Federal Budget 2026: What Creative Business Owners Need To Know
The 2026–27 Federal Budget has generated more discussion than most budgets in recent years.
That’s because it contains several significant tax proposals that could affect business owners, investors and families who use discretionary trusts.
If you’re a creative agency owner, hospitality operator, consultant, production company or founder building long-term wealth, these changes are worth paying attention to.
Importantly, many of the measures discussed below are proposals only and are not yet law.
The final legislation may change before implementation.
However, understanding the direction of these proposals can help you make better decisions about tax planning, business growth and future investments.
Let’s look at what matters most.
Proposed Changes To Negative Gearing
One of the headline announcements in the Budget was a proposed change to negative gearing rules for residential property. The Government has proposed limiting negative gearing for residential property investments to new builds from 1 July 2027, subject to legislation being passed. Further details are available in the ATO’s guidance on the proposed negative gearing and capital gains tax reforms.
Under the proposed rules:
- Rental losses could only be offset against residential rental income or residential property capital gains.
- Remaining losses would need to be carried forward.
- Existing property owners would generally be protected under grandfathering provisions.
For creative business owners who invest in property outside their business, this proposal could affect future investment decisions.
Importantly, the changes are proposed to apply only to residential property. Commercial property investments would not be affected under the current proposal.
If you already own investment properties, the impact may be limited. If you’re planning future property acquisitions, however, it may be worth reviewing your strategy.
Importantly, these measures are proposed changes and are not yet law.
Proposed Changes To Capital Gains Tax
Another major proposal involves the Capital Gains Tax (CGT) discount.
Currently, individuals and trusts can generally access a 50% CGT discount on assets held for more than 12 months.
The Government has proposed replacing this system from 1 July 2027 with:
- Cost base indexation for inflation
- A 30% minimum tax on capital gains
Further details are available in the ATO’s guidance on the proposed negative gearing and capital gains tax reforms.
The proposed changes would apply across a broad range of assets, including:
- Investment properties
- Commercial properties
- Shares
- Business assets
Importantly, gains accrued before 1 July 2027 would continue to receive the existing CGT treatment.
For creative business owners who are building valuable businesses, intellectual property, agency groups or investment portfolios, future capital gains outcomes may look very different if these proposals become law.
Business sale planning and succession strategies may become increasingly important.
Proposed Changes To Discretionary Trusts
For many creative businesses, discretionary trusts continue to provide legitimate commercial benefits, including asset protection and flexibility.
The proposed changes are also a good reminder to review whether your current structure still aligns with your business goals. Read: Has Your Business Outgrown Its Structure? What to Review Before FY27
While the measure is not yet law, the ATO has released guidance on the proposed minimum tax on discretionary trusts.
The key takeaway is not to panic. The key takeaway is to understand how the proposed changes could affect your structure if they proceed.
Small Business Measures Worth Noting
Permanent $20,000 Instant Asset Write-Off
The Government has announced a permanent $20,000 instant asset write-off for eligible plant and equipment purchases.
This provides greater certainty for small businesses investing in equipment, technology and operational improvements.
For creative agencies and hospitality businesses, this may support investments in:
- Computers and technology
- Cameras and production equipment
- Office equipment
- Hospitality equipment
- Business systems
As always, eligibility requirements and timing remain important. Before rushing into EOFY purchases, it’s worth understanding why the $20K instant asset write-off isn’t free money and how the deduction actually works.
$1,000 Standard Deduction Proposal
The Budget also proposes a $1,000 standard deduction for work-related expenses from 2026–27. This measure is primarily aimed at employees rather than business owners. While it may simplify tax time for some Australians, it is unlikely to have a significant impact on most business structures.
What Business Owners Should Do Now
The Budget proposals have created plenty of headlines. That doesn’t mean immediate action is required.
Most of the major measures are not scheduled to commence until 2027 or 2028, and the legislation is still subject to change.
What business owners should do now is:
1. Review Your Business Structure
If your business has grown significantly over the past few years, this may be a good opportunity to confirm your structure still aligns with your goals.
2. Review Investment Plans
Future property and investment decisions may require additional modelling if the proposed negative gearing and CGT changes proceed.
3. Focus On Tax Planning Early
The most effective tax planning rarely happens in June. Regular reviews throughout the year generally provide more opportunities than last-minute EOFY decisions.
4. Stay Informed
Many of these proposals will continue to evolve over the coming months. Understanding how they affect your specific circumstances is far more valuable than reacting to headlines.
What These Budget Changes Mean for Business Owners
The 2026–27 Federal Budget includes some of the most significant proposed tax reforms seen in recent years.
- Negative gearing changes.
- Capital gains tax changes.
- Discretionary trust reforms.
Each has the potential to affect business owners differently.
The good news is that most of these measures are not yet law.
That gives business owners time to review their position, understand their options and make informed decisions. The best approach is not to react.
It’s to plan.
Need Help Understanding How The Budget Affects Your Business?
At The Pen Accounting, we help creative agencies, hospitality businesses, founders and growing businesses understand how tax changes may affect their future plans.
If you’re unsure how the proposed Budget measures could impact your business structure, investments or long-term strategy, speak with our team for tailored advice.
FAQs
No. Many of the measures discussed in the Budget are proposals only and still need to pass through the legislative process before becoming law.
Not necessarily. The trust measures are proposed to commence from 1 July 2028 and may change before implementation. The priority should be understanding your current position rather than making rushed decisions.
Potentially. If the proposed changes proceed, future capital gains outcomes could differ significantly for business owners, investors and those planning an eventual exit strategy.
Under the current proposal, many existing residential property owners would be protected through grandfathering provisions. However, future property purchases may be treated differently.
Stay informed and review how the proposed changes may affect your business structure, investments and long-term plans. The biggest mistakes often happen when business owners react to headlines instead of seeking advice based on their specific circumstances.
At The Pen Accounting, we specialise in helping creative businesses like yours achieve financial success. From bookkeeping to tax advisory and business strategy, our services are tailored to the unique needs of the creative sector in Australia. If you’re ready to take control of your financial records, contact us today and discover how we can help your business grow.
Disclaimer: This is general information only and is not advice of any sort. No warranty or representation is provided by The Pen Accounting as to the accuracy, currency or completeness of the information contained in this blog. Readers of this blog should not act or refrain from acting in reliance upon any information contained herein and must always obtain appropriate taxation and / or other advice as may be appropriate having regard to their particular circumstances.
