How are investment decisions changing in 2026?
Tax reforms legislated in June this year may have altered the investment landscape for many investors.
Some of the headline changes, including restricting negative gearing into residential property and the implementation of a minimum 30% tax on realised capital gains for most investment types, do not take full effect until 1 July 2027, with transitional rules in place until then.
Market dynamics and geopolitical events, as well as changing investor demographics and personal circumstances also heavily influence investment decisions.
Investment flow data suggests some investors may be reviewing their strategies in response to a range of factors, including the tax changes – particularly when it comes to investing in shares.
What changed in June 2026
Among the key changes to investment tax rules passed in June this year were:
Replacing the 50% discount on capital gains tax (CGT) on investments held for more than 12 months with CPI cost base indexation from 1 July 2027 and a minimum 30% tax on realised post 30 June 2027 capital gains. Transitional rules apply for assets purchased prior to 1 July 2027, with the existing 50% individual CGT discount applying to capital gains that accrue up until 30 June 2027.
Restricting negative gearing for residential property investment to eligible new build residential property from 1 July 2027. Established residential properties held at Budget announcement on 7:30pm AEST 12 May 2026 may continue to access current negative gearing treatment until the property is sold, while transitional arrangements apply to properties purchased after Budget night.
What didn’t change
Capital gains on assets held in super for longer than 12 months are effectively taxed at 10%. Within super, taxable income and capital gains are generally taxed at 15%, with a one third CGT discount applying to assets held for longer than 12 months.
The change to negative gearing is only on residential property and doesn’t affect the ability to negative gear other asset classes such as managed funds, share portfolios and ETFs. Where deductible interest exceeds the investment income, the resulting loss can continue to be offset against income from other sources.
What else is coming
A minimum of 30% tax on discretionary trusts’ taxable income is proposed from 1 July 2028. This proposal has not yet been legislated. The Government has indicated that rollover relief will be available for taxpayers wishing to restructure into another structure such as a company or a fixed trust. Draft legislation released on 4 September 2026 introduced an alternative to restructuring, proposing that discretionary trusts in existence at 1 July 2028 will be able to avoid the minimum tax by electing to only make fixed distributions to eligible pre nominated beneficiaries.
How the CGT changes may be influencing investment choices
Many investors may already be favouring more efficient investment structures and considering how they may be affected by the new CGT rules. While CGT related concerns may affect investment outcomes, investors should consider returns and growth, as well as how they fit your long-term investment strategy.
Holding individual stocks may be less attractive
Under the new rules, some investors may reassess the attractiveness of holding individual shares. That’s because tax is paid on real gains above inflation but investors generally won’t be able to use shares that merely underperform inflation but make a nominal gain, to offset gains made on winning shares.
Only shares that fall in value in nominal terms can generate a capital loss for tax purposes.
So if a share portfolio generates little or no real gain after inflation, investors could still be required to pay tax on those that outperform inflation, while receiving little or no offset from the underperformers.
Investment vehicles that consolidate capital gains and losses may appeal to some
Some investors may consider investment vehicles such as ETFs and diversified managed funds when reviewing the potential impact of the new tax rules, depending on their objectives and circumstances.
ASX data shows that net flows to exchange-traded products in July and again August this year reached record levels, although multiple factors may contribute to investor demand. They increased by 26.5% compared with net inflows for the same period a year earlier1.
Rules based investments may attract more interest
Some investors may reassess the role of active and passive investment approaches in light of taxation, fees, investment objectives and expected returns.
A majority of Australian and global large cap equity managers underperformed their benchmarks over one and three year periods to June 20262.
This has coincided with increased investor interest in lower cost, rules based approaches, seen in the popularity of ETFs and enhanced index funds built to closely track a market, as well as systematic investment fund managers that closely manage risk.
They may then reserve active managers for areas where there’s a greater chance that expert stock selection can add value.
Super’s CGT discount means investors retain 90% of realised capital gains
Collectively, Australian investors are making bigger contributions to super, a trend that appears to have increased in the current financial year, although a range of market, economic and personal factors may influence member behaviour.
Super’s favourable tax status, the ability to pursue different investment strategies within super as offered by super providers, strong returns over the past four years3 and general retirement planning activity, may be contributing to that growth.
APRA regulated super funds are also showing strong momentum, with member contributions increasing by 21% over the past financial year4.
It’s worth noting that super, like most investments, is subject to risk and past returns are not a reliable guide to future results. Unlike many other investments, super is generally locked away until age 60 and retirement or another condition of release is met. However, super may offer tax advantages for investors, depending on their individual circumstances.
¹ ASX Investment Product Reports, July 2026, August 2026.
2 Source: S&P Dow Jones Indices LLC, Morningstar. Report 1a. Data for periods ending 30 June 2026.
3 Despite the noise, super funds deliver again in FY26, Chant West, 20 July 2026.
4 APRA releases superannuation statistics for June 2026, Australian Prudential Regulation Authority, 31 August 2026.
Source: Colonial First State
