posted in: Investment Advice

How do the Budget changes affect my retirement plan?

There’s a lot in the 2026-27 Federal Budget, and even now, there’s still some uncertainty about what it actually means for individual retirement plans.

Over the past few weeks, we’ve been having these conversations with many of our clients, and one thing has become clear: the impact varies significantly from person to person. For some, very little has changed. For others, the implications are much more meaningful.

Ultimately, the right response depends less on the Budget itself and more on how your financial plan is structured.

What actually changed

The two biggest measures for retirement planning both relate to how investment income and gains outside super are taxed:

• Negative gearing on established residential properties is being limited from 1 July 2027. Investment properties acquired after 7:30pm (AEST) on 12 May 2026 will only be able to deduct rental losses against rental income or capital gains from residential property, not against salary or other income. Properties already owned before that date are exempt, and new-build purchases remain unaffected. 
• The CGT discount is being replaced. From 1 July 2027, the current 50% capital gains tax discount on assets held over 12 months is proposed to be replaced with cost-base indexation and a minimum 30% tax rate on the resulting gain. This applies to individuals, trusts and partnerships – not to assets held inside superannuation, which will continue under existing concessional treatment. New builds retain access to the 50% discount.

A few of the other changes that are relevant to retirement plans specifically are:

• The general transfer balance cap inside of superannuation is increasing from $2.0 million to $2.1 million from 1 July 2026, along with the concessional contributions cap rising to $32,500
• Payday Super begins from 1 July 2026, meaning employer contributions land in your account sooner
• A minimum 30% tax on discretionary trust income is proposed from 1 July 2028 – relevant if trusts form part of your retirement structure

Who’s genuinely affected – and who isn’t

This is where it gets personal, and it’s the question we’re actually spending most of our time on with clients right now.

Clients are affected by these changes whether they owned assets before budget night or planned to acquire assets after budget night. The impacts, however, vary.

But even for clients who are significantly affected, the underlying strategy hasn’t changed: buying good quality assets that grow by more than inflation over time is still the foundation of a sound retirement plan. For clients who’ve built that kind of portfolio deliberately, with a genuinely all-weather, flexible strategy, these tax changes are an inconvenience rather than something that knocks the plan off track. That’s not an accident – it’s what a properly built strategy is designed to absorb.

Zoom out before you make changes 

The instinct when a change like this lands is to look asset by asset and ask “what does this mean for this specific investment?” We’d encourage the opposite. Before making any changes, it’s worth zooming out and looking at the broader picture: what’s the five, ten, fifteen year plan?

Do you want to retire early, or travel more now? Do you want better cash flow today, or are you funding private school fees, or thinking about upgrading the car? Understanding what you’re actually trying to achieve as a family, and where you currently sit on that path, has to come before any decision about an individual asset or its tax treatment, then you work backwards from there.

If you sell a genuinely good quality asset purely because of a tax change, without a clear strategy for getting back into the market, that’s very rarely the right call. The tax saved on the sale is often smaller than the cost of being out of the market when it recovers.

It’s still important to invest in growth assets or suffer the inflation trap

Holding the majority of your investment portfolio in cash over the long-term is a sure fire way to go backwards financially. This is because over the long-term inflation and tax on interest will eat away at the real value of any investment portfolio. Whilst growth assets such as shares and property can be volatile in nature over the short term, they tend to outperform inflation over the long-term and increase the overall value of your portfolio.

Property also has the increased benefit of leverage (borrowing), allowing investors to get greater investment exposure with limited capital, which tends to turbo charge investment returns provided the selected property increases in value over the long-term.

What works for one Government, might not work for the next

Today we have a Labor government that is focused on increasing taxes and increasing investment into the Public Sector. Regardless of your political persuasion, all political parties have their focuses that are aligned with their voter base. One thing is certain though, every party has its day and no government will hold power indefinitely. 

Should we see a change in government to say a Liberal aligned party that tends to be more business focused, then there is a high probability that some of these recent reforms might be reversed. A good example of this was in New Zealand where in 2021 the Labour led Jacinda Ardern government abolished negative gearing on property investing, only for this to be reversed by the National-led coalition in 2024 as rents were rising too fast due to the lack of rental supply.

Regular wholesale changes to your investment strategy and structures to suit the political party of the day, can be very expensive and take your focus away from the main game of investing in quality assets over the long-term. 

What should you do next?

If your investment strategy includes property or other assets outside super, it’s worth understanding exactly how these changes apply to your specific situation, and whether any adjustments are genuinely warranted, rather than assumed.

For most clients with a solid, diversified strategy already in place, the plan itself doesn’t need to change, but it’s worth confirming that with someone who can look at your full picture.

If you’d like to talk through how the Budget changes apply to your retirement plan, get in touch with our team for a conversation.