Budget 2026: CGT and Trust Tax Changes for Investors

I Hold Investment Assets Other Than Property. What Does the 2026 Federal Budget Mean for Me?

The 2026 Federal Budget changes are being heavily discussed in the context of property, negative gearing and first home buyers. But the capital gains tax changes are much broader than residential property. If you hold shares, managed funds, business interests, units in trusts, cryptocurrency, collectables or other investment assets, the proposed CGT changes may affect the way future gains are taxed from 1 July 2027. The Budget also includes a proposed 30% minimum tax on discretionary trust income from 1 July 2028, which may be highly relevant for families, business owners and investors using trust structures.

Key points for non-property investors

• The CGT changes are not limited to property. The Government is replacing the 50% CGT discount with cost-base indexation for CGT assets held by individuals, trusts and partnerships from 1 July 2027.
• The new system taxes real gains above inflation. Instead of automatically discounting an eligible capital gain by 50%, the cost base is expected to be indexed for inflation and tax applied to the real gain.
• A 30% minimum tax will apply to real capital gains. The Government is introducing a 30% minimum tax on real capital gains income earned from 1 July 2027 for individuals, trusts and partnerships.
• Shares and other non-property assets remain under existing negative gearing settings. The Budget material says the negative gearing limitation applies only to residential property; commercial property and other asset classes, such as shares, will remain subject to existing arrangements.
• Super funds, including SMSFs, are excluded from the CGT discount changes. This may make superannuation structures an important discussion point for some investors, but SMSF and superannuation strategy requires qualified financial advice.
• Discretionary trusts are being targeted separately. From 1 July 2028, a 30% minimum tax is proposed on the taxable income of discretionary trusts, paid by the trustee controlling distributions.
• Some trusts and entities are excluded. Fixed and widely held trusts, complying superannuation funds, special disability trusts, deceased estates and charitable trusts are listed as excluded from the discretionary trust minimum tax.
• Business owners may need to review structure. The Budget states expanded rollover relief will apply for three years from 1 July 2027 to assist small businesses and other taxpayers to restructure out of discretionary trusts into companies or fixed trusts.

What changed for investors holding assets other than property?

The Budget changes have two separate but related parts.

1. Capital gains tax changes

From 1 July 2027, the Government proposes to replace the current 50% CGT discount with a return to inflation indexation for assets held by individuals, trusts and partnerships. The Government is also introducing a 30% minimum tax on real capital gains.

This means future gains may no longer be taxed using the simple “50% discount after 12 months” method in many cases.

Instead, investors may need to consider:

• the asset’s value at 1 July 2027;
• inflation over the holding period;
• real growth above inflation;
• marginal tax rate;
• ownership structure;
• whether the 30% minimum tax applies;
• carried-forward capital losses;
• whether any specific exemption applies; and
• whether the asset is held personally, through a trust, company or superannuation fund.

2. Discretionary trust minimum tax

From 1 July 2028, the Government proposes to introduce a 30% minimum tax on the taxable income of discretionary trusts. The tax will be paid by the trustee that controls distributions. Beneficiaries will still declare the income in their tax returns, but beneficiaries other than corporate beneficiaries will receive non-refundable tax credits for tax paid by the trustee.

This is a significant change for families, business owners and investors who have historically used discretionary trusts to distribute income across beneficiaries.

This does not mean every trust structure is wrong.

It does mean trust structures may need to be reviewed before the rules commence.

Which assets may be affected?

The CGT changes may affect a broad range of assets, including:

• listed shares;
• ETFs;
• managed funds;
• units in private trusts;
• business interests;
• private company shares;
• cryptocurrency;
• collectables;
• commercial property;
• rural property;
• investment-grade assets;
• foreign assets;
• intellectual property rights; and
• other CGT assets held outside superannuation.

The key issue is whether the asset is subject to CGT and whether it is held by an individual, trust or partnership.

The Budget material specifically refers to CGT assets held by individuals, trusts and partnerships. Companies are already taxed differently and do not receive the 50% CGT discount in the same way individuals and trusts do.

How the CGT changes may affect non-property investors

Current rules

Under current rules, individuals and trusts that hold a CGT asset for more than 12 months generally receive a 50% CGT discount.

In simple terms, only half the eligible capital gain is included in taxable income.

For many investors, this has made long-term investing more tax-effective, particularly where assets are held for growth rather than income.

Proposed rules from 1 July 2027

From 1 July 2027, the Government proposes to replace the 50% discount with indexation.

Instead of automatically discounting the gain by 50%, the cost base is increased for inflation. Tax then applies to the real gain above inflation.

This can produce a very different result.

If inflation is high and asset growth is modest, indexation may reduce the taxable gain significantly.

If an asset grows strongly above inflation, the removal of the 50% discount may produce a higher taxable gain than under the current rules.

Why the 30% minimum tax matters

The proposed 30% minimum tax on real capital gains is designed to reduce the benefit of timing asset sales for years when an investor has lower income or a lower marginal tax rate. The Budget material states that income support recipients, including pensioners, will be exempt from the minimum tax, and people already subject to at least the 30% marginal rate on non-capital gains income will not be affected by the minimum tax.

This matters for investors who may have planned to sell assets:

• in retirement;
• after reducing work hours;
• in a year with lower income;
• after stepping away from business;
• after distributing trust income strategically;
• after a separation or restructure;
• after carrying forward losses; or
• once other taxable income reduced.

For some people, timing will still matter.

But it may matter less than it did under the old rules.

How the trust changes may affect investors and business owners

The discretionary trust changes may be one of the most important parts of the Budget for business owners and higher-net-worth families.

From 1 July 2028, a 30% minimum tax is proposed on taxable income of discretionary trusts.

This may affect:

• family trusts;
• business trading trusts;
• investment trusts;
• bucket company strategies;
• family wealth structures;
• asset protection structures;
• property-owning trusts;
• share portfolio trusts;
• intergenerational wealth structures; and
• trusts distributing income to adult beneficiaries on lower marginal tax rates.

Why this matters

Historically, discretionary trusts have often been used to distribute income to beneficiaries in a tax-effective way, subject to the trust deed, tax law and anti-avoidance rules.

If a 30% minimum tax applies at the trust level, the benefit of distributing income to low-income adult beneficiaries may reduce.

For example, under the current personal tax scale, an adult beneficiary with no other income may pay no tax on the first portion of income and a lower marginal tax rate on the next bracket. A 30% minimum tax at the trust level changes that equation.

This does not mean discretionary trusts disappear.

They may still be useful for asset protection, business succession, investment control and estate planning.

But the tax benefit may reduce, and the structure may need to be reviewed.

Who is most impacted?

Share investors outside superannuation

Investors holding listed shares, ETFs or managed funds personally or through trusts may be affected by the replacement of the 50% CGT discount with indexation.

The impact depends on growth, inflation, holding period and marginal tax rate.

Business owners using trusts

Business owners operating through discretionary trusts may be affected by the 30% minimum tax on trust income from 1 July 2028.

This may prompt structural reviews, especially where trusts have been used to distribute income to lower-income family members.

Investors planning to sell assets in retirement

The 30% minimum tax on real capital gains may reduce the benefit of deferring asset sales until retirement or a low-income year.

This is an important planning issue for investors approaching retirement.

Investors holding commercial property

Commercial property is not subject to the residential negative gearing restriction. However, commercial property may still be affected by the CGT changes if held personally, through a trust or partnership.

Investors using discretionary trusts for asset portfolios

Trusts that hold shares, managed funds, property, business assets or private investments may need to be reviewed before 1 July 2028.

SMSF investors

Complying superannuation funds, including SMSFs, are excluded from the CGT discount changes, according to the Budget material. However, superannuation strategy is regulated and should only be considered with licensed advice.

Who may be exempt or less directly impacted?

Based on the Budget material, the following groups or assets may be exempt, excluded or less directly impacted:

• Complying superannuation funds, including SMSFs – excluded from the CGT discount changes.
• Income support recipients, including pensioners – exempt from the 30% minimum tax on real capital gains.
• Fixed and widely held trusts – excluded from the discretionary trust minimum tax.
• Special disability trusts, deceased estates and charitable trusts – excluded from the discretionary trust minimum tax.
• Primary production income of farms – excluded from the discretionary trust minimum tax.
• Certain income relating to vulnerable minors – excluded from the discretionary trust minimum tax.
• Personal-use assets that are already exempt from CGT, such as cars and motorcycles, are not the practical target of these reforms.
• The family home remains protected under the main residence exemption, subject to the usual rules.

Investors should confirm their specific position with a qualified accountant or tax adviser before relying on any exemption.

Our opinion: likely outcomes for investors

1. The Budget will make investors focus harder on real returns

The old 50% CGT discount was simple. The new system is more technical.

Investors will need to think more carefully about real returns after inflation, tax and funding costs.

That is not necessarily a bad thing. It may lead to better decisions.

But it will make lazy assumptions more dangerous.

2. SMSFs will get more attention

Because complying superannuation funds are excluded from the CGT discount changes, some investors will naturally ask whether more of their investment strategy should sit inside superannuation or an SMSF.

That may be appropriate for some people.

It will be completely wrong for others.

SMSF lending, liquidity, contribution rules, preservation rules, compliance and investment strategy all need specialist advice.

From a lending perspective, SMSF borrowing can be powerful but is not simple.

3. Trust structures will need review

The discretionary trust changes are substantial.

Some families and business owners may find their current structure still makes sense.

Others may need to consider whether a company, fixed trust or another structure is more suitable.

The Budget material indicates expanded rollover relief will apply for three years from 1 July 2027 to assist restructuring out of discretionary trusts into companies or fixed trusts. That is a clear signal that the Government expects some taxpayers to review and potentially restructure.

4. Selling decisions may move forward

Some investors may bring forward asset sales before 1 July 2027.

Others may hold and rely on indexation.

There is no universal answer.

A high-growth asset may produce a different answer to a low-growth asset. A retiree may have a different answer to a high-income professional. A business owner may have different concerns to a passive share investor.

5. Borrowing and tax strategy will become more connected

For investors with debt, tax changes do not sit in isolation.

They affect:

• cash flow;
• loan structure;
• redraw and offset strategy;
• debt recycling;
• refinancing decisions;
• liquidity;
• repayment strategy;
• asset selection;
• ownership structure; and
• timing of future transactions.

This is where coordinated advice between your accountant, financial adviser and broker becomes more important.

Worked example 1: share investor selling after 1 July 2027

Scenario

Alex bought a portfolio of listed shares for $100,000.

By the time Alex sells after 1 July 2027, the portfolio is worth $180,000.

Assume:

• original cost base: $100,000
• sale value: $180,000
• nominal capital gain: $80,000
• inflation-adjusted cost base under indexation: $125,000
• Alex’s marginal tax rate is above 30%
• brokerage and other costs are ignored for simplicity

Before the Budget changes

Under the current rules, if Alex held the shares for more than 12 months, the 50% CGT discount would generally apply.

Gross capital gain: $80,000
50% CGT discount: $40,000
Taxable capital gain: $40,000

After the Budget changes

Under the proposed indexation method, Alex’s cost base is adjusted for inflation.

Sale value: $180,000
Indexed cost base: $125,000
Real taxable gain: $55,000

Taxable capital gain: $55,000

What this example shows

In this scenario, the taxable capital gain is higher under the new indexation method than under the current 50% discount.

That is because the asset grew strongly above inflation.

However, a different result could occur if inflation is high and the asset’s growth is modest.

The outcome depends on the numbers.

Worked example 2: modest-growth asset where indexation may help

Scenario

Priya buys an investment asset for $200,000.

After several years, she sells it for $250,000.

Assume:

• original cost base: $200,000
• sale value: $250,000
• nominal capital gain: $50,000
• inflation-adjusted cost base: $240,000
• Priya’s marginal tax rate is above 30%
• selling costs are ignored

Before the Budget changes

Under the current 50% CGT discount:

Gross capital gain: $50,000
50% CGT discount: $25,000
Taxable capital gain: $25,000

After the Budget changes

Under indexation:

Sale value: $250,000
Indexed cost base: $240,000
Real taxable gain: $10,000

Taxable capital gain: $10,000

What this example shows

In this scenario, indexation produces a better tax outcome than the 50% CGT discount.

That is because much of the asset’s nominal gain simply reflected inflation.

This is why the new rules are not automatically worse in every scenario.

They are more sensitive to inflation, holding period and real asset performance.

Worked example 3: discretionary trust distribution

Scenario

A family discretionary trust earns $90,000 of taxable investment income.

The trust has historically distributed income to adult family members with lower taxable income.

Assume, for illustration:

• beneficiary A has no other taxable income;
• beneficiary B has low taxable income;
• the trust income can be distributed under the trust deed;
• Medicare levy and offsets are ignored for simplicity;
• the proposed 30% minimum tax applies from 1 July 2028.

Before the Budget changes

Under the current approach, the trust may distribute income to beneficiaries who are taxed personally.

Some income may be taxed at lower marginal rates, depending on the beneficiary’s other income.

For example, part of the distribution may fall within lower personal tax brackets.

This can create a tax advantage compared with distributing all income to a high-income beneficiary.

After the Budget changes

From 1 July 2028, a 30% minimum tax is proposed on taxable income of discretionary trusts.

On $90,000 of taxable trust income, the minimum tax at the trust level would be:

$90,000 × 30% = $27,000

Beneficiaries may still declare the income, but non-corporate beneficiaries receive non-refundable tax credits for the tax paid by the trustee.

What this example shows

The trust may still have commercial, asset protection and succession benefits.

But the tax benefit of distributing income to lower-income beneficiaries may be reduced.

For business owners and families using trusts, this is a genuine review point.

It is not a reason to panic, but it is a reason to speak with an accountant before the rules commence.

What should non-property investors do now?

Investors should not rush to sell assets solely because of a Budget announcement.

But they should start reviewing their position.

Practical next steps include:

1. Identify assets with unrealised gains

List assets that may have material capital gains, including shares, managed funds, business interests, property, crypto and private investments.

2. Separate assets by ownership structure

The impact may differ depending on whether assets are held personally, in a trust, company, partnership or superannuation fund.

3. Review likely sale timing

If you were already planning to sell before or after 1 July 2027, get advice before making a final decision.

4. Review trust structures

If you use a discretionary trust, speak with your accountant about whether the structure remains suitable.

5. Review lending connected to investment assets

If debt is secured against property or used for investment, consider whether your loan structure still supports your strategy.

6. Coordinate advice

The best outcome will often come from coordinated advice between your accountant, financial adviser and broker.

How Evolve Lending & Finance can help

Evolve Lending & Finance does not provide tax, legal or financial planning advice.

But investment tax changes often have lending consequences.

We can help clients review:

• loan structure connected to investment assets;
• refinancing options;
• available equity;
• investment debt structure;
• cash flow and repayment strategy;
• commercial property lending;
• SMSF lending options;
• business lending implications;
• debt secured against residential or commercial property;
• whether a restructure may affect borrowing capacity;
• how lenders may view trust, company or SMSF borrowers; and
• whether current facilities remain suitable before major asset decisions are made.

For investors, the Budget changes are not just a tax question.

They may affect timing, structure, liquidity and borrowing strategy.

Hold shares, business assets, trust assets or other investments?

Before making decisions based on headlines, speak with your accountant or adviser about the tax position, then review the lending and debt structure connected to your broader investment strategy.

Book a Budget Lending Review

Or speak with Evolve Lending & Finance about how your current lending structure may support your next step.

Related Budget guides

• I held an investment property before Budget night
  Understand how the grandfathering rules may apply to existing property investors.
• I may buy an investment property after Budget night
  See how the new rules may affect future investors buying established or new residential property.
• I am a first home buyer
  Learn how the changes may affect competition, buying conditions and property strategy.
• Speak with a broker
  Review your lending position before buying, refinancing or restructuring.

Disclaimer

This article is general information only and does not take into account your personal objectives, financial situation or needs. Evolve Lending & Finance is not a tax adviser, financial planner or legal adviser. You should seek advice from a qualified accountant, financial planner or solicitor before making decisions about tax, investments, property ownership or asset sales. The Budget measures discussed are based on announcements made in the 2026 Federal Budget and may be subject to legislation, clarification and further guidance.