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Changes to the capital gains tax discount
One of the big changes in the budget which is expected to help more people to get into the housing market is the replacement of the 50% capital gains tax (CGT) discount with a new system.
CGT is paid when an asset is sold, with the gain being the increase in value since the purchase.
Since 1985, capital gains were adjusted for inflation, so that only the real component of gains was taxed. In 1999, the Howard government introduced a 50% discount, effectively overcompensating owners in order to encourage investment in the sharemarket. Under the changes, from 1 July 2027, the 50% CGT discount will be replaced by a system known as cost-base indexation, covering assets held for more than 12 months.
A new 30% minimum tax on net capital gains will be introduced. The changes will apply to all assets, including those dating back from the introduction of CGT in 1985, whether they are held by individuals, trusts and partnerships.
Changes to negative gearing
The government has announced much-anticipated changes to negative gearing – another move aimed at helping Australians buy their own home. A negatively geared investment property is one that makes a loss, usually because the owner’s mortgage repayments and other costs are more than the rental income. The losses are tax-deductible against income, including wages or salary.
Under the new rules, negative gearing for residential property will be limited to new builds, to direct the benefits towards investment in new housing stock. From 1 July next year, losses from established residential properties will only be deductible against rental income or the capital gains from residential property sales.
NDIS cuts and Thriving Kids
With the national disability insurance scheme now on track to cost more than $70bn by the end of the decade, the government is dramatically reducing its growth. About 160,000 people will be removed and the growth rate brought down from more than 10% to about 2% a year.
To support the Thriving Kids program, the government will provide $2bn over five years from 2026-27 to deliver national services, fund enabling supports and contribute to state and territory services.
Taxes on discretionary trusts
Discretionary trusts will face a minimum 30% tax from 1 July 2028 – with some exceptions. The move will help fund the $250 tax offset for all working Australian taxpayers. The measure is estimated to increase revenue by $4.5bn over five years from 2025-26.
Defence spending
The government will spend an extra $6.8bn over four years from 2026-27 – and $35.6bn over the decade starting from 2026-27 – to improve defence capability, preparedness and resilience.
Consultants cuts
The government will save $2.7bn in 2029-30 by cutting spending on external labour costs and other expenses including travel, hospitality and property.
Fuel security
Labor is spending $2.9bn to cut the fuel excise and heavy road user charge for three months, a cost-of-living measure to help households and businesses hit by the global energy shock.
The government is also rolling out a $14.8bn fuel security package which will increase the national stockpiles to 50 days, create extra storage facilities and consider how to expand refinery capability.
Housing
An additional $2bn will be spent on infrastructure for housing developments around the country, including water and sewerage pipes, helping to deliver an estimated 65,000 new homes over the decade.
The national scientific agency will receive an extra $387.4m but says it will still persist with plans to cut up to 350 jobs.
Rail funding
Labor will contribute an extra $3.8bn to Melbourne’s Suburban Rail Loop project over four years, while saving $4.4bn by curtailing the inland rail project at Parkes, rather than completing the massive planned Melbourne-Brisbane project. Other rail projects to receive federal funding include the Melton line electrification in Melbourne ($76.4m), the Canberra-Sydney corridor upgrade ($50m) and $659.6m over three years for “development work” on the proposed Newcastle-Sydney high-speed project.
Changes to EV incentives
The electric vehicle fringe benefits tax discount will be retained in full until the end of March 2027. After that the full FBT discount will only apply to vehicles worth less than $75,000 and provided by the start of April 2029. Those worth more than $75,000 will be eligible for a 25% discount. The 25% rate will apply to all EVs provided after that date and all eligible EVs will retain the rate that was in place when the arrangement began. There will also be $40m to install more kerbside and regional chargers.
Private health insurance cuts to fund aged care
The government will remove subsidies that encourage people over 65 to take out private health insurance and redirect the savings to deliver more residential aged care beds and improve affordability and access to home care supports. The $1.4bn for home care includes $1bn to restore full funding of “personal care” (such as showering) for all care recipients in the Support at Home program.
Medicare urgent care clinics
The government will spend $1.8bn over five years from 2025-26 – and an ongoing $580.2m a year – to fund Medicare urgent care clinics, giving Australians access to bulk-billed care for conditions which are urgent but not life-threatening.
Public hospitals
States and territories will receive $220.3bn over five years from 2026-27 for public hospital services and implementing the national health reform agreement.
Response to Bondi attack
The government will provide $604.2m over five years in response to the Bondi terror attack, including $102m to the Executive Council of Australian Jewry for enhanced security for the Jewish community, and $207.4m over five years to combat the influences of antisemitism. The government will also spend $80m over two years from 2026-27 to enhance capabilities to counter-terrorism threats online and prevent violent extremism and youth radicalisation.
Middle East war
The United Arab Emirates will get advanced medium-range air‐to‐air missiles “for use in self-defence” at a cost of $6.6m to Australia in 2025-26.
Future pandemics
The national medical stockpile will get $379.4m over five years for pandemic preparedness.
RSV vaccine
The RSV vaccine Arexvy will be added to the national immunisation program for Australians over 75 and Aboriginal and Torres Strait Islanders over 60, costing $449.3m over five years.
Pharmaceuticals
The government will spend $5.9bn over five years from 2025-26 on new and amended listings on the Pharmaceutical Benefits Scheme and the Repatriation Pharmaceutical Benefits Scheme. New additions include drugs for treating prostate cancer, arthritis, multiple sclerosis, bladder cancer, and other conditions.
Addressing online gambling harms
Measures to address online gambling harms will receive $112.7m over five years from 2025-26, and an ongoing $18.1m a year. The measures include improved consumer protections, expanded support services and targeted public awareness and education campaigns.
Australian Associated Press will receive $15m in 2026-27. The government will also suspend the commercial broadcasting tax for two years from June 2026 to June 2028 to give relief to commercial radio and TV broadcasters – a move estimated to decrease revenue by $111.3m over five years from 2025-26. The ABC will get $14.1m over two years from 2026-27 to help with activities under the Indo-Pacific broadcasting strategy.
Abolishing nuisance tarrifs
A second tranche of 497 nuisance tariffs will be abolished from 1 July 2026, including tariffs on wine glasses, tyres, air conditioners, margarine and bitumen. The move will bring the total number of tariffs removed over two years to almost 1,000, which the government says will streamline about $23bn worth of trade, and save businesses $157m in compliance costs each year.
Combating illicit tobacco
The government will spend $20.3m over four years from 2026-27 to fight the illicit tobacco market, including $14m in additional funding in the coming financial year to boost compliance and enforment capabilities; $5.2m in the four years from 2026-27 on data collection, analysis and monitoring; and $1.1m in 2026-27 to meet Australia’s international tobacco control obligations.
Passenger movement charge
The passenger movement charge – which applies to people departing Australia by air or sea – will be increased from $70 to $80 a passenger from 1 January 2027. The move will increase revenue by an estimated $755m over five years from 2025-26.
Foreign investment ban
The temporary ban on foreign purchases of established residential dwellings will be extended until June 2029, meaning Australians will be able to buy homes that might otherwise have been bought by foreigners.
Medicare levy
The Medicare levy low-income thresholds for singles, families and seniors and pensioners will be increased by 2.9% from 1 July last year. The increase in thresholds is estimated to decrease revenue by $450m over five years from 2025-26.
Research and development tax incentive
The research and development tax incentive will be reformed. The reforms begin on 1 July 2028 and include a number of changes, including lifting the maxium expenditure threshold from $150m to $200m.
Tax cuts
The government has announced a new tax cut of $250 a worker from the 2027-28 income tax year. At the same time, the government will introduce an instant tax deduction of up to $1,000.
Small business
From 1 July, the government will permanently extend the $20,000 instant asset write-off for small businesses with a turnover of up to $10m.
Venture capital tax incentives
Venture capital tax incentives will be expanded, with the asset size of the investee business – at which the investment returns can be fully tax-exempt – increased from $250m to $420m. The government says the expanded incentives will support early-stage and growth businesses.
Local sports funding
The budget will give $400,000 to the South Melbourne Football Club to help it play in the Oceania Football Confederation Pro League. Wilston‐Grange Australian Football Club is getting $300,000 for new electronic screens.
There is also $20m over the next two years to “upgrade and restore Leichhardt Oval in Sydney”, the home of the Wests Tigers NRL team, which is also used by other sporting teams, and money for the North Queensland Cowboys’ women’s team.
Drone and ebike regulation
The government “will not proceed with recreational remotely piloted aircraft systems registration requirements from 1 July 2026”, the budget papers reveal.
But there is $6.6m over three years for “reforms aimed at strengthening Australia’s product safety framework and safety standards, including by improving product recalls, advancing online marketplace reforms”. That includes “an immediate focus on introducing standards for e‐bikes and nationally consistent requirements for all e‐micromobility devices”.
Aircraft noise and price monitoring
The government is also putting $38m towards a new Aviation Consumer Protection Authority and an independent ombudsman for aircraft noise. There’s also $4.5m for the Australian Competition and Consumer Commission (ACCC) to monitor prices and competitiveness in the domestic airline sector.
Bird flu
There’s $11.2m this year to “maintain critical preparedness against High Pathogenicity Avian Influenza (HPAI H5) incursions”, including measures that help resilience of “priority native wildlife across high‐risk locations”.
Additional Closing the Gap funding
The government will spend $793m over five years on the Closing the Gap program, which includes: $299m on creating an additional 3,000 jobs under the Remote Jobs and Economic Development program, $144m on health infrastructure for Aboriginal Community Controlled Health Services, $55m to support a school program for at‑risk First Nations young men, $53m for dialysis units and services, and a number of other measures