Could Budget changes force us to rethink how we invest?

Australians with rental properties, share portfolios and family trusts could face a very different investment landscape if the Federal Government’s proposed tax changes become law.

The measures, announced in the 2026 Federal Budget and now before Parliament, include changes to capital gains tax, negative gearing and trust taxation. While some argue the reforms will create a fairer tax system, critics say they could make it harder for investors to build wealth outside superannuation.

Investment Markets chief executive Darren Connolly believes the changes represent a major turning point.

“Investors have largely operated within the same framework for more than 25 years, so this is one of the most substantial resets we’ve seen in decades,” he said.

Why investors are paying attention

The biggest concern for many investors is the proposed overhaul of capital gains tax.

Under the plan, the long-standing 50 per cent CGT discount would be replaced by a cost-base indexation system from July 2027. Negative gearing rules would also become more restrictive, particularly for established residential properties.

Connolly believes it is the combination of changes that are important.

“Collectively, they alter the economics of how Australians build wealth,” he said.

Investors who have traditionally relied on long-term capital growth could find themselves paying more tax when they eventually sell assets, particularly those held outside superannuation.

Why super is back in focus

For many older Australians, superannuation may become an even more attractive home for long-term investments.

Connolly says the existing tax advantages available through super are unlikely to go unnoticed if the proposed reforms proceed.

“Superannuation is the clear winner and becomes more relatively attractive under the proposed framework,” he said.

“If capital gains outside super are taxed more heavily, investors will naturally consider structures that can deliver more favourable after-tax outcomes.”

That doesn’t mean everyone should rush to restructure their finances, but it does mean many investors may revisit how much of their wealth sits inside and outside the super system.

Don’t panic

Despite the debate surrounding the reforms, Connolly’s strongest advice is not to make decisions based on headlines alone.

“The biggest mistake would be making rushed decisions,” he said.

“Tax matters, but investment fundamentals matter more.”

He says investors should remain focused on diversification, income generation, inflation protection and long-term objectives rather than reacting emotionally to policy announcements.

The legislation still faces parliamentary scrutiny and may yet be amended before becoming law. In the meantime, Connolly believes investors should focus on understanding the proposals and reviewing their long-term strategy.

“The investment landscape is changing, but opportunities don’t disappear — they simply shift.”

Further reading

Looking for more information about retirement income and home equity loan options? Visit Money At 60 for articles, guides, calculators and information designed specifically for Australians aged over 60.

Disclaimer: This article is general information only and does not constitute financial, tax or investment advice. Individual circumstances vary and readers should seek professional advice before making financial decisions.