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Treasurer Jim Chalmers is expected to hand down the Australian Federal Budget 2026-27 on Tuesday, 12 May 2026.
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- When is the Federal Budget?
- Will corporation tax change in the Budget?
- Will there be more tax cuts in the Budget?
- Could tax changes feature in this Budget?
- Is there likely to be a focus on Budget measures that enhance productivity?
- Is tax reform back on the agenda for this term of Government?
When is the Federal Budget?
The 2026-27 Budget is scheduled to be delivered at 7:30pm AEST on Tuesday, 12 May 2026. This is the first Federal Budget since Labor’s re-election last year.
Will corporation tax change in the Budget?
One of the recommendations made by the Productivity Commission’s review into meeting productivity challenges was to pivot the corporate tax system toward a more efficient mix that reduces taxation of normal returns to better support investment and dynamism. A key element of this was a recommendation to reduce the company income tax rate to 20% for companies with revenue less than $1bn and to 28% for companies with revenue over $1bn, and introduce a 5% net cashflow tax applying to all companies. It remains to be seen whether the Government will accept any or all of the Productivity Commission’s recommendations in relation to corporate taxes, and if so, it would be expected that there would be detailed consultation process undertaken before any changes were implemented.
Will there be more tax cuts in the Budget?
Individual tax cuts are already enacted to take effect from 1 July 2026. Specifically, the 16% personal marginal income tax rate that applies to Australian resident taxpayers will reduce to 15% for the 2026-27 income year and to 14% for the 2027-28 and later income years. For an individual earning over $45,000 per year, this will result in a tax cut of $268 in the 2026-27 income year and $536 in 2027-28 income year (as compared to the amount paid in the 2025-26 income year). The Budget will confirm how these already legislated personal tax cuts interact with broader fiscal priorities and whether any further cost‑of‑living measures are in focus.
Could tax changes feature in this Budget?
We always see tax changes announced in Federal Budgets, but whether they are significant varies from year to year. This year, perhaps we might see some significant announced measures. For example, some possible changes that are speculated include:
- for business, given that the Productivity Commission has released its reports and recommendations to identify priority reforms under their five pillar productivity growth agenda,will the Government use this Budget to respond to the recommendationto move to a hybrid corporate tax system, combining a lower company income tax rate combined with a net cashflow tax for all companies
- a simplified and re-focussed Research and Development Tax Incentive (R&DTI) as recommended by the independent Strategic Examination of R&D
- on the investment front, possible reductions to the capital gains tax (CGT) discount and winding back the tax benefits of negative gearing investment properties
- changes to fuel taxation and the petroleum resource rent tax (PRRT) settings, and reductions in red tape in the tax system.
Is there likely to be a focus on Budget measures that enhance productivity?
This is possible, given increasing pressure to lift Australia’s productivity performance. The Government has yet to formally respond to the recommendations made by the Productivity Commission for priority reforms under their five pillar productivity growth agenda. It is also worth mentioning that the Board of Taxation’s review into reducing red tape in the tax system continues and since the Board is not due to deliver its report to Government until June 2026, we may not see any substantial tax system red-tape reduction reforms in this upcoming 2026-27 Federal Budget.
Is tax reform back on the agenda for this term of Government?
This is the first Budget since Labor’s re‑election, making it an important marker of the Government’s reform ambitions. Whether this Budget contains substantive reform measures or simply sets the direction for future consultation remains to be seen.
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