2026 Tax Update: Negative Gearing Restrictions, CGT Indexation Changes, and the Discretionary Trust Tax Delay

In this episode of Wealth Coffee Chats, financial advisor and retirement tax specialist Anthony Wolfenden breaks down two major tax reform bills currently before the Senate and their potential impact on Australian investors, business owners, and taxpayers.Anthony examines the proposed changes to negative gearing and Capital Gains Tax (CGT), explaining how residential property investors may lose the ability to offset rental losses against salary income for certain properties purchased after May 12, 2026. He also discusses the planned phase-out of the 50% CGT discount from July 1, 2027, which would be replaced by an inflation-indexed cost base and a new 30% minimum CGT rate.The episode also explores the growing opposition from professional bodies such as CPA Australia, the Tax Institute, and the National Farmers Federation, which have raised concerns about legislative gaps, compliance burdens, and the potential impact on family farms and succession planning.What We CoveredIncome tax cuts reducing the lowest marginal rate from 16% to 15% in 2026 and 14% in 2027.A new permanent $1,000 receipt-free deduction for eligible work-related expenses.The Working Australians Tax Offset (WATO), providing up to $250 annually from 2027–28.Negative gearing restrictions for certain residential investment properties purchased after May 12, 2026.The proposed replacement of the 50% CGT discount with an indexed cost-base system and 30% minimum CGT rate.Industry concerns over unresolved legislative details and compliance challenges.Risks to family farm succession planning under existing asset and CGT thresholds.Delayed implementation of proposed discretionary trust distribution tax changes.New corporate loss carry-back provisions for eligible businesses with turnover under $1 billion.Recent court decisions limiting the ATO’s ability to tax the global income of certain non-residents.Key TakeawaysReview property investment strategies if purchasing residential property after May 12, 2026.Reassess discretionary and testamentary trust structures while proposed trust tax changes remain delayed.Consider whether corporate loss carry-back provisions could improve cash flow for eligible businesses.Monitor Senate committee findings and legislative developments, as significant amendments or implementation delays remain possible.