Navigating the New Tax Landscape: Strategies for Super and Investment Post-Budget

The Australian federal budget has proposed changes to capital gains tax (CGT) and negative gearing, leading financial experts to highlight several strategies for individuals to consider regarding their superannuation and investment planning.

The proposed changes are scheduled to take effect from July 1, 2027.

Key Proposed Budget Changes (Effective 1 July 2027)

• The 50% CGT discount will be replaced with an indexation-based discount.
• A minimum 30% tax rate will be introduced on future capital gains.
• Negative gearing will be limited to new build properties.

Seven Strategies for a Changing Environment

Financial contributor Bec Wilson, author of "How to Have an Epic Retirement," outlined seven financial strategies that she argues have become more attractive following the budget announcement. These are presented for general informational purposes and do not constitute financial advice.

1. First Home Super Saver Scheme (FHSS)

Eligible first-home buyers can make voluntary super contributions (up to $15,000 per year, $50,000 total) and withdraw them for a home deposit. Contributions inside super are taxed at 15%, which Wilson notes is lower than potential tax on external investments under the new CGT rules.

2. Super Co-contribution

Parents can gift $1,000 to an adult child earning under $47,488 per year. If the child contributes that amount as an after-tax super contribution, the government may add up to $500. These funds may later be withdrawn via the FHSS scheme.

3. Catch-up Concessional Contributions

Individuals with a total super balance under $500,000 can use unused concessional caps from up to five prior years. The current cap is $30,000, rising to $32,500 from July 2026.

4. Downsizer Contribution

People aged 55 and over can contribute up to $300,000 (or $600,000 per couple) from selling a home owned for 10+ years into super, outside normal contribution limits.

5. Gradual Asset Sales

Wilson suggests spreading asset sales over multiple financial years and using capital losses to offset gains.

6. Family Home and Mortgage

The family home remains CGT-exempt and is not counted in age pension asset tests.

7. Early Financial Help for Children

Wilson proposes that assisting children earlier (e.g., with home deposits) may be more tax-efficient than leaving an inheritance.

Expert Commentary: Super is Increasingly Attractive

"Superannuation is set up to be an increasingly attractive option after this Federal Budget." — Anna Shelley, AMP's Chief Investment Officer

AMP analysis of ATO data indicates that many Australians are not fully utilizing their concessional contribution caps, even as retirement approaches.

Noel Whittaker, a money columnist, responded to reader queries regarding the budget changes. On the topic of negative gearing, Whittaker advised:

"The secret is to focus on the potential of the property and treat any tax benefits as icing on the cake."

Retirement Preparedness: The Worry Gap

A report from Colonial First State (CFS) titled "Rethinking Retirement" (2026) found that 49% of Australians do not feel prepared for retirement. Among that group, 56% are actively worried. Among those who feel prepared, the worry level drops to just 15%.

Key CFS Report Findings

• The difference between worried and non-worried individuals correlates more with whether they have assessed their financial position than with their superannuation balance size.
• A couple with $500,000 in super can generate a similar retirement income to a couple with $1 million, due to the age pension.
• The amount Australians believe they need to retire comfortably has crossed $1 million, a $183,000 increase in one year.
• Nearly two in three women worry they will not have enough for retirement, compared to under half of men.
• The primary reason for not engaging with superannuation is perceived complexity (over a third of disengaged members).

Bec Wilson noted that anxiety about retirement is often reduced by understanding one's financial position. She advised logging into super fund apps to run retirement calculators.

The $2.5 Billion Superannuation Transition Gap

Research commissioned by super fund HESTA indicates that Australian retirees are collectively losing an estimated $2.5 billion annually by not transitioning their superannuation to the tax-free retirement phase.

When super remains in the accumulation phase, investment earnings are taxed at 15%. In the retirement phase, investment earnings are generally tax-free up to a specified transfer balance cap.

HESTA Research Findings

• Approximately 1.8 million Australians missed out on an estimated $2.46 billion in additional investment earnings last financial year because they did not move their super to the retirement phase when eligible.
• Making this transition could increase total retirement income by up to 12% , potentially adding as much as $99,000 for individuals compared to delaying the move by four years.
• HESTA projects that without changes, 2.9 million Australians could be affected by 2030, leading to over $5 billion in annual losses.

HESTA is advocating for amendments to superannuation laws to enable funds to actively assist eligible members in transitioning to retirement phase products, while allowing for opt-out options.

Tax Implications for Inherited Property and Family Trusts

In response to a reader query, Noel Whittaker explained that transferring an inherited Sydney property now would trigger a capital gains event. The property, purchased in 1955 for £2,940 and transferred to the reader in 2009 at a probate value of $550,000, currently has a net value of approximately $1.9 million.

Whittaker advised that no immediate action is required as the 50% CGT discount is grandfathered until July 1, 2027. If the property is left in the will, the son inherits the cost base; if sold shortly after, CGT is based on the original cost base.

Regarding the proposed flat 30% tax on trusts, Whittaker suggested paying salaries of at least $45,000 each to family members to reach the 30% bracket, with the balance as trust distribution or super contribution.

Context and Caveats

• All recommendations attributed to financial experts are general in nature and not intended to influence financial decisions.
• The proposed budget changes to CGT and negative gearing are scheduled to take effect from July 1, 2027.
• Gains accrued before July 1, 2027, remain under existing rules; only gains after that date are subject to the new minimum 30% tax rate.
• Readers are advised to seek professional financial advice tailored to their individual circumstances.