Leave, Gender Equality). And Source.
Family law
The Government is investing $182.6 million to make the Child Support Scheme safer, with a stated focus on protecting women from conflict and abuse and ensuring children receive the financial support they need. From July, government-funded Paid Parental Leave will increase to a full six months. The Budget also confirms a 3 Day Guarantee of subsidised childcare per week for eligible families, and provides $171.7 million for front-line community services through a new, simplified Children and Families Support program. A further $218.3 million supports Our Ways, Strong Ways, Our Voices, Australia’s first standalone plan to end violence against Aboriginal and Torres Strait Islander women and children. Since 2022, the Government has invested over $4.4 billion to deliver the National Plan to End Violence against Women and Children. Source.
Criminal law and regulatory response to the Bondi attack
The Government has committed $604.2 million in response to the antisemitic Bondi terrorist attack, including $36.1 million for stronger hate crime and firearms laws and continued work to progress the National Gun Buyback Scheme through National Cabinet, alongside further funding to disrupt politically and ideologically motivated violence and hate crimes. It has accepted all Commonwealth-relevant recommendations from the Interim Report of the Royal Commission on Antisemitism and Social Cohesion. Together with the NSW Government, $21.7 million has been committed under the Disaster Recovery Funding Arrangements to support the Bondi community, including $1 million for legal services. Source.
Defence, critical minerals and government contracts
The 2026 National Defence Strategy provides an additional $53 billion over the next ten years. High-priority Defence capabilities include up to $130 billion for enhanced undersea warfare, up to $77 billion for the enhanced surface combatant fleet and fleet support, up to $15 billion for autonomous and uncrewed systems, and an initial $12 billion to establish the Henderson Defence Precinct in Western Australia. The Government has also established a Critical Minerals Strategic Reserve, initially focused on antimony, gallium and rare earth elements, drawing on $1 billion from the expanded $5 billion Critical Minerals Facility. For corporate, projects and government contracts teams, the pipeline of advisory work across procurement, security clearances and joint venture structuring is substantial. Source.
Lawyers as wage earners: five rounds of tax cuts
The Budget also touches every lawyer personally. A permanent $250 Working Australians Tax Offset will apply from the 2027-28 income year, expected to benefit more than 13 million workers. From 1 July 2026, the 16 per cent tax rate on taxable income between $18,201 and $45,000 drops to 15 per cent. From 1 July 2027 it falls again to 14 per cent. A $1,000 instant tax deduction is being introduced from 2026-27, allowing workers to reduce their taxable income by $1,000 without keeping receipts. Source.
Why this matters:
- Property, tax and trusts practices have the most immediate advisory pipeline, with effect dates in 2027 and 2028 driving inbound questions now.
- Corporate, banking and finance and competition teams should track the financial sector compliance reforms, faster approval pathways and the doubled consumer law penalty ceiling.
- Employment, family and criminal practices have specific touchpoints worth flagging to clients early, alongside a meaningful annual lift in take-home pay for every lawyer.
Conclusion
The 2026-27 Federal Budget is dense with measures that will keep practising lawyers busy. Tax and property reforms are the headline, with effect dates from 1 July 2027 and 1 July 2028. Regulatory reform and faster approvals will reshape advisory work across corporate, banking and finance, foreign investment and projects. Employment, family and criminal practices each have specific touchpoints, and the defence pipeline is substantial for firms with government contracts capability.
For firms, the practical task is now planning: aligning practice-group capacity and client communications to the staged effective dates, and keeping a watching brief on exposure drafts as the relevant Bills are introduced. For individual lawyers, the tax changes are worth a brief review with an accountant ahead of the next financial year.
Disclaimer: This blog is a general overview and should not be construed as professional legal, financial or medical advice.
FAQs
- When do the main legal-relevant Budget measures take effect?
Most personal and small business tax measures start from 1 July 2026. The capital gains tax and negative gearing changes apply to gains arising and arrangements entered from 1 July 2027. The new minimum tax on discretionary trusts applies from 1 July 2028, with three-year rollover relief from 1 July 2027.
- Are existing investment properties affected by the negative gearing change?
Budget materials state that existing arrangements remain unchanged for all properties held before Budget night. Investors who buy established housing after Budget night will continue to deduct losses against residential property income, but not against other income such as wages. Unused losses can be carried forward to future years. Investors in new builds will continue to be able to deduct losses from other income.
- What is the new minimum tax on discretionary trusts?
A minimum 30 per cent tax will apply to discretionary trusts from 1 July 2028, with some exceptions. Three-year rollover relief will be available from 1 July 2027 to help small businesses and others restructure.
- What changes affect competition, consumer and regulatory practitioners?
Maximum penalties for major breaches of competition and consumer laws have been doubled to $100 million. The Government has introduced penalties for breaches of the Oil Code of Conduct and directed the ACCC to undertake weekly retail fuel reporting. The financial sector compliance reform package will deliver $780 million a year in savings through 14 legislative reforms.
- Where can I read the full Budget papers?
All Budget documents, including Budget Paper 1 and Budget Paper 2, are available at budget.gov.au. The Tax reform, Productivity, Cost of living, Care and opportunity, and Security and investment theme pages set out the legal-relevant measures in more detail.
Information Sources
- Australian Government – Budget 2026-27 (home)
- Budget 2026-27 – Tax reform (CGT, negative gearing, discretionary trusts, business tax)
- Budget 2026-27 – Productivity (regulatory burden, accelerated approvals, financial sector compliance, tariffs)
- Budget 2026-27 – Cost of living (foreign buyer ban, consumer law penalties, Oil Code, Fair Work amendments, tax cuts)
- Budget 2026-27 – Care and opportunity (Child Support Scheme, Paid Parental Leave, family violence)
- Budget 2026-27 – Security and investment (defence, critical minerals, Bondi response)
- ABC News – Federal Budget 2026: tax break for millions of workers (12 May 2026)
