2026–27 Budget: What SMSF Trustees Need to Know

The 2026–27 Federal Budget, handed down on the evening of 12 May 2026, has been described by Treasurer Jim Chalmers as "the most important and ambitious Budget in decades." While much of the headlines are about housing and the CGT discount overhaul, the picture for SMSF trustees is — surprisingly — largely positive.

The biggest tax changes announced are directed at personal investors, discretionary trusts, and negative gearing on established property. SMSFs are explicitly carved out of most of them. Here's what you need to know, in order of what matters most.

Update 1

The CGT Discount Is Being Overhauled — SMSFs Are Excluded (Good News)

This is the biggest tax change in the Budget — and the one most likely to drive decisions about where Australians hold their investments. From 1 July 2027, the 50% CGT discount that personal investors currently receive on long-held assets will be abolished and replaced with a different system. SMSFs are completely excluded from these changes.

What's changing for personal investors

Currently, an individual who sells an asset held for more than 12 months pays tax on only half the capital gain. From 1 July 2027, this 50% flat discount disappears for all CGT assets held by individuals, trusts, and partnerships. It's being replaced by two new mechanisms:

• Cost base indexation — the cost base of an asset held more than 12 months is adjusted for inflation (CPI), so investors only pay tax on their "real" gain above inflation.
• A 30% minimum tax — even after indexation, the net capital gain is taxed at a minimum rate of 30%, regardless of the investor's marginal tax rate.

These changes apply to gains arising on or after 1 July 2027. Gains accrued on assets held before that date will retain the 50% discount for the period up to 30 June 2027. New residential property builds retain a choice between the old and new system to preserve investment incentives for housing supply.

Importantly, pre-CGT assets — those acquired before 20 September 1985 — will also lose their full CGT exemption from 1 July 2027. Gains arising after that date on pre-CGT assets will be subject to the new rules.

What this means for SMSFs: nothing changes

Inside an SMSF, the CGT rules continue to operate exactly as they do today:

What this means in practical terms: the tax advantage of holding appreciating assets inside an SMSF compared to personally has just widened significantly. An SMSF member in retirement phase will pay zero CGT on gains from pension assets. A personal investor selling the same asset from 1 July 2027 faces a minimum 30% tax on the real gain. That's a meaningful difference.

For SMSF members with property, shares, or other appreciating assets inside their fund — this is a positive development. The relative attractiveness of the SMSF environment for capital growth has been reinforced by this Budget.

Update 2

Negative Gearing on Established Property: Limited for Individuals, Not for SMSFs

The second major reform is the restriction of negative gearing on established residential property. Like the CGT changes, SMSFs are explicitly excluded.

What's changing

From 1 July 2027, individuals who purchase established (existing) residential property after 7:30pm AEST on 12 May 2026 will no longer be able to offset net rental losses against other income (wages, salary, other investment income). Excess rental losses can still be carried forward and used against future residential property income and capital gains — but the immediate offset against wages is gone.

Key dates and grandfathering:

• Properties already owned (or under contract) before 7:30pm AEST 12 May 2026 are fully grandfathered — existing investors are completely unaffected until they sell.
• New residential builds retain full negative gearing regardless of when purchased.
• Widely held trusts and super funds (including SMSFs) are explicitly excluded from the restriction.

What this means for SMSFs

Important reminder: standard SMSF property rules still apply in full

Thinking about your personal investment property?

A question we're hearing from clients is: "I own an investment property personally and the negative gearing changes affect me — is there anything I can do?" While the property itself cannot be transferred or sold into an SMSF, there are other strategies worth exploring in your broader financial picture.

One option worth discussing with your accountant: if you sell an investment property and realise a capital gain personally, you may be able to use carry-forward concessional contributions to reduce your personal taxable income in that year — potentially offsetting some of the tax cost of the sale. This relies on having unused concessional cap space from prior years and a total super balance under $500,000 at 30 June of the previous year.

Update 3

Discretionary Trust Minimum Tax: A Big Change for Clients with Family Trusts

This is the update most likely to affect superco clients who use a discretionary (family) trust alongside their SMSF. From 1 July 2028, a 30% minimum tax will apply to the taxable income of discretionary trusts. This is significant.

How the new minimum trust tax works

Currently, discretionary trusts pay no tax at the trustee level. The trustee distributes income to beneficiaries, who each pay tax at their own marginal rates. This flexibility has allowed families to distribute income to lower-taxed beneficiaries (e.g. adult children, a spouse on a low income) to reduce the overall family tax bill.

Under the new rules:

• From 1 July 2028, the trustee of a discretionary trust pays a 30% tax on the trust's taxable income.
• Non-corporate beneficiaries (individuals) receive a non-refundable credit for the tax paid — this avoids full double taxation, but doesn't generate a refund if the beneficiary's rate is below 30%.
• Corporate beneficiaries (bucket companies) receive no credit at all — an anti-avoidance measure targeting the use of companies to defer or reduce tax on trust distributions.
• The minimum tax will not eliminate the benefit of trust structures for higher-income beneficiaries (those already on 30%+ marginal rates) — the credit covers their tax liability.

Trusts that are excluded

Not all trusts are caught. The minimum tax does not apply to:

• Fixed trusts and widely held trusts (including most managed investment schemes and unit trusts)
• Complying superannuation funds — including SMSFs
• Deceased estates
• Charitable trusts and special disability trusts
• Discretionary testamentary trusts that existed at 12 May 2026 (Budget night)

What this means for SMSF clients

The bigger question for many clients is whether their discretionary trust structure remains the right vehicle for holding assets outside of super. For clients with trusts distributing to lower-income beneficiaries, the 30% floor significantly changes the economics.

Rollover relief: a restructuring window

To ease the transition, the Government is providing expanded CGT and income tax rollover relief for three years from 1 July 2027 to 30 June 2030. This allows eligible businesses and individuals to restructure out of a discretionary trust into a company or fixed trust without triggering immediate CGT or income tax consequences.

Update 4

$20,000 Instant Asset Write-Off Made Permanent

A straightforward piece of good news for clients who run small businesses alongside their SMSF: the $20,000 instant asset write-off has been made permanent from 1 July 2026.

Small businesses with an annual turnover of up to $10 million can immediately deduct the full cost of eligible assets costing less than $20,000, rather than depreciating them over time. This reduces taxable income in the year of purchase and improves cash flow. Previously, this threshold had been extended annually on a temporary basis — making it difficult to plan capital investment with confidence. Making it permanent removes that uncertainty.

Eligible assets include business equipment, tools, technology, vehicles, and fitout items below the $20,000 threshold. Assets must be first used, or first installed ready for use, in the relevant income year. The $20,000 applies per asset — multiple assets each below $20,000 can each be written off immediately.

Update 5

Company Loss Carry-Back Made Permanent

From 1 July 2026, eligible companies with global turnover under $1 billion will be able to permanently carry back losses against tax paid in the prior two income years and receive a cash refund.

For small business clients operating through a company structure, this is valuable — particularly during economic downturns or difficult trading periods. If your company paid tax in 2024–25 and reports a loss in 2025–26, it can apply that loss to generate a refund of previously paid tax. The refund is capped by the company's franking account balance.

A separate start-up loss refundability measure from 1 July 2028 will also allow new businesses in their first two years to claim a refundable tax offset for losses, capped at the FBT and PAYG withholding paid on employee wages.

Update 6

Personal Income Tax Cuts and the $1,000 Instant Deduction

The Budget confirms two further rounds of personal income tax cuts, plus a new instant work-related deduction:

For SMSF clients, the personal income tax changes are primarily relevant to members who are still working — where wages and salary remain part of their taxable income. The cuts reduce the overall marginal rate at lower income levels, which may modestly affect the relative attractiveness of concessional super contributions (which save tax at the margin between the member's rate and the 15% fund rate). The $1,000 instant deduction is specifically for employees making work-related expenses — it doesn't apply to investment income or SMSF activities.

Update 7

Super-Specific Budget Measures

Division 296 — Royal Assent confirmed

The Budget confirmed that the Treasury Laws Amendment (Building a Stronger and Fairer Super System) Act 2026 — which formally legislates the Division 296 tax on super balances above $3 million — received Royal Assent on 13 March 2026. This is not a new announcement, but confirmation that Division 296 is locked in law. It applies from 1 July 2026.

If you have a total super balance approaching or above $3 million, the CGT cost base reset election window — which must be lodged by the due date of the 2026–27 SMSF Annual Return — is now in play. See our dedicated Division 296 post for full detail.

Low Income Superannuation Tax Offset (LISTO) boost

The Budget confirmed a boost to the LISTO, which provides a super contribution refund of up to $500 for lower-income workers. Around 1.3 million Australians earning under $37,000 will benefit. For SMSF members receiving LISTO payments, those amounts need to be correctly recorded and reported in the fund.

Super performance test review

The Government has opened consultation to review and potentially strengthen the super performance test, which measures APRA-regulated funds against benchmarks. This is more relevant to large APRA funds than SMSFs — but SMSF trustees comparing their fund's performance to benchmarks should note that no formal SMSF performance test exists.

ASIC governance for managed investment schemes

$7.6 million over four years has been allocated to ASIC, the auditing standards board, and Treasury to strengthen governance requirements for managed investment schemes. This primarily affects retail managed funds but may tighten the compliance environment around unlisted trusts — a category some SMSFs invest in.

Budget Changes at a Glance: SMSF Impact Summary

Table reflects Budget announcements as at 12 May 2026. Measures requiring legislation may be amended or may not proceed.

The Bottom Line

For SMSF trustees, this is one of the better Budgets in recent memory — not because of what was announced for super, but because of what wasn't. The two biggest tax reforms (CGT discount and negative gearing) explicitly carve out super funds. The discretionary trust minimum tax does the same.

If anything, the relative tax advantages of growing and holding wealth inside a complying SMSF have strengthened compared to personal or trust-based alternatives. The gap between the 0% pension phase tax rate and the 30% minimum personal CGT rate from 2027 is now wider than ever.

The area requiring the most attention for many clients is the interplay between their SMSF and any discretionary trust structures they operate. If you currently use a family trust alongside your super — or are considering restructuring assets between the two — the 2027–2030 window is worth planning around.

As always, this Budget introduces changes that need to be read alongside your specific circumstances. If you have questions about how any of these announcements affect your fund, talk to us.

This post contains general information about the 2026–27 Federal Budget announcements only. It is not financial product advice, tax advice, or legal advice. Budget measures are proposals until legislated — some measures may be amended or may not pass Parliament. SuperCo Pty Ltd is a registered tax agent and SMSF specialist accounting firm. We are not a licensed financial services provider. Please speak with your SMSF accountant about how these changes may affect your specific situation. Information reflects Budget announcements as at 12 May 2026.