Uncensored Money Season Eight: The Budget without the BS: What the 2026/27 Federal Budget Actually Means for Your Money

Melissa Browne: Ex-Accountant, Ex-Financial Advisor, Ex-Working Till I Drop, Now Serial Entrepreneur & Author, Financial Wellness Advocate, Living a Life by Design | 14/05/2026

Show Notes

Last night's Federal Budget made a splash — but did it go far enough? In this episode, Mel gives you her unfiltered take on the 2026/27 Budget and walks you through exactly what's changing, who's affected, and what (if anything) you actually need to do about it.

No political spin. No media clickbait. Just plain-English answers from someone who's spent 25 years in accounting and financial education.

In this episode, Mel covers:

• Her honest take on the Budget — and why she thinks Labor stumbled on the biggest reform opportunity
• The Working Australians Tax Offset and the lifted $1,000 receipt-free deduction threshold
• Negative gearing changes for established properties — who's affected, who isn't, and the critical timeline
• The new build exemption and why Mel has thoughts
• Capital Gains Tax explained through Maxine's story — a worked example showing how the 50% discount, indexation, and the new minimum 30% tax rule all fit together
• What happens to pre-1985 assets (this one matters for older investors)
• The crackdown on discretionary trusts and income splitting
• Small business wins — including the permanent $20,000 instant asset write-off and loss carry-back rules
• The NDIS overhaul and what it means for 160,000 Australians
• Support changes for young people at risk of homelessness
• Mel's action list — five things to actually do with this information

This podcast contains general information only and does not take into account your personal circumstances, objectives or needs. Please speak to a licensed financial adviser, accountant, or tax professional before making any financial decisions based on the content of this episode.

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Transcription

Mel: Hey, it's Mel here for a solo episode where I'm talking everything federal budget. And even though we're not talking shares, I'm still going to drop the ASIC warning where we are licensed here to give general advice only. Nothing here is personal advice. And as always, if you're after personal advice, make sure you speak to a professional like an accountant or a financial advisor.

So last night the federal budget dropped and if you have spent a lot of this week scrolling headlines trying to figure out whether you should be panicking, celebrating or maybe even selling your investment property, I want you to take a breath because we are going to walk through it together. No political spin, no media click bait. Just what these changes actually mean for your investments, your wealth creation and your bank account.

This is my edition of Budget Without the BS 2006-27 edition. So let's get into it. Now, before I get into the line items, because I know that's what you're here for, what the budget means for you, I want to give you my honest take on this budget, the budget without the BS. And if I had to describe it in one sentence, this is the budget that made a splash with tax reform, but in my opinion, didn't go far enough. And that might surprise you because look, I'm going to be honest, you might not know this about me, but I'm a genuine swing voter. So in, if I look at the last half a dozen elections, I've either chosen not to vote, I voted liberal, I voted labor and I voted green. So this isn't a political hot take. This is a financial educator take from someone who is a genuine swinging voter. But here's what I mean. I believe at the moment, labour has a real opportunity to create reform. They hold the majority federally, they hold the majority in the Senate, and they hold the majority across many states. And sure, there are some genuinely meaningful changes in this budget, and we'll get to them today. But I believe that they are stumbling and they are cow-towing to pressure, particularly from oil and gas and from international pressures, where it really matters. Because the biggest lever for wealth distribution in this country, it's a 25 % tax on fuel and gas exports. And government released a really teeny little announcement while the whole media was in lockdown last night. And that announcement was, they're not going to look into it. They're not going to be doing anything about a 25 % tax on fuel and gas exports, all drowned out by the noise of capital gains ⁓ and negative gearing. But here's why this could make such meaningful change, far more meaningful. It's not to say we don't need personal tax reform, but this would make such a big difference.

We could be looking at free childcare. We could be looking at free schooling, public housing, real infrastructure changes. And it can't be in this budget because we don't have the dollars for it. But we would if we had a 25 % tax on fuel and gas. And why we don't is because our federal government are bowing to pressure from fuel companies, gas companies, unions and international governments. They also haven't told us when the promised income tax that they talked about in the budget are coming. And that's concerning for me. I think that they would have built more trust if they said, here's everything we're taking from you and we're doing it to redistribute wealth through income tax cuts. We're just not telling you what they are and when they're coming. And they've left negative gearing in place for new bills, which I absolutely have thoughts about. Again, I think that is a kowtowing to the construction industry, because if we're going to remove negative gearing.

Let's remove negative gearing across the board. But here is what I will give them. This is not a beige budget. This is not an election budget. This will make them wildly unpopular with boomers. But what this is, it's a swing at younger voters. And honestly, our housing market is so cooked that I believe something had to happen, even unpopular things. So credit where it's due.

There's actual courage in some of these changes and there's good things and some things are grandfathered where people have relied on things to make wealth creation decisions and they are going to continue receiving those things like negative gearing. My hope, however, is that state governments follow through, especially on residential lease legislation. So renters and also landlords can have some certainty and people are getting booted out every 12 months because the federal government have already acknowledged that this is only going to make fix like 4%. It's going to move the needle a tiny amount. And what it probably will do is it's not going to drop property prices, but it won't be that gallop forward. ⁓ So there is still it is still problematic. So we need to protect renters knowing they're probably not going anywhere anytime soon. But that is my opinion. Let's get into what this actually means for you.

We're going to start off with some good news and that is tax cuts and tax deductions. So the Working Australians Tax Offset or Waitara because we love an acronym in the financial world. So from 4th of July, 2027, you're going to get an extra 250 bucks at tax time in your pocket. Is that amount life changing? No. Is it a coffee a week? No barely, but at least it's something. The bigger win for most of you, especially if you're a payable, you go employee who hates keeping receipts. And let's be honest, that's most of us, is you can now claim $1,000 in work related expenses without keeping receipts. So that's up from $470. So nearly double. So that kicks in for your 2026 and 27 returns. So not this tax return that we're in now, but the 27 year tax return.

So if you've been throwing out receipts and stressing about it, you can relax a little, the threshold got a lot friendlier. But the big one is negative gearing and this is where it gets interesting. So negative gearing on established properties is being abolished. But, and this is really important, but only for properties bought after budget nine. So let me break this down because there's a lot of confusion floating around.

Now, if you already own a negatively geared investment property, nothing changes for you. You keep claiming carry on. Nothing changes. Now, if you signed a contract before budget night, but the property hasn't settled yet, you're also OK. You can negatively gear it going forward until you sell it. Properties held in trusts and super funds also fine. So who does this actually affect?

Well, anyone buying an established investment property after budget night, so after 7.30 p.m. on the 12th of May. And here's the timeline, just so you really understand it. So if you buy an established property, so not a new property, but an established property in, say, August 2026, you can still negatively gear it until 1st of July 2027. But after that date, you can't apply those rental losses against your income anymore. But, and this is the bit that many people are missing, those losses don't disappear. They get carried forward and can be used to offset capital gains tax when you eventually sell. Now, the exception is new builds. So if you were to buy a brand new property or apartment newly constructed, you can still negatively you. And that's the government trying to incentivise housing supply.

And my opinion is also kowtowing to the construction industry. But my honest opinion, I would have liked them if they're going to, if you're going to remove negative gearing, remove it completely. Like remove it for the new building exemption too. Because I don't think it's going to create the supply they're hoping for. Even in the modeling that the government's done, they've admitted it's not going to create the supply they're hoping for. But that's the framework we've got.

The next massive change that is all over the media today, this week is capital gains tax. And with this, I want to use a case study to show you how it's going to work. I think that there's been a lot of confusion. So I'm going to slow it down. I'm going to walk you through it properly because I've got to be honest, the headlines have been all over the place. So before I do, here's what's changing.

From 1st of July, 2027, the existing 50 % capital gains tax discount, so the one where you halve your profit before being taxed, as long as you've held the asset for over 12 months, that's being scrapped. And what replaces it is something called an inflation indexation model. yes, inflation of every year, that's what's going to be applied. ⁓to the growth rather than a flat 50%. And honestly, this is the system when I was an accountant back in the day that we used. John Howard brought in the 50 % rule. So this is a relatively new scheme anyway. So we're just going back to the old system and we're increasing it with inflation, which to be honest is fair. So in many ways, we're going back to the future here. Now,

Under indexation, so under the new rules, you only get taxed on the real gain, meaning the gain above inflation. Plus, there's a minimum 30 % tax rate that kicks in for property and shares sold from 1st of July, 2027. It's also really important to understand that prior to...assets that were capital gains tax exempt, meaning they were bought before 1985, they simply didn't form part of the capital gains tax rules. They're now caught in this net, they're now being included. So you might have something that you think, oh, no, it's an investments pre-1985 investment, never have to worry about capital gains tax when I sell, now you do. So that's the abstract. Let's talk, walk it through with a real example because this one, this case study that I've created will actually show you how both the old system and the new system will work together. Because if you buy your property from first of July, 2027, it's really easy. It's the new system. But if you own shares and you might sell them one day or if you own a property and you might sell them one day, that's where it's important to understand how it works. meet Maxine.

Maxine buys an asset, let's say it's some shares on the 1st of July 2025 for $4,000. Easy, right? Now let's fast forward to 1st of July 2027. That's that magical date that we all will now need to have in our head as to when the new system kicks in for everyone and everything except for certain things like your home, for example. That 1st of July, 2027 is our new important date for when the new rules kick in. So Maxine's asset, as it, when we index it full, using what's considered fair value with the indexation rules is $14,000. So it's increased in four years from four to $14,000. So in those first two years, she's made a gain of $10,000.

So let's say that in this example, she holds it for another year and in 30th of June, 2028, she sells the whole parcel of shares for $35,000. So she bought it for 4,000. As of 1st of July, 2027, they were worth 14,000. And at 30th of June, 2028, she sells the whole thing from $35,000.

So from 1st to July 27, when it was worth 14, to when she sold it 35. So from the transition date, that's what we call 20 July 27 now, to the sale, she's effectively made another $21,000. Let's also say she happens to earn $10,000 in interest income that year. That's all the other income that she has. So.

This is how the tax treatment works. And this is a bit I want you to really hear because I've got to be honest, it's actually pretty fair. So for the gain that happened before 1st of July, 2027, that $10,000 because it moved from $4,000 to $14,000 before that transition tax kicked in, Maxine still gets the old 50 % discount. So she only includes $5,000 of that $10,000 gain in her taxable income. The government isn't being retrospective with this, so your past gains are protected. But for the gain that happened after 1st of July, 2027, that $21,000, that's where the new rules apply, the indexation. So let's say if we applied indexation with the government figures that they're going to release, the tax office figures, let's say that that increased her cost base by $1,000. So now instead of a $21,000 gain, she's taxed on a $20,000 gain. So Max's total taxable income for the 2028 year looks like this and bear with me, I'll go really slowly. Interest income of $10,000, the discounted pre-1st of July, 2027 gain of $5,000 and the indexed post July 2027 gain of $20,000, meaning her total taxable income is $35,000. But remember, the government said there is a minimum 30 % tax on gains. And this is where that kicks in. And this is the bit people are getting confused about. So on 35,000 of taxable income, Maxine normally sits in the same 14 % tax bracket on average.

So she'd ordinarily pay 14 % on that $20,000 post-July gain. But the new rules say that there's a minimum 30 % effective tax rate on that post-July 2027 portion. So Maxine has to top up the difference. So 30 % minus 14 % is 16%. 16 % of 20K is $3,200 extra tax which means she would end up paying $6,000 in tax on that part of the gain instead of $2,800. Now, here's, which I can hear some people going, but that's unfair. And I hear you, I hear you, but this is the rules. This is the rules that we have, right? But here's the part I want you to hear because this is where the design of the rule changes.

So let's say instead of just having $10,000 interest only, let's say Maxine had been earning a salary. Let's say she had 40K on wages, $40,000 of wages. So her new total taxable income now would be $75,000 instead of the previous example when it was $35,000. And at $75,000, she's already in the 30 % tax bracket. So no top-up applies.

So that extra tax that Maxine had to pay of $2,800 in the previous example, because she wasn't paying enough, she wasn't paying the minimum 30 % tax. Here, suddenly, she's not having to pay a top up. And what that tells you is this rule isn't really designed to hit everyday earners. It's designed to stop very high net worth people structuring their affairs to have tiny taxable incomes while realising huge gains. So if you're a normal pay as you go earner, this minimum tax rule probably doesn't touch you. Where it bites is low income years, so early retirement before the pension, career breaks, that kind of thing, which I absolutely see as problematic and also, I've got to be honest, kind of unfair.
But it's also worth noting that age pensioners and certain income support recipients are exempt from the 30 % minimum altogether. But here's the thing, I believe they will keep massive, this hasn't been legislated yet, and I believe this is a portion that the government didn't intend to cut people out. So there are some people that get caught up in that 30 % example where it genuinely is going to be unfair.

So we'll just have to apply a wait and see what happens when this is actually legislated because this budget isn't legislated yet. It has to go out to the Senate. They've got to decide on what's in, what's out. But remembering that the Labor government really is able to push it through if they want to. But here's the thing that I really want you to understand. Please don't make decisions about selling assets based on this.

Go and see an accountant. you are going to sell something before, well, first of all, don't make a decision to sell something based on tax. Go and if you are genuinely concerned, what I would do is I would go and speak to your accountant. Not yet. They need time to digest this too. And also what they're going to say to you is just hold on. And because one, the changes don't come until 1st of July, 2027 yet.

And also let's see what's actually legislated before you make any decisions. But especially if you're going to sell an asset in a low income year, the timing of when you sell could genuinely change your tax bill. So having a relationship with a good accountant and speaking to them before you sell is going to matter more than it ever used to. So.

A few quick other capital gains tax points before we move on.

Pre-1995 assets, as I said, this one's a big deal for older investors that have had these for a while. So assets bought before 20th of September, 1995, used to be completely exempt from capital gains tax, as I said. The blanket exemption has gone from 1st of July, 2027. So if you've got an old commercial property or artwork from the early 80s sitting in the family, you might want to go get advice. The other thing to understand is superannuation.

So your superfund keeps its existing one third CGT discount inside super nothing changes, which is yet another reason why super remains one of the most tax effective places to invest. And you can see what the government is essentially wanting you to do here. So that's the swap.

Now, the next change which is going to affect far less people is with trusts and the income splitting crackdown. So if you have a discretionary trust, or if you've been thinking about setting one up, you really need to pay attention. Because from the new rules is a minimum 30 % tax rate on distributions from discretionary trust. And what that means in practice is that the strategy of distributing trust income to adult children or low income spouses to reduce your overall tax bill is effectively being scrapped.

You can still do it, but the tax benefit largely evaporates. So if income splitting through trust has been a core part of your structure up till now, it's absolutely worth a conversation with your accountant about whether having a trust still makes sense for you. And the ATO has been attacking trust for a long time. They really hate it. I'm not surprised to see that this year.

But let's go back to wins because we need some rights. So some genuinely good news. If you run a small business, the $20,000 instant asset write off is being made permanent. So it's all locked in. That's a great thing. Also from 1st of July, 2028. And I think this is a really good one. So more businesses under two years old will be able to get a tax refund on their losses, which is a huge deal for startup cashflow. And this is the other thing that I really like.

Small businesses can use current losses to claim a tax refund on profits in previous years. So in the past, you could roll those losses forward and apply them against future profit. Now, like the year you have a loss is often the year you need the cash flow. And now you can go back to use amend to use worth of returns. I imagine that's how they'll do it and get that cash back, which is great. I guess the only other thing that's worth mentioning is the NDIS and the stuff that doesn't sit right because the NDIS has been a system that has been too easily rorted for too long. It's a great system for people that need it, but it has been rorted. So there's a long overdue reform of that. And on the more hopeful side, young people aged 16 to 24 at risk of homelessness will receive extra support through the away from home rate of youth allowance or ab study. So a really meaningful change for some really vulnerable kids.

So what does all this mean for you? Like this is the action list because we want to take something away. So what do you actually do with this information? Well, first of all, if you own a negatively geared investment property, breathe because nothing changes for you. Second, if you're thinking about buying an investment property, you need to be much more deliberate because the maths has shifted.

Get advice before you sign anything and understand that if you were relying on negative gearing provisions, if you've already signed a contract, great, breathe, you are allowed to have negative gearing rules. However, if you haven't, and it's going to be negatively geared, you can't claim that against other income. You can only roll those loss forward. It's only with new properties that you're able to get negative gearing. But let's be honest, we shouldn't be doing things just for the tax advantages anyway.

Third, if you've got pre-1985 assets, I really think it's worth a visit to your accountant once this is all legislated genuinely before 1st of July, 2027. So you could decide what's actually right for you. Fourth, if you have a discretionary trust, again, talk to your accountant about whether the structure still works for you.

Before 30 June is a great time to change your structure. Before the new financial year hits, this might be a great time to do some tax planning and look at whether a structure changes right for you. And finally, if you're a small business owner, get familiar with the new lost carry back rules and the permanent asset right off. There's real money to be claimed there. And if you are not doing tax planning with your accountant,

There's some real opportunities to do that. So go and talk to a great accountant about exactly what to do.

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