On budget night, I cheekily posted a photo to social media of a bottle of whiskey and an empty glass. The caption for the photo read I’m normally a red wine type, but I think tonight I will need something harder.
Looking back, we all knew there was going to be some big announcements and let’s be clear, they happened. What we did not know is how much they could affect us.
Some two weeks after the budget was delivered, it is still making headlines as we discover and consider various aspects of this budget. I can’t quite recall a budget having such an effect. Over the next few newsletters, and as we begin to see legislation, we will give you our take on this budget. Call it the Mobility + Doctors Wealth budget reply and commentary.
My key takeaways from the budget
- Arguably greater tax collections but budget deficits for the foreseeable future;
- Taxation from companies predicted to remain stable and perhaps fall over the next four years;
- Nasty stings in the tail with respect to the taxation of trusts;
- Extra taxation and confusion regarding capital gains tax;
- Significant limitation to negative gearing;
- Housing market changes.
For this newsletter, let’s focus on a couple of these.
Economic Management
According to the Australian Bureau of Statistics in the 2021-22 financial year the federal government collected $550 billion in tax. In the 2025 year, that rose to $675 billion. In the 2026-27 financial year, the budget papers estimate this to be $737 billion.
On a per-person basis in 2022 it was $20,992. In 2027 it will be $25,769.
In the forecasts, measures regarding trusts and CGT suggest a mere $8 billion in extra taxes.
It’s hard to see how significant changes which bring in minimum rates of tax for CGT and trusts will bring in such a paltry amount. Further, given its minimal effect it’s also hard to see why the federal government would risk significant political damage for such minimal revenue gains. With the very little information we have I would suggest tax collections will, in reality, be much higher than forecasted.
The budget also highlights key savings particularly with NDIS, but we still see deficits for the next four years as national debt rises from $982 billion to $1,249 billion (yes one Trillion) by 2030.
As a concept, I can see how raising taxes can help the economy. Rising taxes removes money from the economy thereby purchasing power and therefore demand. This can be good for interest rates, however, if it is not put into reducing debt but instead spent in the economy as we have in this budget demand is fueled.
How does this help to control inflation? Demand will still be in the economy. It will simply shift funds from being spent by the private sector to government. In theory, there should be no effect on demand.
This leaves only one tool left to control inflation, the one held by the Reserve Bank. Interest rates! If the RBA is doing all the heavy lifting, expect interest rates to rise and perhaps much more than expected
Is this a missed opportunity for the good economic management being claimed by this government?
Will it provide real help with cost of living and interest rates?
Or is it simply a tax grab to fuel rampant and perhaps uncontrolled spending?
Company Tax collections & the business environment
Over the next four years, company tax collections are expected to stay stagnant and/or fall.
What does this say for the business environment? With the extra tax hikes and the budget makes various concessions for business, including extension of the instant asset write-off, at best revenues remain stagnant.
Does Treasury forecast more difficult trading conditions ahead for business? I suggest so.
In the next issue, we will look at the recently introduced legislation behind the proposed CGT changes.
Stay tuned!!
For tailored advice or further information, please contact Tony D’Agostino or Ashley Staunton. Our team can guide you as relates to your specific circumstances.
📞 Or call us on +61 7 3666 0091 to arrange a consultation.
Useful Resources:
2026–27 Federal Budget Important Insights
EOFY Small Business Tax Planning Tips
Understanding the Tax on Super
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