The 2026/27 Federal Budget landed with considerable fanfare around tax relief and housing affordability. Having spent the morning after it was handed down working through the detail and what it means for Stones Sharp clients, our honest read is that the picture is more complicated than the headlines suggest. Some measures will deliver real benefit. Others sound generous until you look closely. And several of the biggest announcements are not yet law, which matters more than most people realise.
Out of all the details and jargon, here is what we think individuals, employees, and property investors actually need to know.
“This budget lands at a moment when a lot of Australians are still finding their feet after years of rate rises and inflation. Some of the measures provide real relief. Others raise more questions than they answer, particularly for people with property and investments.” – Shane Borg, Director, Stones Sharp
Income Tax: Three Changes, Three Very Different Stories
The Stage 3 Tax Cuts and Who Actually Feels These?
The income tax rate on earnings between $18,201 and $45,000 drops from 16% to 15% from 1 July 2026, then again to 14% from 1 July 2027. That is a saving of up to $268 next financial year, and up to $536 per year from 2027.
The people who we believe will feel this most are lower income earners whose income sits largely within that bracket. For someone earning $80,000 or more, the saving is real, but proportionally modest relative to their overall tax bill. It is not nothing, but it is not the transformational change the headlines might imply.
The $1,000 Instant Work Deduction
From the 2026/27 income year, workers can claim a standard $1,000 deduction for work-related expenses without receipts. If your actual expenses exceed $1,000 and you have the records to support it, you can still claim the higher amount instead.
This is worth clarifying before social media gets hold of it: a $1,000 deduction reduces your taxable income by $1,000. It does not reduce your tax bill by $1,000. The actual saving depends on your marginal rate. At 15%, that is $150 back. At 30%, it is $300.
If you have been keeping receipts and claiming more than $1,000 in legitimate work expenses, keep doing that. The instant deduction here is a floor, not a ceiling.
The $250 Worker’s Tax Offset May Already Be Worth Less Than it Sounds
A new $250 annual tax offset for all Australian workers comes into effect from 2027/28. Unlike a deduction, an offset directly reduces your tax bill dollar for dollar, so the $250 is the actual saving, not a reduction in your taxable income.
Two things are worth noting: first, this does not apply until 2027/28, not this coming financial year. Second, and a bigger conversation we’re having internally: by the time this arrives, inflation will have already done its work on that $250, and the value it brings will be a lot less. As a standalone measure, it is welcome, but it should not be mistaken for meaningful structural relief.
The Part of This Budget That Actually Warrants Attention: Property and Investment
This is where the 2026/27 budget gets truly significant, and also where the most care is needed before making any decisions.
Two major changes have been announced: a reduction to the Capital Gains Tax (CGT) discount, and reforms to negative gearing. Both are material. Both are also not yet law.
Keep in mind that to pass, these measures require crossbench support in parliament. The final legislation, when it comes, may look different to what was announced on budget night. Our advice now is to understand the direction of travel, start thinking through the implications for your situation, and speak to your accountant before making any major moves. Stones Sharp’s view is that we are looking at roughly six months before we have real clarity on the final form of these rules.
Capital Gains Tax and the Hidden Complexity Nobody Is Talking About
Currently, when you sell an asset held for more than 12 months, such as an investment property or shares, you only pay tax on 50% of the capital gain. That discount is being reduced under the proposed changes.
The immediate practical implication: anyone with CGT-affected assets will likely need to obtain a formal valuation of those assets by 30 June 2027 to establish the baseline for calculating gains under the new rules.
But here is the issue that we are surprised to see has received almost no public attention: assets purchased before September 1985 were previously exempt from CGT entirely. Under the proposed changes, there will now be a taxing point on these assets when sold. This affects long-term investors and retirees who purchased assets decades ago under legislation that guaranteed them a CGT-free exit. That guarantee is being unwound.
“These are people who planned their retirement around a set of rules that existed when they made their decisions. Pre-1985 assets being brought into the CGT net is the part of these changes that isn’t getting nearly enough attention.” – Shane Borg
If you hold long-standing investment assets, particularly property acquired in the 1970s or early 1980s, this is not something to deal with later. It warrants a conversation with your accountant now, giving you time to understand your position before the legislation is finalised.
For everyone else with investment property or shares, the question of whether to sell before the new rules take effect, hold, or restructure is one that depends entirely on your individual circumstances. What we would caution against is making a rushed decision based on budget night headlines.
Changes to Negative Gearing
Negative gearing, the ability to offset losses on an investment property against your other taxable income, is being reformed for new purchases going forward. Critically, the changes are not retrospective. If you already own negatively geared property, the existing rules continue to apply to that asset. We consider this an important and fair concession; penalising people for investment decisions made under previous legislation would be inequitable.
The question that is harder to answer is whether these changes will improve housing affordability for first home buyers. The honest assessment is that the relationship between negative gearing policy and housing supply is complex, and the evidence that reforming negative gearing translates into meaningful availability improvements is not straightforward. What is more certain to us is that combined with the CGT discount reduction, the investment calculus for property has shifted.
A Word on Compliance Costs
One consequence of the CGT changes that will not appear in any budget summary: the complexity of calculating gains across different periods, different asset types, and different acquisition dates is going to increase significantly. That means more accounting work, more record-keeping, and higher compliance costs for investors, adding to an already complex landscape for many of our clients. The government has indicated an ATO calculator will be released to assist with CGT calculations, but the detail of what that will cover is not yet clear.
What We Recommend Doing Before 30 June 2026
Given what has been announced, and what is still uncertain, here is where your focus should be before 30 June 2026:
- If you have investment assets, get organised now. Obtain current market appraisals while you can, and ensure your records of acquisition dates and costs are in order. If you hold any assets acquired before September 1985, this is a priority conversation.
- If you are considering an asset sale, do not make that decision without understanding your current CGT position and the likely impact of the proposed changes. We can model this for you.
- If you want to maximise your super contributions, check whether you have unused concessional contribution caps from prior years. You can carry these forward for up to five years, and making additional contributions before 30 June can be a tax-effective strategy depending on your situation.
- If you have work-related expenses, make sure you understand whether the new $1,000 standard deduction or your actual documented expenses gives you the better outcome. For most people with straightforward employment, the standard deduction will be simpler. For people with significant legitimate expenses, keeping records still matters.
How Stones Sharp Can Help
“Everyone’s tax situation is different, and a budget announcement does not affect two people in the same way. The announcements around CGT and negative gearing in particular are going to require careful, individual analysis once the legislation is confirmed. In the meantime, there are things you can do now to make sure you are in the best position when the picture becomes clearer.” – Shane Borg
If you would like to talk through what the 2026/27 budget means for your personal tax position, your property holdings, or your investment strategy, get in touch with the team at Stones Sharp.
