2026-27 Federal Budget

What the Budget means if you’re retired or close to retirement

A reduced private health insurance rebate for older Australians, the end of the 50% CGT discount for personal investments, pension supplement changes for those travelling overseas, and the Division 296 super tax on balances over $3 million. Several of these affect retirees specifically.

PHI rebate change

$800–$1,600+

Estimated annual premium increase for over-70s on Gold cover, from 1 April 2027

CGT discount removed

From 1 July 2027

50% discount replaced by indexation + 30% minimum tax. Affects realising shares and other personal investments.

Division 296 starts

1 July 2026

Additional 15% tax on super earnings attributable to balances above $3M. Already law.

An honest framing

This Budget’s combined effect on retirees and pre-retirees is mixed at best, and slightly negative for many. The personal tax cuts apply to any part-time work income you earn, but they’re modest. The losses — PHI rebate cut, CGT discount removal, Division 296 for higher balances — will outweigh the gains for many clients in this stage of life. The right response is informed planning, not panic.

The most immediate change

Private Health Insurance rebate cut for the over-65s

The age-based uplift on the PHI rebate is being removed from 1 April 2027. For over-65s and over-70s, this means a meaningfully higher out-of-pocket premium cost.

Effective 1 April 2027

The age-based uplift is being abolished

Currently, the PHI rebate has three age tiers: under 65, 65-69, and 70+. The rebate percentage is higher for older policy holders, recognising that they pay higher premiums.

From 1 April 2027, the higher age tiers are flattened back to the under-65 rate. Older Australians keeping private health cover will receive a smaller rebate, and therefore pay a higher out-of-pocket premium.

The change is expected to save the Government $3 billion over 4 years. Private Health Australia estimates the impact on premiums could be significant.

Estimated premium increase — individual on Gold hospital, aged 70+

approx. $807 / year

Estimated premium increase — couple on Gold hospital, aged 70+

approx. $1,614 / year

People affected (over-65s with PHI, including 400,000+ pensioners)

3 million+

The Medicare levy threshold increase doesn’t come close to offsetting this

The Budget also lifts Medicare levy low-income thresholds by 2.9% — a routine annual adjustment that helps lower-income seniors continue to qualify for the levy exemption. But for most retirees who already pay the levy and rely on private health cover, the rebate change has a far larger annual dollar impact than the threshold adjustment.

Estimates from Private Health Australia (8 May 2026). The exact impact on your premium depends on your insurer, policy, and current age tier — worth checking with your insurer ahead of 1 April 2027.

Other changes that affect you

Four further items worth knowing

Each of these may apply depending on your specific situation. The CGT change is the most important for self-funded retirees with material share portfolios; pension supplement changes affect anyone planning overseas travel.

50% CGT discount being replaced

The 50% CGT discount on assets held over 12 months is being replaced with cost base indexation and a 30% minimum tax on real (inflation-adjusted) gains.

For retirees realising shares, managed funds or other investments to fund retirement, the “realise in a low-income year” strategy is largely ended unless you receive an income support payment. Recipients of the Age Pension, JobSeeker and similar payments are exempt from the 30% minimum.

Division 296 super tax

An additional 15% tax on the proportion of super earnings attributable to balances above $3 million, and a further 10% (so 25% additional) on balances above $10 million.

Now law (Royal Assent 13 March 2026). Tested on individual Total Super Balance — a couple can hold up to $6M combined without being affected. See the SMSF page for more on cost base reset elections and planning before 30 June 2026.

Pension supplement: 6 weeks → 12 weeks

Full-rate pension supplement payment extended from 6 to 12 weeks for recipients temporarily absent from Australia. Useful for retirees taking extended overseas trips.

But: the supplement ceases for those residing permanently overseas or temporarily absent for longer than 12 weeks. Retirees considering moving overseas, or spending months at a time away, should be aware of the change.

Personal tax cuts apply to your work income

If you earn income from part-time work or a sole-trader business, you’ll get the personal tax cuts: the lower bracket rate drops to 15% from 1 July 2026, then 14% from 1 July 2027.

From 2027-28, the new $250 Working Australians Tax Offset also applies to your work income (sole traders are eligible too). Modest help — up to about $1,100 extra per year at average earnings — but it’s automatic.

A strategy worth thinking about

Realising gains before 30 June 2027

The CGT changes are prospective — gains accruing before 1 July 2027 keep the 50% discount. For retirees with sizeable investment portfolios outside super, this creates a window worth considering carefully.

Plan, don’t rush

The pre-1 July 2027 window for realising gains

Personal investments (shares, managed funds, property other than your main residence) sold before 1 July 2027 use the existing 50% CGT discount on the full gain. Sold after that date, gains accruing post-1 July 2027 are subject to indexation and the 30% minimum tax floor.

For retirees considering realising long-held positions in coming years anyway — to rebalance, simplify, or fund retirement spending — bringing forward those sales into 2026-27 may produce a meaningfully better after-tax result, especially if your marginal tax rate is below 30%.

But this is genuinely planning territory, not a blanket recommendation. The right answer depends on your other income for the year, whether the underlying investment still suits your strategy, transaction costs, the CGT consequences of selling, and what you plan to do with the proceeds. We can model the outcome for your specific position.

If you receive income support, the 30% minimum doesn’t apply to you

Recipients of the Age Pension, JobSeeker, DSP, Carer Payment and similar income support payments are exempt from the 30% minimum on capital gains. The exemption applies if you receive any payment in the year you realise the gain — even part-pensioners qualify.

For full self-funded retirees with no Centrelink payment, the minimum tax does apply. That changes the maths of realising gains in low-income years.

What you should do

Practical steps for the next 12 months

The actions worth considering depend on your specific situation — particularly your super balance, your personal investment portfolio, and whether you receive any income support payments.

Check your PHI policy and prepare for 1 April 2027

Confirm with your insurer how the rebate change will affect your specific policy and age tier. Some retirees may want to review whether their current cover level still suits, in light of the higher net cost.

If you’re over $3M in super — act before 30 June 2026

Division 296 starts 1 July 2026. The cost base reset election (covered on the SMSF page) is the most time-sensitive single planning item from this Budget. If you’re in (or approaching) this range, let’s book a planning meeting.

Review your investment realisation plans for 2026-27

If you were already planning to realise investments — to rebalance, simplify, or fund spending — doing it before 1 July 2027 keeps the 50% CGT discount on accrued gains. Don’t rush a decision that doesn’t make investment sense, but if the timing was already flexible, this is a meaningful factor.

If you’re planning overseas travel, check the new rules

The 6-week to 12-week extension is helpful for longer trips. The cessation rule beyond 12 weeks is stricter. Worth confirming the implications before booking longer-term arrangements.

Check if you qualify for the income-support CGT exemption

If you receive any Age Pension, JobSeeker or similar payment in the year you realise a gain — even a part-pension — the 30% minimum tax doesn’t apply. For part-pensioners, this is an important interaction worth being aware of.

Revisit your estate plan

Testamentary trusts created from estates of those who die after 12 May 2026 are subject to the new 30% minimum trust tax. Existing testamentary trusts are grandfathered. If your Will doesn’t already include testamentary trust provisions, there’s a time-limited planning advantage to acting now.

Don’t make irreversible decisions on the strength of announcements

The PHI rebate change is confirmed for 1 April 2027. Division 296 is law. But several measures — particularly the CGT changes — remain subject to legislation and consultation. Smaller planning steps (PHI policy review, super planning, estate review) make sense now. Larger irreversible decisions — particularly bringing forward investment realisations purely for tax reasons — should wait until the legislation is closer to final.

Mastin Harris Family Wealth Protection

Estate planning matters more, not less, under the new rules

Testamentary trusts existing at 12 May 2026 are grandfathered from the new minimum trust tax. New ones from future estates are not. CGT rules change for transfers between generations. For retirees thinking about how wealth passes to children and grandchildren, the next 18 months are a meaningful planning window — not a time for inaction.

Learn more →

Other Budget changes that might apply to you

Retirees often fit more than one of these

Most retirees also have investment property, run an SMSF, hold shares or have a discretionary trust as part of their family structure. The full picture matters.

If this applies

I have a Self-Managed Super Fund

Division 296 from 1 July 2026 affects balances over $3 million. Cost base reset planning before 30 June 2026.

Read about SMSF changes If this applies

I hold shares or other investments

The 50% CGT discount is being replaced with indexation and a 30% minimum tax on real gains.

Read about CGT changes If this applies

I own (or am buying) an investment property

Negative gearing limited to new builds from 1 July 2027, plus the end of the 50% CGT discount.

Read about property changes If this applies

I run a business through a trust

A 30% minimum tax on discretionary trusts from 1 July 2028, with rollover relief to restructure.

Read about trust changes If this applies

I’m a PAYG employee

Two more rate cuts plus a $1,000 instant deduction and the new $250 Working Australians offset.

Read about employee changes If this applies

I run a small business

$20,000 instant asset write-off made permanent, loss carry-back returns, PAYG flexibility.

Read about small business changes

Make sure your retirement strategy stays on track.

Several of the Budget’s changes affect retirees specifically. The right response depends on your super balance, your investment mix, your family arrangements and your travel plans. We help clients see the full picture — tax, super, estate — and adjust where it matters.

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