Federal Budget 2026-2027: key impacts and insights for managed funds

The main impact for managed funds is the change relating to the CGT regime that will end the 50 per cent discount for individual and trust investors for gains on disposals of CGT assets made from 1 July 2027 (whether fund assets or investors redeeming their units), to be replaced with a new cost base indexation regime and provided a minimum 30 per cent tax is paid on the capital gain. The CGT discount for superannuation funds appears to be unaffected by this announcement.

Under the proposals, if a property is acquired prior to 1 July 2027, any gain on the sale will benefit from the existing 50 per cent CGT discount (where the usual eligibility conditions are satisfied) up to 1 July 2027, after which gains will be calculated under the new method. These changes are not yet law and draft legislation is still to be introduced – the final legislative outcome may differ from what was outlined in the Budget announcements. 

If legislation that is consistent with the announcements is ultimately passed, then, if the property is sold after 1 July 2027, it will likely impact the way any capital gain of the fund will be taxed. Investors should seek their own advice on the potential impact of the proposed changes on their investment.

It seems that residential funds (including build to rent) will be eligible to retain the 50 per cent CGT concession as part of the government’s policy objective of encouraging investment in new housing stock, creating a tax advantage for these types of funds.

Trustees and managers will also need to consider whether they need to update tax disclosures in their PDS and IM documentation to account for these changes.   

While changes were announced to limit negative gearing in respect of residential property to new builds, these changes won’t affect widely held property funds or build-to-rent arrangements.