Federal Budget 2026: The Opposition’s Response

What It Means for Regional Businesses & Investors

48 hours after the Federal Budget was handed down, Opposition Leader Angus Taylor delivered the Coalition’s response — framing the Government’s plan as an “assault on aspiration” and outlining a distinctly different economic path.

Below we breakdown and contrast the Opposition’s response to key 2026 Federal Budget announcements that impact small and medium businesses (SMEs), employers, property owners and investors across North‑East Victoria and the Southern Riverina.

Opposition Stance: Rejecting the Core of Labor’s Tax Reform

At the heart of the Coalition’s reply is a commitment to scrap most of the Government’s major tax reforms, particularly those affecting investment and business structures.

Capital Gains Tax & Negative Gearing – Full Reversal Proposed

The Coalition has committed to repealing:

• The removal of the 50% CGT discount
• The move to inflation‑based CGT with a 30% minimum tax
• The restriction of negative gearing to new builds only

This would reset tax measures for investors back to current settings.

Discretionary Trust Changes – Also Targeted for Repeal

The Coalition will also oppose the 30% minimum tax on discretionary trusts.

This is particularly relevant in regional economies where:

• Family trusts are common in farming, professional services and SMEs
• Income distribution flexibility is a key planning tool

Again, this would reset tax measures, bringing them back into line with current settings.

Alternative Policies for Small & Medium Businesses

$50,000 Instant Asset Write‑Off (vs $20,000)

A headline SME policy difference is the Coalition’s proposal to increase the instant asset write‑off to $50,000 as a permanent threshold, compared to Labor’s $20,000 permanent threshold. Both sides agree on ending the year-to-year extensions, but the threshold looks to remain a point of change and uncertainty.

What this means for regional businesses:

• Greater capacity to invest in vehicles, plant, and machinery
• More meaningful impact for trades, agriculture and logistics

Tax Reform Alternative: “Tax Back Guarantee”

One of the Coalition’s flagship policies is a Tax Back Guarantee. The proposal aimed at preventing “bracket creep” would:

• Index the bottom two personal income tax brackets to inflation starting with 2028-29
• Index all thresholds starting in 2031-32
• Deliver rising tax relief annually instead of via various other offsets and tax cuts

Tax & Investment Contrast

The Opposition’s approach is effectively the inverse of Labor’s reforms.

The Coalition’s expected framework aims to:

• Support continued use of private investment + negative gearing strategies
• Retain CGT discount advantage for long-term investors
• Support ongoing use of trusts in SME business structures
• Modify thresholds and income tax brackets to attempt to reduce tax for SME’s and individuals.

This contrasts with Labor’s proposed framework, which aims to:

• Restrict rental losses from offsetting other income sources (except for new residential properties)
• Replace the CGT discount with inflation indexation (except for new residential properties)
• Tax discretionary trusts creating uncertainty around the tax implications of business structures.
• Target new tax offsets and deductions at workers

From a portfolio perspective:

• Under Coalition policy → status quo investments encouraged by returning tax settings to current conditions.
• Under Labor policy → changing tax settings, which may encourage some to re-evaluate and change their investment portfolio.

Key Differences That Matter for Regional Clients

Final Takeaways for Regional SMEs & Investors

For business owners and investors across regional Australia, the Opposition presents a very different view to the Government on the future of tax and investment settings.

There are many differences between the Opposition’s response and the proposed Government budget that stand to have major implications for how the tax system functions.

The potential impacts on regional taxpayers and investors are complex and sure to raise many questions over the coming years.

To navigate through what is looking to be many years of major changes ahead you can reach out to your trusted advisor to help you make sure your business and investments have the flexibility and structure you need to adapt and thrive in these uncertain times.

If you have not yet read our breakdown of the Government’s 2026 Federal Budget announcements, you can read the full article here.

What is the Opposition proposing instead of the Federal Budget tax changes?

The Coalition has proposed reversing several major Federal Budget measures, including changes to capital gains tax, negative gearing and discretionary trust taxation. It is also proposing a higher permanent instant asset write off threshold and income tax bracket indexation.

Will negative gearing change under the Coalition’s proposal?

No. The Opposition has stated it would repeal the proposed changes limiting negative gearing to newly built properties only. Under its proposal, current negative gearing rules would remain in place.

How could the Opposition’s policies affect regional businesses?

The Opposition’s policies are designed to maintain existing business and investment structures. Proposed measures such as a $50,000 instant asset write off may support larger equipment and vehicle purchases for regional industries including agriculture, transport and trades.