New Tax Rules Impact Traditional Investments
The 2026 Federal Budget introduces significant tax changes affecting investment strategies across Australia. Australian structured investment platform Stropro states these changes compel advisers and investors to reconsider traditional approaches to portfolio construction.
Key alterations include restrictions on negative gearing for properties, limited to new builds from 1st July 2027. The 50% capital gains tax discount will be replaced with an indexation method, subject to a minimum 30% tax on real gains. A 30% minimum tax on discretionary trust income will also apply from 1st July 2028.
Stropro COO and co-founder Ben Streater said, “The Budget changes the structured products playbook.” He emphasised the impact on structured products, which offer defined income and downside protection. “Protected Equity Lending is the time-sensitive opportunity, defined income structured products are the quiet achiever, and growth-focused structures will need a sharper after-tax investment case,” Mr. Streater noted.
Shift Towards Structured Products
Stropro highlights Protected Equity Lending (PEL) as a potential beneficiary of the Budget changes. PEL strategies offer leveraged equity exposure and downside protection, with potential upfront interest deductibility. Investments maturing before 1st July 2027 may still qualify for the existing 50% CGT discount. “For investors who were already considering a PEL, the Budget has created genuine urgency,” Mr. Streater remarked.
Once the new CGT regime applies, many high-net-worth investors may become more reluctant to sell growth assets and crystallize taxable gains. Instead, there could be a preference for holding quality assets longer and borrowing against portfolios when liquidity is needed.
Defined income structured products are also expected to gain traction, as they do not rely on CGT discounts. “A coupon that has been paid is banked,” Mr. Streater explained, highlighting the value of income earned along the way.
Growth-focused structured products will need to be judged more on payoff design rather than tax efficiency due to the new CGT framework. This underscores the importance of after-tax portfolio construction.
These developments highlight a shift in focus toward income, protection, and equity exposure in the face of changing tax advantages. The changes will push advisers to reassess traditional property-led tax strategies and explore alternatives that offer clearer outcomes, according to Mr. Streater.
