MLC has released analysis of Tuesday’s Budget and its impact for advisers.
Following last night’s Federal Budget, MLC has prepared an analysis outlining key measures and their implications for advisers and clients.
Key measures proposed
-
Tax and cost-of-living: A $1,000 instant tax deduction for work-related expenses and a $250 annual Working Australians Tax Offset will be introduced. The lowest marginal tax rate will reduce to 15% from 1 July 2026 and 14% from 1 July 2027, with Medicare levy thresholds also increasing.
-
Investment and property: From 1 July 2027, the 50% CGT discount will be replaced with CPI indexation, alongside a minimum 30% tax rate on capital gains. Negative gearing will be restricted for newly acquired established residential property, with losses carried forward.
-
Trusts and small business: A 30% minimum tax will apply to discretionary trusts from 1 July 2028, with transitional relief available. The instant asset write-off will be permanently set at $20,000 for eligible small businesses.
-
Superannuation: The Low-Income Superannuation Tax Offset will be expanded from 1 July 2027.
-
Health and care: Higher private health insurance rebates for older Australians will be removed from April 2027. Reforms to NDIS, aged care and Support at Home will expand services and adjust eligibility over time.
What this means for advisers
-
The proposed changes may result in a review of asset ownership structures across super, trusts, companies and individuals.
-
Changes to CGT and negative gearing may affect the way investment outcomes are assessed and modelled.
-
Updates to discretionary trust taxation may prompt a review of existing structures and consideration of alternative strategies.
-
Simplified tax measures may streamline tax return preparation, while substantiation may still be required where higher deductions are claimed.
-
Changes to health insurance settings and EV concessions may prompt review of existing arrangements at relevant points in time.
What this means for clients
-
Tax changes introduce a standard deduction for work-related expenses, with the option to claim higher amounts where applicable.
-
The Working Australians Tax Offset and tax rate adjustments may affect after-tax income from employment.
-
Changes to CGT and negative gearing alter how capital gains and investment property losses are treated over time.
-
Adjustments to Medicare levy thresholds may affect the amount of levy payable for some households.
-
Changes to private health insurance rebates may affect premium costs for some older Australians.
-
Updates to aged care, disability support and government payments may affect eligibility, access and out-of-pocket costs across these services over time.