Introduction
The 2026–27 Federal Budget has introduced a range of proposed tax reforms that could significantly impact investors, property owners, family groups and discretionary trust structures. While many of the measures are not yet law and remain subject to the legislative process, taxpayers should be aware of the potential implications and begin planning accordingly.
Capital Gains Tax Reforms
One of the headline announcements is the proposed replacement of the current 50% CGT discount for individuals and trusts. Under the proposal, from 1 July 2027 the existing CGT discount would be replaced by an inflation-indexed cost base calculation, together with a minimum tax rate applying to gains accruing after that date. Transitional provisions are expected to apply to gains accrued before commencement. These changes could significantly affect long-term investment planning and asset disposal strategies.
Negative Gearing Changes
The Budget also proposes substantial changes to negative gearing arrangements. Investors purchasing established residential properties after the proposed commencement date may no longer be able to offset rental losses against salary and other income. Instead, losses would generally be quarantined and carried forward to offset future rental profits or capital gains. Newly constructed properties are expected to continue qualifying for existing concessions to encourage housing supply.
Reform of Discretionary Trust Taxation
Another significant proposal is the introduction of a minimum tax rate on discretionary trust distributions. The reforms are aimed at limiting the tax advantages associated with income splitting among beneficiaries. Transitional relief is expected to be available to allow families and businesses time to review and restructure their affairs if required. Trustees should carefully assess how the proposed measures may affect existing trust arrangements.
Private Health Insurance (PHI) Rebate for Seniors
The Government will remove the age-based uplift of the PHI rebate from 1 April 2027. Currently individuals aged 65 and above are entitled to a higher rebate percentage. The proposal will standardise the rebates across all age groups based strictly on income.
What Should You Do Now?
At this stage, these measures remain proposals and have not yet become law. However, the potential impact on investment structures, property ownership and family wealth planning is significant. We recommend that investors, business owners and trustees review their current arrangements, monitor legislative developments closely and seek professional advice before making major financial decisions.
Phase 2 AML Reforms: What Businesses Need to Know from 1 July 2026
From 1 July 2026, Australia’s expanded Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) reforms will place greater obligations on accountants and other professional service providers as part of the Government’s Phase 2 AML reforms.
These changes are designed to strengthen Australia’s ability to detect and prevent money laundering, terrorism financing, and other financial crimes. As a result, accountants will be required to undertake more comprehensive client identification and verification procedures before providing certain designated services.
For clients, this means they may be asked to provide additional documentation to verify their identity, business ownership structures, source of funds, and other relevant information. Existing clients may also be subject to updated verification checks as firms review and strengthen their compliance procedures.
While these additional requirements may seem more rigorous, they are becoming a standard part of professional services globally and are intended to protect both businesses and the broader financial system from criminal misuse.
Accounting firms will need to implement robust customer due diligence processes, maintain detailed records, monitor certain transactions, and ensure staff are appropriately trained to identify and report suspicious activities where required.
Clients can help minimise delays by ensuring identification documents and business records are readily available when requested. The increased scrutiny is not a reflection of any individual client but rather a regulatory requirement applying across the profession.
As the reforms take effect, accountants will continue working closely with clients to make the process as efficient as possible while meeting their legal obligations under the updated AML/CTF framework.
For further information about how these changes may affect your business, please contact your accountant or adviser.
Key Superannuation Changes from 1 July 2026
Higher Contribution Caps
The annual concessional (before-tax) contribution cap will increase from $30,000 to $32,500. The annual non-concessional (after-tax) contribution cap will increase from $120,000 to $130,000. For eligible individuals using the bring-forward provisions, the maximum non-concessional contribution over three years will increase from $360,000 to $390,000.
| Contribution Type | 2025/26 | From 1 July 2026 |
| Concessional Cap | $30,000 | $32,500 |
| Non-Concessional Cap | $120,000 | $130,000 |
| Bring-Forward Cap | $360,000 | $390,000 |
Introduction of Payday Super
From 1 July 2026, employers will be required to pay Superannuation Guarantee contributions at the same time as employees are paid, replacing the current quarterly payment system.
Benefits of Payday Super include:
- Improved timeliness of super contributions.
- Reduced incidence of unpaid super.
- Greater opportunity for investment earnings and compounding returns.
What Should You Do?
The increased contribution caps provide additional opportunities for individuals to boost retirement savings in a tax-effective environment. Those making salary sacrifice or personal deductible contributions should review their arrangements to take advantage of the higher limits from 1 July 2026.
Caution: Business Name, Company Name & Domain Renewal Scams
We remind all clients to exercise caution when receiving invoices or renewal notices for business name, company name, or domain name renewals. There are numerous unofficial organisations that send misleading or fraudulent notices which appear to be legitimate.
If you receive any such correspondence and are unsure of its authenticity, please forward it to our office before making any payment. We are happy to confirm whether the invoice is genuine or part of a known scam attempt.
Keep Your Contact Details Up to Date
To ensure we can continue to provide timely and effective service, we kindly remind all clients to inform us of any changes to your contact information. This includes:
– Residential or postal address
– Email address
– Phone number
Keeping your details current helps us manage your tax, superannuation, and compliance matters accurately.
Protecting Your Tax File Number (TFN)
Your Tax File Number (TFN) is securely stored within our systems and handled in accordance with strict confidentiality and privacy standards.
As part of an ongoing commitment to safeguarding sensitive personal information, TFNs are not included on correspondence issued by email, letter, or any other form of communication.
If you receive any communication that appears to contain your TFN electronically, please contact our office immediately so the matter can be investigated promptly.
Important Notice: ABN Applications and Agent Linking
We kindly request that clients do not apply for an ABN themselves for any structure other than sole traders. Due to recent ATO requirements, new ABNs for companies, trusts, and partnerships must be linked to a tax agent through a formal process before we are able to access your records or act on your behalf.
To avoid delays or complications, please contact our office first if you are planning to register a company, trust, or partnership. We can manage the ABN application and ensure all linking requirements are handled properly.
TAX RATE CHANGES
Tax rates have changed from 1 July 2026.
Below is the updated tax rates table comparing 2025-2026 to 2026-2027:
| Resident tax rates 2025-2026 | Resident tax rates 2026-2027 | ||
| Taxable Income | Tax on this income | Taxable Income | Tax on this income |
| 0 – $18,0200 | Nil | 0 – $18,0200 | Nil |
| $18,201 – $45,000 | 16c for each $1 over $18,200 | $18,201 – $45,000 | 15c for each $1 over $18,200 |
| $45,001 – $135,000 | $4,288 plus 30c for each $1 over $45,000 | $45,001 – $135,000 | $4,020 plus 30c for each $1 over $45,000 |
| $135,001 – $190,000 | $31,288 plus 37c for each $1 over $135,000 | $135,001 – $190,000 | $31,020 plus 37c for each $1 over $135,000 |
| $190,001 and over | $51,638 plus 45c for each $1 over $190,000 | $190,001 and over | $51,370 plus 45c for each $1 over $190,000 |
** Above rates do not include Medicare Levy **
2026 – 2027 BAS LODGEMENT DATES
IF HAZEAL NEWMAN & ASSOCIATES LODGE YOUR BAS:
July – Sept 2026 BAS – due 25th November 2026
Oct – Dec 2026 BAS – due 28th February 2027
Jan – March 2027 BAS – due 26th May 2027
April – June 2027 BAS – due 25th August 2027
IF YOU LODGE YOUR OWN BAS via paper the due dates are:
July – Sept 2026 BAS– due 28th October 2026
Oct – Dec 2026 BAS – due 28th February 2027
Jan – March 2027 BAS – due 28th April 2027
April – June 2027 BAS – due 28th July 2027
IF YOU LODGE YOUR OWN BAS online the due dates are:
July – Sept 2026 BAS– due 11th November 2026
Oct – Dec 2026 BAS – due 28th February 2027
Jan – March 2027 BAS – due 12th May 2027
April – June 2027 BAS – due 13th August 2027
MIDSEC UPDATE – 2026
Current Market View
Share markets have experienced increased volatility recently, driven by a combination of global and domestic factors. Ongoing geopolitical tensions, particularly in the Middle East, along with higher interest rates in Australia and uncertainty following the Federal Budget, have all contributed to short-term market fluctuations.
While these factors can feel unsettling, it is important to keep perspective. Periods of uncertainty are a normal part of investing, and markets have historically worked through similar challenges over time. Encouragingly, the broader global economy remains resilient, with many companies continuing to deliver solid earnings, supported by structural growth in areas such as technology and artificial intelligence.
That said, current conditions have led to some dislocation between company performance and share prices. In some cases, high-quality businesses continue to grow earnings, despite their share prices moving sideways or declining. Rising interest rates have also contributed to a shift away from more expensive assets, bringing valuations back to more reasonable levels.
While volatility can be uncomfortable, it often creates opportunities. Broad market movements can temporarily impact even strong businesses, allowing investors to access high-quality investments at more attractive prices. At the same time, higher interest rates are providing improved returns on cash and fixed interest investments, offering additional balance within portfolios.
Overall, remaining patient and focused on long-term objectives remains the most effective approach. Periods like this are not unusual and can present valuable opportunities for disciplined investors.
A refresher of the Midsec 10 Commandments for Successful Investors
1. Establish your risk budget: Don’t take more risk than you should, and make sure that you can tolerate the volatility you’ll face.
2. Spread the money around: Great investors have lots of different investments, they don’t take big bets.
3. Everything is for sale: Investments are not your friends, they’re tools. If it’s logical to do so, they should be sold.
4. Switch off the noise: Ignore the daily commentary. Take a five-year view and focus on it.
5. Be a student of history: Identify good investments by knowing their history. And know what investors have traditionally paid for the profit or the rent the investments provide.
6. Know what the market thinks is going to happen: Investment prices are based on what the market thinks profits and rents are going to be.
7. Act, don’t react: Efficient markets will react to information and then think. Investors take time to think, and then act.
8. No regrets: Decisions made for logical reasons should never be regretted, regardless of the outcome.
9. Use experts who add value: Be prepared to use managed funds wherever doing it yourself is too difficult.
10. Hone a Super Power – and use it! You can be something the markets and other investors can’t – you can be PATIENT.
Midsec and You
If you are starting to plan for your retirement, implement your farm or business succession plan, want to review your current investments and superannuation or improve your retirement cash flow, we can help you. Please contact your accountant at HNAA and make a free no obligation appointment with one of our advisers.
Midsec has been working with HNAA for over 9 years now and our advisers work out of HNAA office regularly and would be thrilled to meet you and discuss your questions and retirement goals.
