Right. If you’re an Aussie expat with a rental property back home, shares, crypto, or any other asset you bought hoping it would one day be worth more than you paid for it, last night’s Federal Budget just rewrote the rules of the game.
Not all at once. Not catastrophically. But enough that doing nothing for the next 14 months would be, well, a strange choice.
The 2026-27 Federal Budget handed down on 12 May 2026 contains the biggest overhaul of Australia’s property and investment tax system in 25 years. Negative gearing is being restricted. The 50% capital gains tax discount is being scrapped. A new minimum tax on capital gains is coming in. And for those of you running family discretionary trusts, there’s a whole separate party happening that we’ll touch on briefly here.
This article walks you through what changed, what it means for you as an Australian expat (whether you’re living and working overseas, whether you’ve recently returned home, or whether you’re a foreign national now living in Australia), and what you can do about it before the rules change.
Pour yourself a coffee. This one’s worth the time to read properly.
Right, So What Actually Changed?
Five big things. Let’s list them so you know what we’re dealing with.
First, negative gearing on residential property is being restricted to new builds only. The change starts 1 July 2027, but the cut-off date for grandfathering existing arrangements was already 7:30pm AEST on 12 May 2026, which is to say, last night. (Source: Budget 2026-27 Fact Sheet, Negative Gearing and Capital Gains Tax Reform, page 1.)
Second, the 50% CGT discount that’s been around since 1999 is being scrapped from 1 July 2027 and replaced with cost base indexation plus a 30% minimum tax on capital gains.
Third, a new 30% minimum tax on discretionary trusts kicks in from 1 July 2028.
Fourth, a new $250 Working Australians Tax Offset arrives from the 2027-28 income year, plus a $1,000 instant deduction for work-related expenses from 2026-27. These are for resident workers, so most expat clients living overseas won’t be affected, but they’re worth knowing about if you’re planning to return home.
Fifth, the $20,000 instant asset write-off for small business is being made permanent.
Now let’s get into the ones that actually matter for your wealth.
The Negative Gearing Shake-Up
Here’s the deal.
From 1 July 2027, you can only negatively gear a residential investment property if it’s a new build.
Everything else gets quarantined: your rental losses can still be claimed, but only against other residential property income, not against your salary, dividends, or anything else.
If that sounds like a big deal, that’s because it is. Negative gearing has been one of the cornerstones of Australian property investment for decades. Around 1 per cent of taxpayers acquire negatively geared properties each year, which was about 230,000 individuals in 2022-23 (Source: Budget 2026-27 Fact Sheet, Negative Gearing and Capital Gains Tax Reform, page 4).
But here’s the good news. If you already owned the property at 7:30pm AEST on 12 May 2026 (or had a contract signed but not yet settled at that moment), you’re grandfathered. Indefinitely. You can keep negatively gearing that specific property until you sell it.
Read that again. Indefinitely.
This is enormously valuable. If you’ve got a negatively geared property in your portfolio right now, you’ve effectively been handed a permanent tax shield on that property. Don’t sell it for trivial reasons.
What about properties bought between 12 May 2026 and 30 June 2027? They get a short transitional window. You can negatively gear them in 2026-27, but from 1 July 2027 they fall under the new rules and negative-gearing drops off (unless it was a new build).
And properties bought from 1 July 2027 onwards? No negative gearing at all, unless they’re a new build.
What Counts as a New Build?
A new build means a residential property that genuinely adds to housing supply. The Budget gives examples (Source: Budget 2026-27 Fact Sheet, Negative Gearing and Capital Gains Tax Reform, page 6).
Eligible: a newly constructed apartment bought off the plan, a duplex built where a single house used to stand, any residential construction on previously vacant land, or a brand new property occupied for less than 12 months before its first sale.
Not eligible: an established property that’s been extended, a free-standing house built to replace another free-standing house, a granny flat built next to an established property, or a property that’s been occupied for more than 12 months before sale.
The key word is supply. The government wants more houses built. If your investment property doesn’t add a new dwelling, it doesn’t get the carrot.
The Big One: Say Goodbye to 50% CGT Discount
This is the change that will affect more of you, more substantially, than anything else in the Budget.
For 25 years, if you held a CGT asset for more than 12 months, you got a 50% discount on your capital gain. Bought BHP shares in 2010 for $30,000, sold them in 2024 for $60,000? Your taxable gain was $15,000, not $30,000. Simple.
From 1 July 2027, that’s gone. Replaced with two things.
First, cost base indexation. Your cost base will be adjusted upwards for inflation (using CPI), so you’re only taxed on real, above-inflation capital gains. This is similar to how the system worked between 1985 and 1999.
Second, a 30% minimum tax rate on any real capital gain. If your marginal tax rate is below 30%, you’ll be bumped up to 30% on the gain. Recipients of income support payments like the Age Pension or JobSeeker are exempt from this minimum tax (Source: Budget 2026-27 Fact Sheet, Negative Gearing and Capital Gains Tax Reform, page 2).
What This Looks Like With Real Numbers
Say you buy a $500,000 investment asset on 1 July 2027 and sell it ten years later. Inflation averages 2.5% per year. Your annual return varies.
If your asset grows at 5% per year (a fairly average return, in line with long-term residential property returns), your sale price is $814,447. Under the old 50% discount, your taxable gain would be $157,224. Under the new indexation regime, it’s $174,405. At a 47 cent marginal rate, you pay about $8,075 more in tax (Source: Budget 2026-27 Fact Sheet, Negative Gearing and Capital Gains Tax Reform, page 8).
If your asset grows at just 2.5% per year (the same as inflation), you’ve made zero real gain. Under the old 50% discount, you’d have a taxable gain of $70,021. Under the new regime, you’d have nothing. You pay $24,858 less tax. Better off.
If your asset grows at 7.5% per year (a very strong return), you’d be looking at a taxable gain of $390,474 under indexation versus $265,258 under the 50% discount. You pay $58,851 more tax. Worse off.
The takeaway. High-growth assets are worse off under the new rules. Low-growth assets are better off. Assets that don’t beat inflation are dramatically better off (because they get no taxable gain at all).
For property, which has historically grown at around 5.8% per year over five-year periods and 6.1% over ten-year periods according to the Budget’s own analysis (Source: Budget 2026-27 Fact Sheet, Negative Gearing and Capital Gains Tax Reform, page 2), the new regime is generally less favourable than the 50% discount.
For shares, which have grown at around 4.4% per year over five years (S&P/ASX 200 average), the new regime is roughly comparable, sometimes slightly better, depending on inflation in the period.
How Does the Transition Work?
Critical question. Let’s break it down.
If you bought an asset before 1 July 2027 and you sell it after 1 July 2027, your gain is split into two parts.
The first part is the gain from purchase date to 1 July 2027. This gets the old 50% discount treatment.
The second part is the gain from 1 July 2027 to sale date. This gets the new indexation plus 30% minimum tax treatment.
You can either get a formal valuation of the asset as at 1 July 2027, or use a specified apportionment formula that the ATO will provide tools to calculate (Source: Budget 2026-27 Fact Sheet, Negative Gearing and Capital Gains Tax Reform, page 4).
This is genuinely important. If your asset grew rapidly in recent years (which is true of most Australian residential property, frankly), the apportionment formula might significantly underestimate your pre-2027 gain. Getting a proper valuation on 1 July 2027 could save you a meaningful chunk of tax.
For shares with quoted market prices, this is easy. The price on 1 July 2027 is the price. For property, you’d need a professional valuation. We strongly recommend our clients with substantial property holdings line up valuations for around that date.
Pre-CGT assets (those bought before 20 September 1985) keep their pre-1 July 2027 gains exempt. Anything that’s been in the CGT net all along gets the split treatment described above.
What’s Still Exempt?
The main residence exemption survives. If you live in your home and it’s your principal place of residence, gains are still exempt when you sell.
The four small business CGT concessions are unchanged. These remain valuable for clients running businesses through Australian structures.
The existing 60% CGT discount for qualifying affordable housing is retained in full.
Income support recipients (Age Pension, JobSeeker) are exempt from the 30% minimum tax.
Superannuation funds (including SMSFs) are excluded from the new regime. This might make property held inside super relatively more attractive than property held outside super, for clients with enough super balance to make it work.
Investors who buy new builds get to choose. They can take either the 50% discount or the indexation plus minimum tax treatment, whichever gives them a better outcome (Source: Budget 2026-27 Fact Sheet, Negative Gearing and Capital Gains Tax Reform, page 4).
What This Means If You’re an Australian Expat
OK, now let’s talk specifically about how all this plays out for Australian expats. This is where it gets interesting, because Australian expats already operate under a different set of CGT rules than residents.
If You’re a Non-Resident with Australian Property
This is most of you reading this article.
The negative gearing grandfathering applies to you in the same way as everyone else. If you owned your Australian rental at 7:30pm AEST on 12 May 2026, you keep negative gearing on that property until you sell. Even though you’re not resident in Australia, even though the deduction is being applied against Australian-sourced rental income or eventually against an Australian capital gain.
For CGT, here’s the wrinkle. Non-residents already lost access to the 50% CGT discount on gains for every day that the person is a non-resident, way back in May 2012, under the apportionment rules in Subdivision 115-B of ITAA 1997. That’s been the position for 14 years.
What does the new regime mean for you? The Budget papers don’t directly address how the new indexation rules will interact with the existing non-resident apportionment regime. On the face of it, indexation should be available to non-residents in some form, which would actually be more favourable than the current ‘no discount’ treatment for gains accrued while non-resident. But until we see the draft legislation, this is a question to watch carefully.
The 30% minimum tax is largely irrelevant for non-resident clients, because non-residents already pay tax at 30% from the first dollar of taxable Australian income (rising to 37% above $135,000 and 45% above $190,000 for 2025-26). You’re already at the 30% floor on your first dollar.
If You’re a Non-Resident Planning to Return Home
Different game. And not in the way most people think.
Let’s start with what happens to your non-TAP assets (broadly, everything except Australian real property and indirect Australian real property interests) when you leave Australia and when you eventually come back.
When you ceased Australian tax residency, CGT event I1 under section 104-160 of ITAA 1997 was triggered on your non-TAP assets. You either paid Australian CGT on a deemed disposal at market value at departure, or you elected under section 104-165 to defer that CGT until actual disposal. We’ll come back to the section 104-165 election in a moment, because it matters.
Either way, any non-TAP assets you’ve acquired since becoming non-resident (and most of the assets you owned at departure if you didn’t make the section 104-165 election) are entirely outside the Australian CGT net. The growth on your Singapore property, your US shares, your offshore crypto, none of it has any Australian CGT consequence while you remain non-resident. It doesn’t matter whether the asset has doubled or halved in value. None of that growth is in the Australian system.
Then you come home.
When you become an Australian tax resident again, section 855-45 of ITAA 1997 deems you to have acquired your non-TAP assets at market value on the date residency recommences. Cost base resets to the market value on that day. The clock starts then.
This is the critical point that most people get wrong. There is no ‘accrued foreign gain’ for the Australian CGT system to capture on your return. The deemed acquisition at market value wipes the slate clean for Australian CGT purposes. Any historical appreciation on your foreign assets while you were non-resident is simply not in the Australian CGT system. The new 1 July 2027 rules can’t reach back to it. But until we see the draft legislation, this will need to be confirmed and as such, it is a question to watch carefully.
So what actually matters for the timing of your return?
If your residency recommences before 1 July 2027, any growth on your foreign assets between your residency date and 1 July 2027 will eventually get the 50% discount on sale. Any growth after 1 July 2027 gets indexation plus the 30% minimum tax. For someone returning in mid-2027, that’s only a few months of growth getting discount treatment. For someone returning in 2024 or 2025 who’s still here at 1 July 2027, it’s a more meaningful window.
If your residency recommences after 1 July 2027, the deemed acquisition at market value happens on your (later) residency date, and from that point forward you’re entirely in the new regime. No 50% discount on anything.
In dollar terms, the 50% discount window is usually a smaller lever than people think, because it’s only working on growth from the recently-reset cost base, not on accumulated foreign-residency gains.
The bigger planning lever is what to do with appreciated foreign assets before becoming resident again. If you’ve got foreign assets you were planning to sell anyway in the next year or two, selling them while you’re still non-resident keeps them entirely out of the Australian CGT system. Once you’re resident, future sales sit in the Australian system at the new (reset) cost base, and future growth gets the new regime.
And here’s the section 104-165 wrinkle. If, when you became a non-resident, you elected under section 104-165 to defer the I1 CGT consequences on your assets, those assets retained TAP-like character for Australian CGT purposes meaning that they have remained trapped in the Australian Capital Gains Tax net for the entire period of your non-residency. For these specific assets, the new 1 July 2027 rules do apply, and indexation plus the 30% minimum tax will apply to growth from 1 July 2027 even while you’re still non-resident.
A non-trivial number of departing expats made this election (sometimes deliberately to defer the tax bill at departure, sometimes inadvertently by default through ignorance of the rules, or by inadequate advice from their local accountants/advisors at the time). If that’s you, those specific assets behave very differently from your other foreign assets, and you’ll want to take that into account in your pre-return planning.
If You’re a Temporary Resident in Australia
Taxpayers who are not married to or in a defacto relationship with an Australian citizen or Permanent Resident and who hold a temporary class of visa (e.g. Subclass 457, 482, 491, and similar non-permanent visas) typically qualify as ‘temporary residents’ for tax purposes under section 768-915 of ITAA 1997.
Temporary residents are essentially treated as non-residents for CGT purposes on non-TAP assets. Your foreign shares, foreign property, offshore crypto, and most other non-Australian assets sit completely outside the Australian CGT net while you hold temporary resident status.
The 1 July 2027 changes appears to be irrelevant for those non-TAP assets during your period of temporary residency, although we’ll have to review the government’s draft legislation whenever it is published to be sure. You pay no Australian CGT on them, period.
Where it gets interesting is when you convert to permanent residency, become an Australian citizen, or enter into a de facto or marriage relationship with an Australian citizen or PR (which can trigger loss of temporary resident status earlier than you’d expect).
At that conversion point, section 768-955 of ITAA 1997 deems you to have acquired your non-TAP assets at market value on the day you ceased being a temporary resident. From there, you’re subject to the same regime as any Australian resident.
So if you’re a temporary resident considering when to apply for permanent residency, there’s now a tax variable to add to the equation. Conversion before 1 July 2027 means you get a market-value cost base on the conversion date, then the gain from conversion to 1 July 2027 gets the 50% discount, and post-2027 growth gets indexation.
Conversion after 1 July 2027 means you get a market-value cost base on the (later) conversion date, no access to the 50% discount, and only indexation plus minimum tax going forward.
Bigger picture: temporary residents with significant unrealised foreign capital gains have a unique planning window. Disposing of foreign assets before becoming a permanent resident triggers no Australian CGT at all (subject to your home country’s rules if applicable, of course).
Australian TAP assets (Australian real property, indirect interests in Australian land, business assets of an Australian permanent establishment) are caught the whole time regardless of your residency status. So a temporary resident with an Australian investment property is in the same boat as any other foreign owner in relation to that property.
If You’re a Returning Expat Already Back Home
Most complex group. Sorry.
For any non-TAP assets you held when you came back, your cost base was reset to market value on the day you became Australian tax resident again, under section 855-45 of ITAA 1997. The new regime layers on top of that reset cost base. Growth from your residency date to 1 July 2027 will eventually get the 50% discount on sale. Growth after 1 July 2027 gets indexation plus the 30% minimum tax. The pre-2027 portion is more meaningful for clients who returned in 2022 or 2023 than for those who came back more recently.
For TAP assets you’ve held continuously (most commonly an Australian rental property you kept while overseas), the original cost base from your initial acquisition still applies. These have been in the Australian CGT net all along. The gain from purchase date to 1 July 2027 gets the 50% discount, and the gain from 1 July 2027 onwards gets the new regime. For long-held Australian property, this split is potentially very valuable.
If you elected under section 104-165 to defer CGT on any of your non-TAP assets when you originally left Australia, those specific assets retained TAP-like character throughout your non-residency. They’re treated more like TAP assets than non-TAP for cost base purposes, so the original acquisition cost base applies, not a market-value reset.
You may also need to deal with the 2019 main residence exemption denial rules for foreign residents, if you used Australian property as your main residence before departure and have disposed of (or intend to dispose of) it. Those rules are separate from the new regime but interact with it in ways that need careful consideration.
If that’s making your head spin, you’re not alone. The interactions are genuinely complex, and they’re exactly the sort of multi-layered analysis where good advice pays for itself many times over.
If You’re a Foreign National Now Permanently Tax Resident in Australia
You’re treated exactly like any Australian resident for CGT purposes. The new rules apply to you in full. If you have foreign property or shares, they’re caught by the new regime from 1 July 2027.
The Main Residence Exemption Minefield
A quick word on the main residence exemption, because for a lot of our client base this is where the genuinely scary numbers live.
The 2019 foreign resident main residence denial rules mean that if you sell a property while you’re a foreign resident, the main residence exemption is denied entirely. Not partially. Not for the years you actually lived there. Entirely. The whole gain from the day you bought it becomes assessable, regardless of how many years it was genuinely your home before you went overseas. There’s a narrow “life events” exception (terminal medical condition, death of an immediate family member, or divorce or separation) that can preserve the exemption if your foreign residency period is 6 years or less, but for most expats it doesn’t apply.
The 6-year absence rule in section 118-145 of ITAA 1997 lets you treat a former home as your main residence for up to 6 years while it’s tenanted, but only if you’re still an Australian tax resident when you sell. If you’ve been overseas longer than 6 years with the property tenanted, your future exemption is already partial. If you sell while non-resident, the 2019 rules wipe it out entirely.
The new 1 July 2027 regime then layers on top of whatever assessable gain remains.
This combination is genuinely brutal for long-term expats holding former main residences. We’ll soon publish a separate dedicated article working through the interactions and the planning levers (return-before-sale, life events, hold-to-death). If this is your situation you’ll want to read that one too once it’s live.
The Trapped Losses Trap (Yes, Really)
Here’s something the Budget papers don’t shout about, but you need to understand.
If your property is caught by the new negative gearing rules (so, properties purchased after the 12 May 2026 announcement, other than new builds), your rental losses don’t disappear. They get quarantined into a carry-forward pool.
That pool can be applied against your future net residential rental income (from any residential property you hold, not just the one that generated the loss), or against capital gains on disposal of any residential property you hold.
What it cannot be applied against, and this is where the narrowness bites:
- Your salary or wages
- Business income
- Dividends, including from listed property trusts and REITs (because the income to you is dividend income, not direct rental income)
- Interest
- Commercial property rental income, or capital gains on commercial property
- Share gains, crypto gains, precious metals gains, or gains on any other asset class
- Foreign income or foreign capital gains
- Any other category of assessable income
This is a category quarantine, not a property-specific quarantine. So if you own three Australian residential properties and one generates a loss, you can apply that loss against rental income or capital gains from any of the three. Good if you’ve got a residential property portfolio.
But now think about the typical non-resident expat client. You own a single Australian residential property as your only Australian asset. You buy it post-1 July 2027 (and let’s assume for a moment it’s not a new build). You rent it out for ten years at a loss. You build up, say, $50,000 in carry-forward residential property losses.
Then you sell the property. The losses get applied against the capital gain. So far so good.
But what if you have no other Australian residential property? And no intention of buying more? Your losses just sit there. Unused. Indefinitely.
The losses can’t be applied against your foreign salary. They can’t be applied against a future Australian commercial property purchase. They can’t be applied against your Australian shares (if you hold any). They can’t be applied against your future foreign property gains. They’re stranded.
This is a particular risk for non-resident clients who own a single Australian residential property as their only Australian asset. When you eventually exit, any residual quarantined losses are effectively lost.
The planning response is to think carefully about timing. Accelerating loss absorption while you still have rental income coming in (rather than carrying losses forward to a sale year when you might not need them all) can sometimes be optimal.
Note also: when losses are applied against the capital gain on sale, they reduce the assessable capital gain dollar-for-dollar. This actually treats the losses slightly better than they’d be treated if added to the cost base, because cost base additions get smoothed through the discount or indexation calculation. Small silver lining.
Your Critical Dates Cheat Sheet
Pin this to your fridge. Or, you know, save it in a Notes app.
- 7:30pm AEST 12 May 2026 – Negative gearing grandfathering cut-off. Already past. If you owned the property at this moment, or had a contract signed but unsettled, you’re grandfathered for as long as you own that property.
- 30 June 2027 – Last day of transitional negative gearing for properties bought between 12 May 2026 and this date. These properties can be negatively geared in 2026-27, but not after.
- 1 July 2027 – The big one. CGT discount replaced with indexation plus 30% minimum tax. Negative gearing restricted to new builds only. Asset valuation date for transitional calculations. Trust restructure rollover relief window opens.
- 1 July 2028 – 30% minimum tax on discretionary trusts begins.
- 30 June 2030 – Trust restructure rollover relief window closes.
What You Can Do About It
Right. Now the practical stuff. What can you actually do?
Get Asset Valuations Lined Up for 1 July 2027
For property and unlisted assets, the apportionment formula provided by the ATO will use a notional growth rate to estimate value at 1 July 2027. If your asset grew faster than average in the run-up to 2027 (which is true of much Australian property over recent years), the formula will likely underestimate your pre-2027 gain.
A proper professional valuation as at 1 July 2027 can preserve more of your 50% discount entitlement. This is well worth doing for any substantial holding.
For shares and other listed securities, the closing price on 1 July 2027 is your reset value. Easy.
Think Carefully About Pre-July 2027 Disposals
For most assets, the Budget is right that there’s no automatic incentive to sell before 1 July 2027. The grandfathering of pre-2027 gains takes care of that.
But there are specific scenarios where pre-July 2027 disposals deserve consideration.
If your asset is genuinely unlikely to keep up with inflation, selling under the old 50% discount rules makes sense, because you’ll get a meaningful discount on a gain that wouldn’t even be a real gain under indexation.
If you’re approaching retirement or a major life event where your marginal rate is about to drop substantially, the 30% minimum tax becomes a meaningful cost on future gains. Crystallising now under the 50% discount might be better.
If you’re a non-resident with substantial accrued gains on TAP assets and uncertain about future residency, locking in the current treatment can simplify your tax position.
Consider New Builds for Future Property Investment
If you’re going to buy more residential property post-2027 and want to use leverage to do it, new builds are the only way to retain access to negative gearing. They also let you choose between the 50% discount and indexation when you eventually sell.
Be aware that subsequent purchasers of a new build don’t inherit the concessions. So the eventual resale value of a new build may be slightly affected by the loss of those concessions for future owners.
Look at Property Inside Super (after you return to Australia)
SMSFs are explicitly excluded from the new regime, both for negative gearing changes and for the CGT changes. For clients with sufficient super balance, limited recourse borrowing arrangements (LRBA) funded property is potentially relatively more attractive than property held in personal name. Other considerations apply (the in-house asset rules, the borrowing constraints, the limited recourse requirements), but the tax differential is now larger than it used to be.
Note: SMSFs are not generally recommended for non-resident clients due to the greater non-compliance risks, so using a SMSF to purchase property should typically not be considered until after returning to Australia to regain your Australian tax residency status.
Time Your Return Strategically
For non-resident clients planning to come home, the timing of return has always been a tax variable. Now it’s a bigger one.
This needs proper modelling against your specific asset profile. The right answer for one client is the wrong answer for another. Generic advice is not advice.
Crystallise Appreciated Foreign Assets Before Becoming a Tax Resident Again
If you’re a non-resident or temporary resident planning to become an Australian tax resident, this is probably the single most important planning lever you have for your foreign assets.
Non-TAP assets you hold while non-resident sit outside the Australian CGT net entirely. Sell them while non-resident, no Australian CGT applies (subject to your country of residence tax rules, of course). The same applies for temporary residents on non-TAP assets.
Once you become a full Australian tax resident, your non-TAP assets are deemed acquired at market value on residency date under section 855-45, and from that point they’re in the Australian system. Future growth is subject to indexation plus 30% minimum tax from 1 July 2027.
For appreciated foreign assets you were going to sell within a year or two anyway, doing it pre-return keeps the entire gain out of the Australian system. For assets you plan to hold long-term, consider whether a sell-and-rebuy rebalancing immediately before becoming resident makes sense, both for cost base reset purposes and for tax outcomes in your country of current residence.
This is not always the right strategy. You may trigger tax in your country of current residence. You crystallise gains that would otherwise compound. Transaction costs eat into the benefit. But for clients with substantial unrealised gains on foreign assets and a planned return to Australia, this may be the biggest single planning lever available.
One important caveat: if you elected under section 104-165 to defer CGT on a particular asset when you originally left Australia, that specific asset has remained in the Australian CGT net throughout your entire period of non-residency. Selling it while still non-resident does not escape the Australian system. The new 1 July 2027 rules will apply to the post-2027 portion of any eventual gain on that asset.
A Quick Word About Trusts
If you maintain a discretionary trust/family trust (and many of our expat clients do), you’ve got a separate set of changes coming.
From 1 July 2028, a 30% minimum tax will apply to discretionary trust income. The trustee pays the tax at the trust level. Non-corporate beneficiaries get non-refundable credits for the tax paid. Corporate beneficiaries (think ‘bucket companies’) get no such credits, which effectively kills the bucket company strategy for trusts.
About half of discretionary trusts won’t be affected in any given year, because they’re already distributing to beneficiaries on marginal rates of 30% or higher (Source: Budget 2026-27 Fact Sheet, Minimum Tax on Discretionary Trusts, page 3). But for trusts that have historically distributed to lower-marginal-rate beneficiaries (a non-working spouse, adult children studying, retired family-members etc), this is a meaningful change.
There’s three-year rollover relief from 1 July 2027 to 30 June 2030 to help restructure out of discretionary trusts without triggering federal CGT.
But note: the rollover relief covers federal CGT only. State stamp duty (also called transfer duty) typically still applies on the transfer of property out of a trust to a company or new trust, often at around 5% of market value, plus foreign purchaser surcharges of 7 to 8% if you’re a non-resident in several states.
For most expat clients, the question of whether to restructure out of a trust is not ‘should I take the rollover relief’ but ‘does the value of escaping the 30% minimum tax exceed the immediate stamp duty hit?’ The answer is often no.
We’ll be publishing a separate detailed article on the trust changes specifically. If you operate through a discretionary trust, you’ll want to read that one too once it’s live.
Right, So What Now?
Look, here’s the bottom line.
These are the biggest changes to property and investment tax in Australia in 25 years. They’re real. They’re starting to apply in 14 months. And the right response depends entirely on your specific circumstances: your residency status, your asset profile, your future plans, your country of current residence, and your eventual return plans (if any).
Generic advice is not advice. The difference between the right strategy and the wrong strategy can easily run to tens of thousands of dollars in tax over the coming years.
We’ve spent over 20 years specialising in tax for Australian expats. If you’ve got Australian property, foreign assets, a trust structure, or any meaningful wealth that’s going to be affected by these changes, the conversation is worth having now rather than later.
You can book an Expat Already Overseas Tax Consultation through our appointments page. We’ll work through your specific situation, model the impact of the new rules against your asset profile and plans, and develop a clear strategy for the 14 months between now and 1 July 2027.
Booking takes less than a minute. The peace of mind is worth a great deal more.
A Brief Note on What This Article Isn’t
This article is general information based on the Federal Budget handed down on 12 May 2026. It’s not personal financial or tax advice. The legislation to give effect to these changes has not yet been drafted, let alone enacted, and so the details may change. Your specific situation requires specific advice, which is what we’re here for.
The 2026-27 Budget papers are publicly available at budget.gov.au if you want to read them in full. The most relevant document for property investors is the Negative Gearing and Capital Gains Tax Reform fact sheet.
For trust changes, the relevant document is the Minimum Tax on Discretionary Trusts fact sheet. For the new worker tax cuts, see the New Tax Cuts for Australian Workers fact sheet.
Right. That was a lot. Go book that consultation.
