The Federal Budget
The Government has handed down the 2026-27 Federal Budget on 12 May 2026 with a wide range of significant tax reform measures being announced.
Some of the key measures include:
$1,000 instant deduction for work‑related expenses from 2026–27
Working Australians Tax Offset to provide a permanent annual $250 tax offset to all eligible Australian workers
Limiting negative gearing for residential property to new builds from 1 July 2027
Replacing the 50% CGT discount with inflation‑adjusted indexation from 1 July 2027 and introducing a minimum tax rate of 30% on capital gains
Permanently introducing a two‑year loss carry back for all companies up to $1 billion in turnover from 2026–27
Making the $20,000 threshold for the small business instant asset write‑off permanent
Applying a minimum 30% tax rate to discretionary trust distributions from 2028–29
Introducing loss refundability for start‑ups from 2028–29, to help new businesses invest and grow in their first two years
Transitioning to a permanent 25% FBT discount for eligible electric cars over $75,000 from 1 April 2027 and for all eligible electric cars from 1 April 2029.
Since the Budget was handed down, legislation relating to some of the key tax related measures has been introduced to Parliament. Further details can be found in the “Legislation” section of the Round Up.
FBT exemption for EVs to be scaled back
The Government has announced that it will be modifying the FBT exemption for electric vehicles (EVs) in a staged approach over the next few years.
Currently, there is a full FBT exemption in place for eligible zero or low emission vehicles where certain conditions are met. One of the conditions is that the vehicle has never been subject to luxury car tax (LCT). The LCT threshold for fuel-efficient vehicles is $91,387 for the 2025–26 financial year.
However, the Government is planning to scale back the FBT exemption for EVs progressively in the following 3 phases:
The existing EV discount will continue in full until the end of March 2027.
Between 1 April 2027 and 1 April 2029, the full FBT exemption will continue to apply for EVs costing $75,000 or less. EVs costing more than $75,000 but below the LCT threshold will receive a 25% FBT discount.
From 1 April 2029, all EVs below the LCT threshold will receive a 25% FBT discount.
The Government has indicated that existing leases won’t be impacted by the changes, but it remains to be seen whether any transitional rules will apply to vehicles that are owned outright by employers and provided to employees as a car fringe benefit.
Strengthening the superannuation performance test
The Government has released a consultation paper seeking stakeholder feedback on proposals to strengthen the annual superannuation performance test. Introduced to safeguard retirement savings, the performance test is designed to hold super funds accountable for investment performance and fees, while promoting better outcomes for members.
The Government is consulting on changes to:
Adjust benchmarks for emerging and alternative assets
Assess risk‑adjusted returns
Review the benchmarks on a regular basis
Extend the test to more superannuation products.