u/AndyHaf

Quick read for anyone whose FI plan leans on a non-super bridge to preservation age 60. Tonight's Budget didn't touch super (every 1 July 2026 super and tax change is still on as legislated), but it materially re-priced the non-super side of the wealth-build. Three structural changes do the work, and the CGT one is the one that bites the bridge-phase realisation strategy most Australian FI plans rely on.

Below is the lay of the land plus a worked CGT example for a bridge-phase retiree, so you can sanity-check whether your own plan needs a re-run before 1 July 2027.

1. 50% CGT discount being replaced (effective 1 July 2027). The 50% discount is being replaced by an inflation-indexed discount with a minimum 30% tax floor on gains. Gains crystallised before 1 July 2027 keep the 50% discount. ABC News reports pensioners and people on income support will be exempt from the floor; budget.gov.au's tax-reform summary doesn't list that exemption itself, so treat it as indicative until the Treasury Laws Amendment Act is published.

This is the change that re-prices the FI bridge.

Worked example, bridge-phase retiree. You retire at 50 with $700k of broad-market ETFs sitting on a $400k cost base after twelve years of accumulation. To fund a year of living expenses you sell $80k of the position. The slice you sold has a cost base of about $45k (pro-rata), so the nominal gain on the slice is $35k. Assuming CPI compounded at 2.6% over the holding period, the indexed cost base on the slice is about $61k and the real gain is about $19k.

• Old rules: $35k × 50% discount = $17.5k taxable. With no other income that year it sits at or below the $18,200 tax-free threshold. Tax: essentially zero.
• New rules: $19k real gain × 30% floor = $5.7k. The floor binds because marginal tax on $19k of taxable income alone is well below 30%.
• Net effect: about $5.7k of new tax on a year's bridge draw that used to be effectively tax-free.

That is the structural change for FI planners. Routine bridge-phase ETF realisations that used to attract close to zero tax now attract a 30% minimum on the real gain. The strategy of "retire early, draw down ETFs at low or zero marginal tax until preservation age" stops working from 1 July 2027.

For high earners selling pre-retirement the change is much smaller (marginal rate already above 30%, indexation softens the headline). The bite lands squarely on the bridge-phase realisation strategy that most Australian FI plans rely on.

2. Negative gearing limited to new builds. Properties owned before tonight are grandfathered for the life of the holding. Established homes bought after tonight have losses ring-fenced to property income (no offset against wages) once the law commences 1 July 2027. New builds keep full negative gearing.

3. 30% minimum tax on discretionary trusts (effective 1 July 2028). Rollover relief for restructuring out of discretionary trusts into companies or fixed trusts runs three years from 1 July 2027 to 30 June 2030, so the relief opens twelve months before the floor and continues for two years after. Hits the cohort holding investments in a family trust to stream distributions to lower-bracket beneficiaries.

Smaller items. $250 Working Australians Tax Offset from 2027-28 (wage/salary only; retirees ineligible). $1,000 instant work-expense deduction from 2026-27. Private health insurance rebate for over-65s drops to the under-65 24% rate, adding $226 to $255 a year per over-65 adult to retirement-phase premiums.

Bottom line for FI planning. Modest headwind. Super is now relatively more valuable than non-super for the post-preservation phase, since the super system was left untouched. Bridge-phase plans built on the 50% CGT discount for low-income retirement-year realisations need a re-run. Existing property holdings are unaffected; new property additions face a new-build vs established-home tax choice.