July 2026 Newsletter


Published
1 July, 2026

As we step into a new financial year, a raft of changes will take effect, so consider the opportunities and challenges ahead.

June delivered a mixed picture for the Australian economy as the new financial year begins. Headline inflation eased, but underlying inflationary measures rose to their highest level in almost two years, reinforcing expectations that interest rates may remain higher for longer. 

Domestic data highlighted ongoing structural pressures. Building approvals remained subdued, signalling persistent constraints on housing supply despite strong demand. Consumer confidence weakened, falling 2.9% to 80.6, returning to pessimistic levels after a brief improvement in May. 

Australian share markets were volatile, with the ASX 200 moving within a narrow range as investors responded to shifting rate expectations and global uncertainty.

Globally, shares delivered strong gains, however, risks remain elevated. In the United States, concerns about policy direction and financial stability unsettled markets, while geopolitical tensions including the on-again off-again ceasefire in the Gulf continued to cause inflationary and supply risks. 

The Australian dollar experienced modest fluctuations and finished July at a three-month low. 

Market movements and review video - July 2026

Stay up to date with what's happened in the Australian economy and markets over the past month.

June delivered a mixed picture for the Australian economy as the new financial year begins. Headline inflation eased, but underlying inflationary measures rose to their highest level in almost two years, reinforcing expectations that interest rates may remain higher for longer.

Domestic data highlighted ongoing structural pressures. Building approvals remained subdued, signalling persistent constraints on housing supply despite strong demand. Consumer confidence weakened, falling 2.9% to 80.6, returning to pessimistic levels after a brief improvement in May.

Australian share markets were volatile, with the ASX 200 moving within a narrow range as investors responded to shifting rate expectations and global uncertainty.

Globally, shares delivered strong gains, however, risks remain elevated. In the United States, concerns about policy direction and financial stability unsettled markets, while geopolitical tensions including the on-again off-again ceasefire in the Gulf continued to cause inflationary and supply risks.

Please get in touch if you’d like assistance with your personal financial situation.

 

What lies ahead for property investors?

Property investors are facing a whole new world this financial year following the tax reforms announced in the May Federal Budget, the ATO tightening the rules around claiming deductions for holiday homes and the government’s decision to abolish the ability to purchase residential property through self-managed super funds (SMSFs).

While there is no need to panic, the reforms will usher in significant change and require careful thought and detailed modelling of the financial implications for your investment portfolio and cash flow going forward.

New Capital Gains Tax rules

Major reforms to the CGT rules are set to take effect from 1 July 2027. The changes mean property investment assets held for more than 12 months will no longer receive a 50 per cent discount on their capital gain before tax. This will be replaced with cost-based indexation, with gains adjusted for inflation before CGT is applied.i

A minimum 30 per cent tax rate will also be introduced for net capital gains from 1 July 2027 and will apply to individuals, partnerships and companies. These tax changes will also apply to discretionary trusts from 1 July 2028.

Any capital gains made on an investment property that was held for more than 12 months and sold before 1 July 2027 will be taxed under the existing 50 per cent CGT discount rules. Gains after this date will be taxed using the new minimum 30 per cent rules.

With the window to take advantage of the current 50 per cent discount rule closing on 30 June 2027, property investors contemplating selling a rental property should seek professional advice to understand how these changes could affect their financial position.

Negative gearing changes

One of the most controversial Budget changes is to limit negative gearing for residential property investments to new builds.ii

Properties held prior to Budget night (12 May 2026) are exempt from these changes, but use of negative gearing by taxpayers purchasing established properties will be restricted. For commercial property, the current negative gearing rules continue with no change.

From 1 July 2027, investors who purchase an existing property will only be able to offset their residential investment property losses against other income from residential properties. This includes any capital gains. Excess losses can be carried forward to offset against residential property income in future years. The changes will apply to individuals, partnerships, companies and most trusts, but widely held trusts and super funds (including SMSFs) will be excluded.

New rules for holiday homes

If the Budget proposals aren’t enough to give property investors a headache, the ATO has made it clear its approach to holiday home tax deductions will be tougher.iii
Following the release of a new holiday home tax ruling, owners will now be restricted to minimal private use each year if they wish to retain access to tax deductions.

From 1 July 2026, deductions for ownership costs like mortgage interest, council and water rates, insurance, repairs and maintenance may be denied depending on when and the way a holiday home is used. Advertising and cleaning expenses, booking fees and commissions remain deductible.

Personal use during peak periods is now a signal that a property is primarily a leisure asset rather than an income-producing one. If the property is available for most of the year, but is blocked out during Christmas, Easter, school holidays and local peak periods, it is now likely to be assessed as a property that is not mainly used to generate income.

Time to reassess your property portfolio

Given this strict new interpretation of the deduction rules by the ATO, the Budget tax reforms to CGT, along with the banning of SMSFs from Limited Recourse Borrowing Arrangement (LRBA) for residential properties, property investors are urged to seek professional advice early on and review their property investment strategy in light of the changes.

Transitional rules, valuation approaches and record-keeping requirements will be critical. Investors should ensure documentation is up to date, consider timing of transactions carefully.

If you would like to discuss any of the changes and how they may affect you, please contact our office today.


i Proposed reforms to the CGT rules |Treasury
ii Negative gearing explainer | Treasury
iii Rental property deductions | ATO

Superannuation: more relevant than ever

A range of superannuation changes that came into effect on 1 July 2026, are reinforcing the role of super as one of the most tax-effective investment structures available.

For many investors, it’s not simply that super remains attractive but that the rules continue to change. Understanding these changes can help ensure your strategy takes advantage of available opportunities while staying on track with your financial goals.

  • A changing tax environment

    Outside of super, tighter rules around the use of discretionary trusts and closer scrutiny of income distributions have reduced some traditional tax planning flexibility. Combined with the ongoing treatment of capital gains, this has made tax outcomes in non-super structures less predictable for some investors.i In contrast, superannuation continues to provide favourable tax treatment. This is a key reason why super is becoming increasingly important in long-term financial planning.

  • Payday Super – boost your retirement savings

    One of the more practical changes is the introduction of Payday Super, which requires employers to pay super contributions at the same time as wages rather than quarterly.ii While this is primarily an administrative shift, it can have a real impact on individuals' super balance. More frequent contributions mean compounding begins earlier. Over time, this could lead to improved retirement outcomes.

  • Higher contribution caps create more opportunities

    From 1 July 2026, the concessional superannuation contribution cap (including employer contributions and salary sacrifice) increased to $32,500 from $30,000 in the 2025-2026 financial year. Non-concessional caps have also increased, from $120,000 in 2025-2026 to $130,000 in the 2026-2027 financial year, enabling larger after-tax contributions. This can be particularly relevant for individuals who have accumulated savings outside super and wish to transfer funds into a more tax-advantaged environment.iii

  • Carry-forward and bring-forward rules

    Two existing rules continue to offer significant opportunities when used effectively.iv The carry-forward rule allows those with a total super balance below $500,000 on 30 June in the previous financial year to use unused concessional cap amounts from previous years. This can be especially beneficial for those with irregular income patterns, such as business owners or individuals returning to work after a break. The bring-forward rule allows you to make several years’ worth of non-concessional contributions in one year, subject to eligibility criteria. This can be particularly useful when receiving an inheritance, selling an asset or restructuring investments.

  • Parental leave contributions

    Another important development is the extension of super contributions to government-funded parental leave, introduced last year. It recognises the long-term impact that time out of the workforce can have on retirement savings, particularly for women.v While the financial impact may appear modest in the short term, over time the effect of compounding can be meaningful.

  • Division 296 tax

    One of the more widely discussed measures is the Division 296 tax, which applies an additional tax on earnings associated with super balances above $3 million.vi While this affects a relatively small proportion of investors, it represents an important shift in the superannuation landscape. The measure is designed to target very large balances, with the objective of limiting the extent of tax concessions at higher levels of wealth.

  • Transfer Balance Cap increase to $2.1 million

    The increase in the Transfer Balance Cap to $2.1 million is another positive development, particularly for those approaching or entering retirement. This cap determines how much can be transferred into the tax-free retirement phase. An increase allows more capital to benefit from a zero per cent tax rate on earnings, enhancing after-tax income in retirement.

Bringing it all together

Superannuation continues to offer a compelling tax environment, particularly when compared with other investment strategies that are facing increased complexity and scrutiny.

Contribution caps, along with carry forward and bring forward rules, provide multiple pathways to build super balances over time. Changes such as Payday Super and parental leave contributions highlight the benefits of regular, ongoing investment into super and the power of compounding. While new measures such as Division 296 introduce additional considerations, they do not diminish the overall value of super for most investors.

Please get in touch if you’d like to discuss any of these superannuation options

i Capital Gains Tax and Discretionary Trusts Reform | Treasury.gov.au

ii Payday Super | Fair Work Ombudsman

iii Contributions caps | Australian Taxation Office

iv Carry forward and bring forward rules | ATO

v Paid Parental Leave Superannuation Contribution | ATO

vi Better Targeted Super Concessions is law | ATO