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One Act, five schedules, three different start dates. The $1,000 standard work-expense deduction already applies for 2026–27. From 1 July 2027, the 50% CGT discount is replaced with CPI cost-base indexation plus a 30% minimum tax. Separately, from the 2027–28 income year, negative gearing is quarantined for established dwellings bought after 7:30pm AEST on 12 May 2026. This is the largest change to Australian personal tax in 25 years. Everything on this page is sourced directly to the Act text, checked 2 August 2026.
Almost every summary of this Act treats it as one change landing on 1 July 2027. It is not. A schedule commences on the day the Act says it takes effect as law, and separately specifies the income years the amendments apply to. Every schedule below except Schedule 5 has already commenced, and the one that reaches the most people applies to the income year we are in.
| Schedule | Commenced | First applies to |
|---|---|---|
| Schedule 4, Part 1s25-130 standard deduction of $1,000, and the s25-100(1A) transport expense definition | 1 July 2026 | Assessments for 2026–27 and later — the income year we are in |
| Schedule 5Limited recourse borrowing arrangements: an SMSF's borrowed-asset real property must be business real property | 10 August 2026 | Arrangements entered into on or after commencement. Pre-existing borrowings, refinances of them and acquisitions under a pre-commencement arrangement are unaffected |
| Schedule 3ss61-155 and 61-160 working Australians tax offset, up to $250 | 1 July 2026 | Assessments for 2027–28 and later — a year behind Schedule 4 |
| Schedule 2Negative gearing quarantined for established residential dwellings | 27 June 2026 | The 2027-28 income year and later |
| Schedule 1CGT discount abolished, CPI indexation, 30% minimum tax | 1 July 2026 | Assessments for the income year that includes 1 July 2027; the s115-125 changes apply to CGT events happening on or after that date |
| Schedule 4, Part 2FBT: salary-packaged expense payment benefits and the eligible work related item list | 1 July 2026 | FBT years starting on or after 1 April 2027 |
Sourced to the Act's s2 commencement table and to each schedule's own application item: Schedule 1 Part 4 items 82-84, Schedule 2 item 5, Schedule 3 Part 2 item 4, Schedule 4 Part 1 item 17(1) and Part 2 item 20, and Schedule 5 item 2.
Applied in the Tax Refund Estimator
Old law vs new law, side by side
Check your property in three questions
Full cash flow with the quarantine applied
Section 25-130 of the ITAA 1997, inserted by Schedule 4, gives an individual who is an Australian resident at any time in the income year and who derives assessable labour income a deduction for work-related expenses. It applies to assessments for the 2026–27 income year and later, which makes it the only part of this Act already affecting the return most Australians will lodge next.
It is a floor, not a bonus. The amount is the lesser of $1,000 and your total assessable labour income, reduced — but not below zero — by your own work-expense deductions: general deductions under s8-1 incurred in gaining that labour income, Division 28 car expenses, s25-100 travel between workplaces, repairs and depreciation on assets used for work, and s25-125 COVID-19 tests. So your effective work-expense deduction becomes whichever is larger, your real claims or $1,000, capped at your labour income.
Claims nothing
s25-130 adds $1,000
$1,000
total work-expense deduction
Claims $400
s25-130 adds $600
$1,000
total work-expense deduction
Claims $1,500
s25-130 adds $0
$1,500
total work-expense deduction
All three are worked out on $80,000 of wages, by the same engine the Tax Refund Estimator uses. Note the middle one: the $400 claim does not add to the $1,000 — it is absorbed by it.
Four things are disregarded, and they stack on top. Subsection (3) tells you to ignore, for the reduction, any s8-1 deduction for an income protection insurance premium, a personal sickness insurance premium, an accident insurance premium, or membership of a trade, business or professional association. Union and professional association fees therefore do not eat into the $1,000: someone on $80,000 of wages whose only work-related claim is $600 of union fees deducts $1,600, not $1,000.
It cannot exceed your labour income. Paragraph (2)(b) caps it, so a student with $800 of wages deducts $800, not the full amount. And "assessable labour income" in s25-130(4) means pay an employer must withhold from — salary and wages, directors' fees, office holders, termination payments, parental leave pay. Business and investment income are not in the list, so a sole trader with no wages gets nothing from s25-130.
In cash, $1,000 off taxable income is worth $320 to someone on $80,000 and $470 at $250,000 — both computed here including the Medicare levy, not quoted from a headline rate.
Schedule 4 also narrows what a "transport expense" is. New s25-100(1A) defines it as a loss or outgoing to do with transport, including the decline in value of a depreciating asset used in connection with transport, but excludes accommodation, food and drink and expenditure incidental to transport. Parking is on the wrong side of that line, which is why our car expense calculator now claims parking at its own work-related amount instead of running it through the logbook business-use percentage. The same schedule repeals the award transport payment machinery in Subdivision 900-I and s28-180, and stops assets used mainly to produce labour income being allocated to a low-value pool.
Schedule 3 inserts Subdivision 61-E. You are entitled to the offset if you are an individual who is an Australian resident at any time in the income year and your net labour income exceeds the tax-free threshold. Net labour income is a defined subtraction: labour amounts less labour deductions. Labour amounts are your assessable labour income, income from carrying on a business as an individual, personal services income, employee share scheme discounts included under s83A-25, and labour hire payments. Labour deductions are the outgoings incurred in earning those amounts, the s25-130 standard deduction itself, and depreciation on the assets used to earn them.
The amount, under s61-160, is the lesser of $250 and the basic income tax liability you would have if your taxable income were your net labour income and nothing else. That makes it phase in across the first tax bracket rather than arriving whole: it reaches the full $250 at $19,986 of net labour income for 2027–28, and is smaller below that. It is non-refundable, cannot be transferred and cannot be carried forward, so it reduces income tax to zero and no further.
It does not apply to a 2026–27 return. Schedule 3 commenced on the same day as Schedule 4 — both on 1 July 2026 — but its application item covers assessments for the 2027–28 income year and later. Two schedules, one commencement date, two different first income years.
Individuals and trusts other than complying superannuation entities lose the unconditional 50% CGT discount from 1 July 2027. In its place: the cost base of an asset is indexed by CPI from the quarter the expenditure was incurred to the quarter of disposal — the same method used before 1999 — and a 30% minimum tax applies as a top-up if ordinary marginal-rate tax on the gain would otherwise come in under that rate. Companies and complying super funds are unaffected.
Anything held across the change is treated as sold at market value just before 1 July 2027 and bought back at that value just after — a deemed disposal and reacquisition, not a pro-rata split of one gain. The portion of the gain up to that point keeps the current discount rules; growth after it is indexed under the new rules. Assets bought before 20 September 1985 lose their blanket pre-CGT exemption for growth after the change, using the same deemed-disposal mechanism.
Income-support recipients — including Age Pensioners, JobSeeker, Carer Payment, DVA pensioners and several other listed payments — are exempt from the minimum tax top-up for any income year they receive a qualifying payment. Ordinary tax on the gain at marginal rates still applies as usual.
From the 2027-28 income year, a net rental loss on an established (previously-occupied) residential dwelling contracted after 7:30pm AEST on 12 May 2026 can only offset residential rental income or a residential capital gain, not wages or other income. It isn't forfeited: it carries forward and pools with your other quarantined residential properties per taxpayer, not per property, until you have residential income or a gain to use it against.
Anything contracted before that moment is grandfathered and keeps full negative gearing indefinitely, and so are new residential dwellings — regardless of contract date. What legally counts as "new" is not yet defined: the Act delegates that definition to a Ministerial legislative instrument that has not been made as of this page's last verification date.
"New residential dwelling"
Delegated to a Ministerial legislative instrument (s26-160(4)) that has not been made yet — confirmed genuinely open, not a research gap.
Deferred-gain reconciliation mechanics
The Act defers the notional gain/loss from the deemed disposal at commencement rather than taxing it immediately (s112-160(2)), but the exact reconciliation mechanics at the real, later disposal (s112-160(3)-(4)) aren't pinned to primary text yet.
How s25-130 interacts with the substantiation rules
Schedule 4 repeals ss900-35 to 900-45 and the whole of Subdivision 900-I, along with the "award transport payment" and "laundry expense" definitions. What written-evidence rules a taxpayer relying on the $1,000 standard deduction is left with is a question for ATO guidance, which had not been published as of this page's last verification date. Nothing here assumes the answer.
Whether a working holiday maker gets the standard deduction
s25-130(1)(b) needs an Australian resident at any time in the income year, and a working holiday maker can be one. Our calculators cannot tell from a residency selector alone, so they take the conservative reading and leave the deduction out rather than granting a $1,000 deduction the taxpayer may not be entitled to.
Named CPI series
The indexation formula itself is sourced directly to the Act (s960-275(1B)/(1C)); which published ABS series 'index number' refers to is inferred from the historical pre-1999 definition, not independently re-verified against this Act's current text.
Royal Assent — Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (No. 49, 2026) and its companion (No. 50) become law.
Every mechanic below verified directly against the Federal Register's full Act text and the Treasurer's second reading speech — see the sourcing note at the bottom of this page.
CGT reform calculator, negative gearing grandfathering checker and the rebuilt Negative Gearing Calculator published.
Schedules 3, 4 and 5 added. This page previously covered only the CGT and negative gearing schedules and said nothing about the $1,000 standard deduction, which has applied since 2026–27 — a year earlier than anything else in the Act. s25-130 is now implemented in the Tax Refund Estimator and the commencement-versus-application table below distinguishes the five schedules' dates.
Yes. Schedule 4 applies to assessments for the 2026–27 income year and later — the year we are in. It inserts s25-130, a standard deduction for work-related expenses, and s25-100(1A), a narrower definition of "transport expense". The CGT and negative gearing schedules everyone talks about do not bite until 2027-28 and the income year that includes 1 July 2027 respectively, so the schedule affecting the most people is the one that arrived first.
No, and this is the part almost everyone gets backwards. s25-130(2) gives you the lesser of $1,000 and your total labour income, reduced by the work expenses you actually claim and floored at zero. It is a floor, not a bonus. On $80,000 of wages: claim nothing and you deduct $1,000; claim $400 and s25-130 adds $600 for $1,000 in total; claim $1,500 and s25-130 adds $0. Your effective work-expense deduction is whichever is larger — your real claims or $1,000.
No. s25-130(3) disregards deductions for income protection insurance premiums, personal sickness insurance premiums, accident insurance premiums and membership of a trade, business or professional association. They stack on top instead of reducing it. On $80,000 of wages with $600 of union fees and nothing else, you deduct $1,600 — the fees plus the full $1,000.
Up to $1,000 off your taxable income, so its cash value is that times your marginal rate plus the Medicare levy. On $80,000 of wages with no work expenses claimed it is $320 of tax; on $250,000 it is $470. Someone who already claims more than $1,000 gets nothing from it. Someone whose labour income is under $1,000 is capped at that income — $800 of wages means a $800 deduction, not $1,000.
2027–28, not 2026–27. Schedule 3 commenced on the same day as Schedule 4 but its application provision covers assessments for the 2027–28 income year and later, a full year behind. When it does apply, s61-160 gives the lesser of $250 and the tax that would fall on your net labour income if that were your whole taxable income, so it phases in from the tax-free threshold and reaches the full $250 at $19,986 of net labour income. It is non-refundable and cannot be carried forward.
They are still deductible where the ordinary rules allow, but from 2026–27 they are no longer "transport expenses". s25-100(1A) defines a transport expense as a loss or outgoing to do with transport but excludes accommodation, food and drink and expenditure incidental to transport. Parking sits on the wrong side of that line too, so it is not part of a car or transport claim — it is claimed at its own work-related amount rather than at your logbook percentage.
Two things. First, the 50% CGT discount goes for individuals and for trusts (other than complying superannuation entities), replaced with CPI cost-base indexation plus a 30% minimum tax top-up. It survives for new residential dwellings and affordable housing. Second, net rental losses on an established residential dwelling bought after 7:30pm AEST on 12 May 2026 are quarantined from the 2027-28 income year: they can only offset residential rental income or residential capital gains, not wages.
For individuals and for trusts other than complying superannuation entities, yes — replaced with indexation and a minimum tax top-up. Partnerships are not named in the Act: a partnership makes no discount capital gain in its own right, and a partner's share flows through to them. Companies and complying super funds keep their existing treatment. New residential dwellings and affordable housing keep a discount of at least 50% by default, and indexation is the alternative that can be chosen instead — for affordable housing, only where the discount would otherwise be 60%.
No. It's a top-up, calculated separately (s119-10), that only applies if your ordinary marginal-rate tax on the gain would otherwise come in under 30% of it. If your marginal rate is already 30% or higher on the gain, the top-up is zero.
The Act treats it as sold at market value just before 1 July 2027 and bought back at that value just after (s112-155) — a deemed disposal and reacquisition, not a pro-rata split. The pre-portion keeps the current 50% discount rules; the post-portion is indexed under the new rules.
Age Pensioners and recipients of several other listed income-support payments (JobSeeker, Carer Payment, DVA pensions, Family Tax Benefit and others) are exempt from the 30% minimum tax top-up for any income year they receive a qualifying payment (s119-15). Ordinary marginal-rate tax on a gain still applies as usual.
No. Anything contracted before 7:30pm AEST on 12 May 2026 is grandfathered and keeps full negative gearing indefinitely. New residential dwellings are also grandfathered, regardless of contract date.
This isn't defined in the Act yet — it's delegated to a Ministerial legislative instrument that hasn't been made as of this page's last verification date. Expected criteria (from explanatory material, not law) include genuinely adding to supply, bought from the builder, and not previously occupied for more than 12 months.
Pre-CGT assets lose their blanket exemption for growth after 1 July 2027 (s112-175). Growth up to that date stays exempt; growth after it is taxable, via the same deemed-disposal mechanism used for the general apportionment.
Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (No. 49, 2026), Royal Assent 26 June 2026. Sourced directly from the Federal Register of Legislation and the ATO's Act text mirror. Last checked 2 August 2026. General information only, not personal tax advice — see our full disclaimer below.
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