Last updated on August 7th 2026
How will my SMSF be affected by the 2026-27 Federal Budget?
Self-managed super funds (SMSFs) were largely unscathed by the recent Federal Budget handed down on 12 May 2026. Changes to other tax vehicles highlight the tax advantages of SMSFs, despite the recent passing of the Div 296 legislation (the $3mil super tax).
There were some big changes to the capital gains tax (CGT) regime and negative gearing that do not affect SMSFs. An SMSF will continue to receive the 1/3 CGT discount under the SMSF Capital Gains Tax Regimen. However, changes to other tax structures may affect the SMSF estate planning process and the way contributions are made. Of course, the changes are not yet legislated, and the details will be revealed as the budget is digested and draft legislation and regulations are released.
Key budget changes
The following is a summary of the key tax changes.
| Budget change | Who is affected |
| CGT – 50% discount on assets held longer than 12 months will be replaced by an indexed cost base approach, with a minimum 30% tax rate and removal of the CGT exemption on pre-September 1985 assets– proposed start date 1 July 2027 (2027/28 year) on gains arising after that date, some grandfathering of existing rules for unrealised capital gains prior to 1 July 2027 | Individuals, partnerships and trusts |
| Investors in new residential properties will have a choice to either continue the existing 50% CGT discount rules or apply the new capital gains rules | Individuals, partnerships and trusts |
| Negative gearing – rental losses can only be carried forward for established residential #properties acquired after 12 May 2026, effective from 1 July 2027 (2027/28 year). The losses can be offset against future rental income or capital gains from the property. Can no longer be offset against other income, such as salary, wages, and investment income. | Individuals, companies, partnerships, most trusts (excludes SMSFs, widely held trusts) |
| Negative gearing for new residential properties can continue, with rental losses offset against other income. | All entities |
| Discretionary trusts will pay 30% tax on taxable income distributed to beneficiaries, with individual beneficiaries receiving a non-refundable tax credit. Companies do not receive the tax credit. Effective from 1 July 2028 (2028/29 year). Some types of income, such as primary production income, will be excluded. | Discretionary trusts, testamentary trusts, individuals and companies. SMSFs, widely held trusts, fixed unit trusts, and fixed testamentary trusts are excluded. |
# Negative gearing changes do not apply to investments made in non-residential property or other asset classes such as shares.
Is my SMSF affected?
To be clear, the following rules have not been flagged for change, but you should keep an eye on the final legislation.
| Key Tax Rules |
| CGT 1/3 discount for assets held longer than 12 months – effectively giving a 10% tax rate or even nil if the fund is in full pension mode, continues for SMSFs |
| Pre-September 1985 CGT assets are taxed in an SMSF; however, the cost base at 30 June 1988 is the greater of the asset’s market value or the asset’s cost base and no changes to this were made in the budget |
| SMSFs are exempt from the changes to negative gearing on established residential properties so buying a residential investment property within an SMSF has probably been made more attractive due to the changes |
| #Fixed unit trusts are not subject to the 30% tax on distributions paid to beneficiaries |
| No changes to the transfer balance cap increase to $2.1 million on 1 July 2026, or contribution caps rising to $32,500 for concessional (taxed) contributions from 1 July 2026, increasing the non-concessional cap to $130,000 |
| Division 296 and Payday Super will be effective from 1 July 2026 as legislated |
| Limited recourse borrowing arrangements (LRBA) remain unchanged so Bare Trusts will continue to function as normal |
# Whilst the budget papers noted the 30% tax on beneficiary distributions, we need to see how a fixed unit trust is defined for these measures to ensure it aligns with the non-arm’s length income (NALI) provisions, under which a 45% tax may apply to distributions from a trust that does not hold a fixed entitlement to the income and capital.
Other measures affecting SMSFs
In light of the collapses at the Shield and First Guardian, additional funding is being provided to ASIC to improve surveillance and data collection for managed investment schemes.
Further funding is being provided for the Counter and Fraud Strategy to prevent and detect fraud in the tax and super systems. The ATO will be given the power to pause the recovery of tax debts when a taxpayer is a victim of fraud by tax agents and other intermediaries, and may waive those debts depending on the specific circumstances. The ATO may also recover the debt from tax intermediaries.
Better and more efficient regulation, such as:
- linking Director IDs to the Companies Register
- redeveloping the ATO’s ABN and Super Fund Lookup services
Exploring the potential for taxpayers, including SMSFs, to authorise the ATO to share tax-related data with their financial adviser or SMSF administrator through the “Consumer Data Right”.