May 2026 Budget & Client Investment Update

from Neil Kendall - Managing Director of Tupicoffs, The Independent Financial Planners

It has been a busy period for both policy and investment markets following the recent Federal Budget announcements.

At this stage our advice is to avoid making any immediate decisions. While a number of changes have been announced, these measures still need to be legislated and may change before they are finalised.

The proposed changes include adjustments to capital gains tax, limits to negative gearing on established residential properties, and the introduction of a minimum tax on discretionary trust income. While these are important developments, many of the details are still unclear and the impact will vary depending on individual circumstances. It is important to note that these changes are not immediate, and in most cases, will take effect over time, allowing an opportunity to review and plan appropriately.

Notably, the government did not make any new changes to superannuation. However, the Division 296 increase in taxation from previous budgets will take effect

from the 1st of July 2026. This only applies to where individual superannuation balances are over $3 million, and is an additional 15% tax on only the proportion over that $3 million. While this means that superannuation is not as advantageously taxed for large balances as it was, it is likely to remain the most tax-effective investment vehicle in Australia.

The purpose of the budget is very clearly to raise tax revenue, particularly from investment income. Larger portfolios, trusts and investment properties are likely to be more affected than they have been in the past. We will review each client’s personal circumstances and then make an informed decision about the right course of action. Our initial analysis shows that the effects will differ significantly, but we will work through each client’s situation and provide advice over time. At this stage, it makes sense to wait until we see the legislation so we understand the detail.

Turning to investment markets, returns over the past twelve months have been strong, particularly in the United States. While Australia has seen more modest returns, markets overall have performed well despite ongoing geopolitical tensions.

As expected, markets have been volatile. We have seen periods of sharp falls followed by strong recoveries, including a significant drop in US markets early in the year that was followed by a strong rebound. This pattern of movement is likely to continue.

Looking ahead, we expect ongoing volatility, but with a generally positive direction over time. Higher interest rates are also increasing the role of cash and fixed interest in portfolios, with more attractive returns now available in those areas.

Property markets are likely to be more uncertain, particularly in light of the budget changes, although the Brisbane market still appears relatively stable.

In terms of current events, our view is that at this stage there is no cause to take action. The way portfolios have been built allows for this sort of volatility. We shouldn’t be concerned if we see a short-term sell-off, and we shouldn’t be too excited if we see a short-term bounce. Over time, we would expect markets to revert to more normal behaviour.

Please don’t worry about your money, we’re doing that for you. If you have any concerns or would like to talk things through, we’re always happy to speak with you.

Highlights – May 2026

• The Federal Budget has introduced a number of proposed changes, but these still need to be legislated and may change.

• At this stage, clients should not make any immediate decisions or restructure investments.

• Proposed changes include adjustments to capital gains tax, negative gearing, and discretionary trust taxation.

• Most changes will take effect over time.

• Superannuation continues to be a tax-effective investment structure.

• Investment markets have delivered strong returns over the past year, particularly in the United States.

• Markets have been volatile, with sharp falls followed by strong recoveries.

• Looking ahead, we expect continued volatility but generally positive market conditions over time.