Superannuation funds – including self-managed super funds – were explicitly carved out of every major tax measure in the 2026 Budget. Here is what changed, what didn’t, and the one measure that is already law.
In This Article
- 01Property Inside an SMSF: What Changed and What Didn’t
- 02Why SMSFs Survived: The Explicit Exemptions Explained
- 03The Widening Advantage: How the Gap Grew
- 04The Negative Gearing Carve-Out: What SMSFs Can Still Do
- 05Division 296: The One Caveat That Is Already Law
- 06Contribution Caps and the Funding Window
- 07Where This Leaves SMSF Investors
01 — Property in Super
Property Inside an SMSF: What Changed and What Didn’t
Property investment through an SMSF attracts consistent interest from Australian investors, and the 2026 Budget has reinforced why. Let us be precise about what changed and what did not.
- Proposed to change The ability to purchase residential or commercial property inside an SMSF using fund contributions or an LRBA loan.
- Did not change The 15% income tax rate on rental income in accumulation phase.
- Did not change The 10% effective CGT rate on property sold in accumulation phase after 12 months.
- Did not change The 0% tax on rental income and capital gains in pension phase.
- Did not change The ability to negatively gear residential property inside an SMSF and offset losses against other fund income.
- Did not change The rule that SMSF property cannot be acquired from or leased to a related party (residential), or acquired from a related party (commercial – leasing to a related business at market value is permitted).
- Proposed to change (for individuals, not SMSFs) Negative gearing salary offsets for established residential property purchased after 12 May 2026 (announced, not yet legislated). This would apply to individuals and trusts, not to SMSFs.
- Proposed to change (for individuals, not SMSFs) The CGT discount on investment property would be replaced by indexation and a 30% minimum for individuals and trusts (announced, not yet legislated). This would not apply to SMSFs.
If these proposed measures proceed as announced, the practical effect is that property investment inside an SMSF would be more competitive relative to holding property personally than at any point since the CGT discount was introduced in 1999. The individual investor’s cost of property ownership would go up. The SMSF investor’s cost would stay the same.
A note on borrowing: the ability to purchase property inside an SMSF using an LRBA loan is itself proposed to change, and the availability of new SMSF lending may be affected. Investors planning to purchase property through their fund should seek specialist SMSF advice on the current state of these rules, and on current lending availability, before assuming that pathway remains open.
02 — The Exemptions
Why SMSFs Survived: The Explicit Exemptions Explained
When the 2026 Budget rewrote the rules for capital gains and discretionary trusts, it did not do so accidentally. The government made deliberate and explicit choices about which structures to target and which to leave alone. Superannuation funds, including self-managed super funds, were explicitly carved out of every major measure.
Important: This carve-out relates to measures that are themselves announced but not yet legislated. The Budget papers and supporting explanatory material specifically named superannuation funds as excluded from the proposed new CGT regime and from the proposed discretionary trust minimum tax. The government’s stated rationale for the reforms was to narrow the tax gap between investment structures and wage earners. Super was treated as a separate policy domain, already subject to its own contribution limits and tax rules, and deliberately left outside the reform perimeter. This article reflects the announced framework as at June 2026. Do not make irreversible decisions based on announced measures alone.
The result: every rule that made SMSFs tax-efficient before the Budget still applies after it. The 15% income tax rate in accumulation phase, the one-third CGT discount reducing the effective rate to 10% on assets held over 12 months, and the tax-free status of all income and gains in pension phase are all unchanged. Not reduced. Not modified. Unchanged.
03 — The Structural Advantage
The Widening Advantage: How the Gap Grew
The SMSF’s tax advantages are not new. What the 2026 Budget has done is widen the gap between super and every other structure by making the alternatives significantly more expensive. Understanding the comparison now versus before the Budget is the clearest way to see why this matters.
How every structure compares on capital gains from 1 July 2027 (proposed)
Effective CGT rate. One-third discount on gains after 12 months. Explicitly exempt from the proposed new rules.
All income and gains tax-free in pension phase. No cap on gains. No new rules applied.
Flat corporate rate on full nominal gain. No discount ever available. No change from Budget.
Proposed 30% minimum floor on real gain after CPI indexation from 1 July 2027, if legislated as announced. 50% discount gone.
The comparison is stark, but it depends on the proposed measures passing as announced. An individual investor on the top marginal rate previously faced an effective CGT rate of roughly 23.5% under the 50% discount. If the proposed rules take effect from 1 July 2027, they would face a 30% minimum on their real gain after indexation. That same gain inside an SMSF in accumulation phase is taxed at 10%. In pension phase: zero.
The Budget did not create the SMSF’s advantage. It simply proposes to make the cost of holding assets outside super significantly higher. For investors who have capital sitting in personal names, trusts, or companies, the question of whether to move more of it into super has become considerably more pressing, subject to professional advice and to the legislation actually passing.
04 — The Negative Gearing Carve-Out
The Negative Gearing Carve-Out: What SMSFs Can Still Do
One of the most significant and least-discussed aspects of the 2026 Budget for SMSF investors is the negative gearing treatment. Under the proposed rules (announced, not yet legislated), from 1 July 2027 individuals who purchased established residential property after Budget night (12 May 2026) would no longer be able to offset rental losses against salary or wages. That restriction would not apply to SMSFs.
An SMSF that purchases a residential property, even an established property bought after Budget night, can still offset rental losses against other fund income. The restriction that individuals would face on salary offsetting simply does not exist inside the super environment, and is not proposed to.
| Investor type | Established property (post-Budget) | Rental loss offset | CGT on sale |
|---|---|---|---|
| Individual investor | Negative gearing restricted – no salary offset from 1 July 2027 (proposed) | Losses limited to rental income and property cap gains only | New CGT regime: indexation + 30% minimum (proposed) |
| SMSF (accumulation) | Negative gearing fully intact – not subject to the proposed restriction | Losses can offset other fund income (dividends, interest, other rents) | 10% effective CGT rate (one-third discount retained, explicitly exempt from proposed new rules) |
| SMSF (pension phase) | Fully intact – no restriction applies | Fund income is tax-free; offset is moot but losses do not harm position | 0% – all gains tax-free in pension phase |
This creates a position where an SMSF could acquire an established residential property that an individual investor may find structurally less attractive (because of the loss of the salary offset) and hold it under significantly more favourable tax conditions on both the income and the eventual gain, if the proposed reforms proceed as announced.
Important: SMSFs that borrow to purchase property must comply with the Limited Recourse Borrowing Arrangement (LRBA) rules – and the ability to purchase property inside an SMSF using an LRBA loan is itself proposed to change. Property inside an SMSF must satisfy the sole purpose test and cannot be acquired from or leased to a related party in most circumstances. SMSFs also cannot purchase residential property that a member or related party currently lives in or has lived in. Get specialist SMSF advice before purchasing any property inside the fund.
05 — The One Caveat
Division 296: The One Caveat That Is Already Law
SMSFs are not completely untouched by the 2026 tax environment. One measure affects high-balance super accounts, and unlike everything else discussed in this series, it is already law. It passed Parliament in March 2026 and takes effect from 1 July 2026.
Division 296 imposes an additional 15% tax on the earnings attributed to superannuation balances above $3 million. It is important to understand what this means in practice:
- The additional 15% tax applies only to earnings attributable to the portion of the balance above $3 million. It is not a flat 15% on your entire super earnings if you cross the threshold.
- Unrealised gains are included in the earnings calculation. This is the most contentious aspect – even if an asset has not been sold, its paper gain is included in the attributed earnings calculation.
- The $3 million threshold is assessed at the individual member level, not the fund level. A two-member SMSF with $2.5 million per member is not affected.
- The threshold is not indexed to inflation, meaning more members will cross it over time simply through normal investment returns.
| Member balance | Division 296 applicable? | Effective tax rate on earnings | Action required |
|---|---|---|---|
| Under $3 million | Not affected | 15% income / 10% CGT (unchanged) | None – monitor as balance grows |
| $3M to $4M (e.g. $3.5M) | Partially affected | Additional 15% applies to ~14% of earnings (attributable to $500k above threshold) | Review asset mix, timing of contributions, and liquidity for tax payments |
| Above $4 million | Significantly affected | Additional 15% on a growing proportion of earnings; unrealised gains included | Review with an SMSF specialist. Consider contribution timing, liquidity planning, and whether partial withdrawal makes sense |
| Two members, each under $3M | Not affected | Normal SMSF rates for both members | None – threshold is per member |
Of everything in this series, Division 296 carries the most genuine time pressure, because it is already law and takes effect on 1 July 2026. For members in this position, timing is material. Independent advice from a licensed SMSF specialist before 30 June 2026 is strongly recommended, particularly around liquidity, asset mix, and how unrealised gains are treated in the attributed earnings calculation.
06 — Contribution Caps
Contribution Caps and the Funding Window
The 2026 Budget did not touch superannuation contribution caps. They remain exactly as they were, and the mechanisms for maximising them are intact. This is important context for anyone looking to accelerate the movement of capital into super given the new external tax environment.
Concessional (pre-tax)
$30,000 / year
Includes employer SG contributions and salary sacrifice. Taxed at 15% inside the fund (versus up to 47% personally). Unused amounts can be carried forward up to 5 years if your balance is under $500,000.
Non-concessional (after-tax)
$110,000 / year
After-tax contributions with no tax inside the fund on entry. Bring-forward provisions allow up to $330,000 over three years for eligible members under 75 with a total super balance below $1.9 million.
Carry-forward concessional contributions
If your total superannuation balance is under $500,000 at 30 June of the prior year, you can use unused concessional cap amounts from the previous five financial years. This is a useful mechanism for making catch-up contributions in years where you have a large taxable income event, for example from a property sale or business disposal.
For investors who are transitioning assets out of a family trust under the CGT rollover window, or selling a long-held investment property, the proceeds can create a planning opportunity: using the concessional carry-forward provisions in the same year to shelter more of the taxable income inside super at 15%, subject to advice.
Example (hypothetical): An investor has not maximised their concessional contributions for the past four years, carrying forward $80,000 in unused cap. In a later year, they sell an investment property and realise a significant taxable gain. By making a $110,000 concessional contribution in that year ($30,000 current year cap plus $80,000 carried forward), they may be able to shelter that income inside super at 15%, rather than paying up to 47% personally. The timing needs to be planned carefully with an adviser before the sale settles.
07 — The Bottom Line
Where This Leaves SMSF Investors
The 2026 Budget did not make SMSFs perfect. They still come with compliance obligations, contribution caps, and the Division 296 issue for high balances – and the ability to purchase property inside an SMSF using fund contributions or an LRBA loan is itself proposed to change.
If the proposed reforms proceed as announced, the 2026 Budget may make superannuation one of the more compelling structures for holding investment capital in a generation – with one important qualification: the changes to purchasing property through an SMSF mean the property-through-super pathway cannot be assumed to operate as it did, and specialist advice on the current rules and lending availability is essential. For capital already inside super, and for contributions made within the caps, the alternatives would become more expensive to hold, while the SMSF’s tax treatment would not change.
If you are building wealth for the long term, the structure that holds your capital matters. It has always mattered. After this Budget, it may matter more than ever. The conversation starts with understanding exactly where you sit and what is available to you.
That is a conversation the AllianceCorp team is ready to have.
If you would like a personalised review of your investment structure in light of the 2026 Budget, speak to the team at AllianceCorp.
Book a Free ConsultationThis article is intended for general informational purposes only and does not constitute financial, tax, legal, or superannuation advice. Superannuation rules are complex and depend on individual circumstances including age, total super balance, employment status, and fund structure. Division 296 is already legislated. All other Budget measures referenced are announced but not yet legislated. You should seek independent professional advice from a licensed financial adviser and SMSF specialist before making any contribution, investment, or structural decisions.