Federal Budget 2026: Initial Analysis of Tax Reform

I have put pen to paper and am keen to share my top line commentary on the May 12 Federal Budget.

1. There is SIGNIFICANT change – even more than probably expected and reported – including the end of tax free pre-CGT assets and in fact a minimum 30% tax on most capital gains.
2. I don’t use the word reform because the changes are going to be staggeringly complicated. There is no simplicity in these measures.
3. As a result it is going to be a very busy time over the next 3 years for tax accountants and lawyers. More costs for small business.
4. It’s a great time to be a valuer! Basically every asset (properties, shares in private companies and businesses) will need to be valued. With the ATO already attacking valuations, there is likely to be a lot of future litigation regarding valuations.
5. There will be a lot of restructuring but we cannot yet say for certain what that restructuring will be. We will have to wait and see the detail of the new provisions which will provide a lot of uncertainty for some time.
6. The Government has not released any rules for the taxation of the start up and technology space – fundamental to the future growth of our economy. Decision on these rules has been set aside for future consultation. This will delay or even stop important investment into Australia likely to limit the future opportunities for younger workers.
7. The older generation who are benefitting from negative gearing on residential properties are still able to do so. The younger generation will miss out potentially broadening the wealth gap rather than the intended closing of the gap.
8. It is going to be harder for the younger generation to create wealth – they will be taxed much more heavily than the previous generation.
9. There are still large taxes on earnings. There was very little done to reduce the tax payable on earnings.
10. While the Labor faithful will feel better that the rich are not getting away with as much, there is little benefit for them. A yearly tax saving of less than $1,000 is not going to provide much assistance.

And finally in the meantime the politicians will have $77B of additional taxpayer’s money to spend responsibly. Now surely there will be no conjecture around that!

Greg Vale