The federal budget has landed and for most tradie business owners and the verdict is pretty grim. Touted as a budget for the worker, the changes coming through are being felt hardest by the very people who have spent years building something of their own: small business owners, investors, and everyday tradie families trying to get ahead.
Angus Gasbarri, founder of Earnt Advisory, has spent his career working closely with clients in the trade and construction industry, starting out in NSW accounting office before rounding out his expertise with a stint in mortgage broking. Now based in South Melbourne, he helps clients think beyond the tax return and take home what they deserve. Nic brings Angus in to cut through the noise and break down what he calls the “big three” changes from this budget.
Negative Gearing
From 1 July 2027, negative gearing will be quarantined to new builds only. For anyone with an existing rental property, the rental loss that has traditionally been used to offset other income (whether from a job or a business) will no longer be deductible in the same way. Instead, that loss gets carried forward until the property is sold. For a tradie earning $120,000 with a $20,000 rental loss, that’s roughly $6,500 a year in tax savings gone. On top of that, banks have already started adjusting their calculators overnight, with some borrowers finding their borrowing capacity drop by $200,000 after budget night.
Capital Gains Tax
The 50% CGT discount is being replaced with a minimum 30% tax on capital gains, regardless of personal tax rate. This applies not just to property but to shares and business sales as well. For a low-income earner who previously would have paid zero tax on a $40,000 gain, they are now looking at roughly $12,000 in tax. For small business owners thinking about selling down the track, the small business CGT exemptions are still in place for now, but the $6 million asset cap and $2 million turnover threshold have never been adjusted for inflation, making them harder to access every year.
Discretionary Trusts
Any discretionary trust will face a minimum 30% tax regardless of where the income is distributed. Trusts are not just for the wealthy 1%, they are widely used by small business owners for asset protection and estate planning. Under the proposed changes, the tax benefits that made trusts an attractive structure are effectively wiped out, forcing many business owners to weigh up whether the asset protection alone is worth the extra tax hit or whether a costly and complex restructure is the better option.
The draft legislation is yet to be released, but the direction is clear. Now is the time to book a conversation with your accountant and understand what these changes mean for your specific situation before the decisions are made for you.
Connect with Angus and get to know more about Earnt Advisory here:
Website | Linkedin | YouTube
