We have pleasure in enclosing a summary of the highlights from the Federal Government’s May 2026/27 Budget.
Electric Car Discount – more sustainable fringe benefits tax treatment of electric cars
The Government is adjusting settings of the electric car discount to maintain incentives for the shift to electric vehicles while transitioning to more sustainable settings for the longer term.
From 1 April 2029, a permanent 25 per cent discount on fringe benefits tax (FBT) will be available for all electric cars valued up to and including the fuel‑efficient luxury car tax threshold, implemented through a 15 per cent rate in the FBT statutory formula.
The following transitional arrangements will be put in place:
- All eligible electric cars will retain the FBT discount rate that was in place when the arrangement commenced;
- All electric cars valued up to and including $75,000 that are provided before 1 April 2029 will continue to be eligible for a 100 per cent discount on FBT, implemented through a 0 per cent rate in the FBT statutory formula; and
- Electric cars valued above $75,000 and up to and including the fuel‑efficient luxury car tax threshold that are provided between 1 April 2027 and 1 April 2029 will be eligible for a 25 per cent discount on FBT, implemented through a 15 per cent rate in the FBT statutory formula.
The existing 20 per cent statutory rate will continue to apply for all other cars, including electric cars costing more than the fuel‑efficient luxury car tax threshold.
Reportable fringe benefits will continue to be determined for eligible electric cars as if a 20 per cent FBT statutory formula rate or cost basis method applied.
This measure is estimated to increase receipts by $1.9 billion and increase payments by $200.0 million over the five years from 2025–26.
Source: Budget Paper No 2, p 11.
Foreign Investment – extending the ban on foreign purchases of established dwellings
The Government will extend the temporary ban on foreign purchases of established residential dwellings by two years and three months until 30 June 2029. The ban was originally implemented for two years from 1 April 2025. The extension of the ban will mean Australians will be able to buy homes that would have otherwise been bought by foreign persons, while encouraging foreign persons to boost Australia’s housing supply.
Current limited exceptions to the ban for purchases of established dwellings that support housing supply will continue. General exemptions from foreign investment screening will also continue to apply for purchases of established dwellings, including for permanent residents and New Zealand citizens.
The measure is estimated to decrease tax receipts by $185.0 million over the five years from 2025–26 due to foregone revenue from foreign investment applications.
Source: Budget Paper No 2, p12.
Global Anti‑Base Erosion Rules (Pillar Two) Side-by-Side Package Implementation
The Government will amend Australia’s global and domestic minimum tax legislation, introduced in 2024, to implement the side‑by‑side package agreed by the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting on 5 January 2026.
Implementing the side‑by‑side package will ensure Australia’s global minimum tax rules are consistent with those of other implementing jurisdictions and will deliver on the Government’s commitment to support the OECD/G20 efforts to reform the international corporate tax system.
The side‑by‑side package will apply from 1 January 2026 and is estimated to decrease receipts by $240.0 million and increase payments by $11.0 million over the five years from 2025–26.
This measure continues to advance the Government’s multinational tax reform agenda by supporting a globally coordinated minimum tax framework that ensures large multinationals pay their fair share of tax.
Source: Budget Paper No 2, p12.
Personal Income Tax – increasing the Medicare levy low‑income thresholds
The Government will increase the Medicare levy low‑income thresholds for singles, families, and seniors and pensioners by 2.9 per cent from 1 July 2025.
The increase in the thresholds provides cost‑of‑living relief by continuing to exempt low‑income individuals and families from paying the Medicare levy.
The threshold for singles will be increased from $27,222 to $28,011. The family threshold will be increased from $45,907 to $47,238. For single seniors and pensioners, the threshold will be increased from $43,020 to $44,268. The family threshold for seniors and pensioners will be increased from $59,886 to $61,623. The family income thresholds will increase by $4,338 for each dependent child or student, up from $4,216.
The increase in the thresholds is estimated to decrease receipts by $450.0 million over the five years from 2025–26.
Source: Budget Paper No 2, p13.
Protecting the tax system against fraud
The Government will provide $86.3 million over four years from 1 July 2026 and $9.7 million per year ongoing from 2030–31 to deliver Phase 2 of the Counter Fraud Strategy to modernise the prevention and detection of fraud in the tax and super systems.
This proposal will enhance the Australian Taxation Office’s (ATO) ability to detect and prevent fraud in real time, provide additional fraud protections for individuals and expand live monitoring of fraudulent account access to tax agents, business and for high‑risk superannuation changes.
The Government will also strengthen the ATO’s ability to combat fraud by tax agents and other intermediaries. The ATO will be given powers to pause the recovery of tax debts of taxpayers who are victims of fraud by tax intermediaries, and waive those debts in appropriate circumstances, and to recover the debts from the tax intermediaries. Existing garnishee powers will also be expanded to include jointly held assets in circumstances where such arrangements are being used to frustrate recovery actions.
The Government will also progress further targeted exceptions to tax secrecy and enhancements to tax regulators’ information‑gathering powers to support integrity, compliance and effective administration of the tax system.
The ATO will undertake additional targeted compliance activities over the two years from 2026–27 to further address fraud in the system, including in relation to the Research and Development Tax Incentive.
This measure is estimated to increase receipts by $217.8 million and increase payments by $72.9 million over the five years from 2025–26. The ATO will partially meet the cost of this measure from within existing resources.
Source: Budget Paper No 2, p14.
Strengthening the Foreign Resident Capital Gains Tax Regime – transitional arrangements
The Government will provide a time‑limited, targeted concession in the foreign resident CGT regime for investment in the renewables sector as part of the implementation of the 2024–25 Budget measure Strengthening the foreign resident capital gains tax regime.
The transitional arrangement will apply to foreign investors disposing of certain renewable energy infrastructure assets from commencement, being the first day of the next quarter after Royal Assent, until 30 June 2030.
This concession balances ongoing Government support for Australia’s practical action on climate change, with the need to ensure the tax treatment of these assets aligns with the treatment of other assets in the longer term.
This measure is estimated to decrease receipts by $425.0 million over the five years from 2025–26 and was accounted for in a prior Budget process.
The Government will also ensure the concept of ‘real property’ in Australia is determined by Commonwealth legislation rather than state and territory laws, with effect from 12 December 2006, when the regime was introduced. As this clarification is intended to protect existing revenue, the revenue impact is estimated to be nil.
Source: Budget Paper No 2, p14-15.
Taking Pressure Off Australians – temporary reduction of fuel excise and heavy vehicle road user charge
The Government has temporarily reduced the excise and excise‑equivalent customs duty rates (excise rates) applying to most fuel products and the road user charge for heavy vehicles, for 3 months from 1 April 2026.
The excise rates have been reduced by a total of 60.9 per cent, equating to a 32 cent per litre reduction for petrol and diesel. States and territories have agreed to provide the Commonwealth up to $400 million to enable increased GST revenue to be returned through lower excise, which equates to 5.7 cents per litre of the cut for petrol and diesel. The road user charge for heavy vehicles has also been reduced from 32.4 cents per litre to zero.
This measure is estimated to decrease receipts by $3.8 billion and decrease payments by $1.3 billion over the five years from 2025–26.
Source: Budget Paper No 2, p16.
Tax Reform – cutting taxes with a Working Australians Tax Offset
The Government will deliver a new tax cut for every working Australian taxpayer by introducing a $250 Working Australians Tax Offset from the 2027–28 income tax year.
The Working Australians Tax Offset will provide a permanent annual tax offset for Australians for their income derived from work, such as wages and salaries and the business income of sole traders, from 1 July 2027. This will help Australian workers keep more of what they earn, delivering further targeted cost of living relief and helping to incentivise workforce participation.
The Working Australians Tax Offset will increase the effective tax free threshold for income derived from work by nearly $1,800 to $19,985 (or up to $24,985 for workers eligible for the Low Income Tax Offset). This is the largest permanent increase in the effective tax free threshold since 2012–13.
This measure is estimated to decrease receipts by $6.4 billion over the five years from 2025– 26. The Australian Taxation Office will receive $10.0 million over five years from 2025– 26 to support implementation of the measure, with funding from 2027–28 to be held in the Contingency Reserve. This measure is offset by the measures Tax Reform – Boosting Home Ownership – reforming negative gearing and capital gains tax and Tax Reform – introducing a minimum tax on discretionary trusts.
This new tax relief is in addition to the tax cuts for every Australian taxpayer that will come into effect on 1 July 2026 and 1 July 2027, and the $1,000 instant tax deduction.
Source: Budget Paper No 2, p16-17.
Tax Reform – better targeting the Research and Development Tax Incentive
The Government is reforming the Research and Development Tax Incentive (R&DTI) to simplify and better target Government support for business R&D.
From 1 July 2028, the Government will:
- Increase the offset for core R&D expenditure by around 25 to 50 per cent, through a 4.5 percentage point increase in core R&D offset rates;
- Reduce the intensity threshold from 2 per cent to 1.5 per cent, enabling more firms that engage in substantial core R&D to qualify for higher offset rates;
- Remove eligibility of supporting R&D expenditure for the R&DTI;
- Enable growing firms to retain access to the refundable tax offset for longer by increasing the turnover threshold for the highest offset rate from $20 million to $50 million;
- For firms below the $50 million turnover threshold, maintain older firms’ eligibility for the higher offset rate while limiting refundability to firms under 10 years of age;
- Lift the maximum R&DTI expenditure threshold from $150 million to $200 million; and
- Improve assurance on smaller claims by lifting the minimum expenditure threshold from $20,000 to $50,000, with research activities valued below this amount required to be undertaken with a registered Research Service Provider or Cooperative Research Centre to be eligible for the R&DTI.
- The Australian Taxation Office will receive $2.8 million in funding over three years from 2027–28 to support implementation of the measure, to be held in the Contingency Reserve pending finalisation of administrative arrangements.
- This measure is estimated to decrease receipts by $910.0 million and decrease payments by $1.6 billion over the five years from 2025–26.
- This measure forms part of the first stage of the Government’s response to the Ambitious Australia: Strategic Examination of Research and Development Final Report.
Source: Budget Paper No 2, p17-18.
Tax Reform – expanding venture capital tax incentives
The Government will expand the venture capital tax incentives to better facilitate venture capital investment and support early stage and growth businesses.
From 1 July 2027:
- The venture capital limited partnership (VCLP) cap on the asset size of the investee business at the time of investment will be increased to $480 million, from $250 million;
- The early stage venture capital limited partnership (ESVCLP) cap on the asset size of the investee business at the time of investment will be increased to $80 million, from $50 million;
- The ESVCLP tax incentive cap on the asset size of the investee business, at which investment returns can be fully tax exempt, will be increased to $420 million, from $250 million; and
- The maximum fund size of ESVCLPs will be increased to $270 million, from $200 million.
The increases will apply to new and existing funds and to new investments they make, including where funds make further investments in businesses already held. ESVCLPs must remain in compliance with their existing investment plans or seek approval for a replacement plan.
The eligible venture capital investor program will be closed to new applications from 7.30PM (AEST) 12 May 2026.
The Department of Industry, Science and Resources (DISR) will receive $3.6 million in 2026–27 to support growth of the programs, with funding from 2027–28 to be held in the Contingency Reserve pending finalisation of implementation details. Treasury and DISR will jointly undertake a departmental impact assessment of these programs in 2032–33 to ensure that they remain well‑targeted and appropriate.
This measure is estimated to decrease receipts by $10.0 million and increase payments by $14.7 million over the five years from 2025–26.
This measure forms part of the first stage of the Government’s response to the Ambitious Australia: Strategic Examination of Research and Development Final Report.
Source: Budget Paper No 2, p18-19.
Tax Reform – introducing a $1,000 Instant Tax Deduction
The Government will introduce an instant tax deduction of up to $1,000 from the 2026–27 income tax year to make the tax system simpler while also delivering more cost-of-living relief.
Australian tax residents who earn income from work will be eligible for the instant tax deduction and will not need to itemise and claim work‑related expenses if claiming less than $1,000.
Individuals who incur work‑related expenses greater than the instant tax deduction can continue to claim their deductions in the usual way. Charitable donations, union and professional association membership fees and other non‑work‑related deductions can still be itemised separately and claimed on top of the instant tax deduction.
The instant tax deduction is expected to decrease receipts by $2.4 billion and increase payments by $183.9 million over four years from 2025–26. This measure was provisioned for by the Government in the 2025–26 MYEFO.
This measure delivers on the Government’s election commitment made during the 2025 federal election.
Source: Budget Paper No 2, p19.
Tax Reform – loss refundability reforms for businesses and start‑ups
The Government will provide tax relief to businesses and start‑ups by reforming the treatment of tax losses. This will encourage investment and sensible risk‑taking and improve the resilience of firms through temporary shocks.
For tax years commencing on or after 1 July 2026, companies with aggregated annual global turnover of less than $1 billion will be able to carry back a tax loss and offset it against tax paid up to two years earlier. Loss carry back will apply to revenue losses only and will be limited by a company’s franking account balance.
Reintroducing loss carry back is estimated to decrease receipts by $2.3 billion over the five years from 2025–26.
The Government will also introduce loss refundability for small start‑up companies. For tax years commencing on or after 1 July 2028, start‑up companies with aggregated annual turnover of less than $10 million that generate a tax loss in their first two years of operation will be able to utilise the loss to generate a refundable tax offset. The offset will be limited to the value of fringe benefits tax and withholding tax on wages paid in respect of Australian employees in the loss year.
Introducing loss refundability for small start‑up companies is estimated to increase administered payments by $410.0 million over the five years from 2025–26.
Together these changes are estimated to decrease receipts by $2.3 billion and increase payments by $468.2 million over the five years from 2025–26. The Australian Taxation Office will receive $58.2 million over five years from 2025–26 to support implementation of the measure, with funding from 2027–28 to be held in the Contingency Reserve.
Source: Budget Paper No 2, p19-20.
Tax Reform – making tax simpler for businesses
The Government is making the tax system simpler so businesses can spend more time running their business and less time on tax.
From 1 July 2026, the Government will permanently extend the $20,000 instant asset write‑off for small businesses with turnover up to $10 million. Assets valued at $20,000 or more can continue to be placed into the small business simplified depreciation pool. The provisions that prevent small businesses from re‑entering the simplified depreciation regime for 5 years after opting out will continue to be suspended until 30 June 2027.
The Government will also provide $10.9 million to the Australian Taxation Office to expand its pilot of dynamic pay as you go (PAYG) instalment calculations, and will expand access to monthly payments. From 1 July 2027, small and medium businesses will be able to opt in to reporting and paying PAYG instalments monthly and to using an ATO approved calculation embedded in accounting software to calculate and vary their instalments. This will support businesses by enabling tax instalments to better reflect real time business activity. Taxpayers with a demonstrated history of non‑compliance will be required to report and pay PAYG instalments monthly.
This measure is estimated to decrease receipts by $815.0 million and increase payments by $17.2 million over the five years from 2025–26.
Source: Budget Paper No 2, p20.
Tax Reform – Boosting Home Ownership – reforming negative gearing and capital gains tax
The Government is reforming negative gearing and capital gains tax (CGT) arrangements to improve the fairness of the tax system, support home ownership and help fund new tax cuts for workers.
Improving Tax Arrangements for Capital Gains
From 1 July 2027, the 50 per cent CGT discount will be replaced by cost base indexation for assets held for more than 12 months, with a 30 per cent minimum tax on net capital gains. These changes will apply to all CGT assets, including pre 1985 CGT assets, held by individuals, trusts and partnerships.
Transitional arrangements will limit the impact on existing investments by ensuring the changes only apply to gains arising on or after 1 July 2027. The 50 per cent CGT discount will continue to apply to gains arising before 1 July 2027. Capital gains on pre 1985 assets arising before 1 July 2027 will remain exempt from CGT.
To maintain incentives for new housing supply, investors in new residential properties will be able to choose either the 50 per cent CGT discount, or cost base indexation and the minimum tax. Income support payment recipients, including Age Pension recipients, will be exempt from the minimum tax.
Reforming Negative Gearing to Support New Housing Supply
The Government will limit negative gearing for residential property to new builds. From 1 July 2027, losses from established residential properties will only be deductible against rental income or the capital gains from residential properties. Excess losses will be carried forward and able to be offset against residential property income in future years.
These changes will apply to established residential properties acquired from 7:30PM (AEST) on 12 May 2026. Properties acquired prior to this time (including contracts entered into but not yet settled) will be exempt from the changes until disposed of.
Eligible new builds will be exempt from the changes, ensuring the benefits of negative gearing are directed to investment that increases the housing stock. Properties in widely held trusts and superannuation funds will be excluded, alongside targeted exemptions for build to rent developments and private investors supporting government housing programs.
This measure is estimated to increase receipts by $3.6 billion over the five years from 2025– 26. The Australian Taxation Office will receive $90.7 million over five years from 2025– 26 to support implementation of the measure, with funding from 2027–28 held in the Contingency Reserve. Treasury will receive $8.1 million over two years from 2026–27 to implement the Government’s tax reform agenda.
Source: Budget Paper No 2, p21-22.
Tax Reform – introducing a minimum tax on discretionary trusts
The Government will introduce a 30 per cent minimum tax on discretionary trusts to improve the fairness of the tax system and help fund new tax cuts for workers.
From 1 July 2028, trustees will pay a minimum tax of 30 per cent on the taxable income of discretionary trusts. Beneficiaries, other than corporate beneficiaries, will receive non refundable credits for the tax payable by the trustee.
The minimum tax will not apply to other types of trusts such as fixed and widely held trusts (including fixed testamentary trusts), complying superannuation funds, special disability trusts, deceased estates and charitable trusts. Some types of income such as primary production income, certain income relating to vulnerable minors, amounts to which non resident withholding tax applies, and income from assets of discretionary testamentary trusts existing at announcement will also be excluded.
The Government will provide expanded rollover relief for three years from 1 July 2027 to support small businesses and others that wish to restructure out of discretionary trusts into another entity type, such as a company or a fixed trust.
This measure is estimated to increase receipts by $4.5 billion over the five years from 2025– 26. The Australian Taxation Office will receive $66.0 million over the five years from 2025–26 to support implementation of the measure, with funding from 2027–28 to be held in the Contingency Reserve.
Source: Budget Paper No 2, p22.
Boosting Consumer Energy Resources and Delivering Bill Savings
The Government will provide $143.2 million over five years from 2025–26 (and $0.7 million in 2030–31) to maximise consumer and community benefits of the energy transition. Funding includes:
- $97.2 million over five years from 2025–26 to continue implementing the National Consumer Energy Resources Roadmap to help consumers save on bills and benefit from the energy transition, including establishing a National Technical Regulator to develop, coordinate and streamline regulation of consumer energy resources
- $15.9 million over four years from 2026–27 (and a $2.0 million equity injection in 2026–27) to uplift the Australian Energy Regulator to deliver energy consumers the best deal through network regulation, the Energy Made Easy website, implementation of the recommendations of the National Electricity Market wholesale market settings review and compliance and enforcement activities
- reprofiling $15.4 million over four years from 2025–26 to expand the scope of the Dealership and Repairer Initiative for Vehicle Electrification Nationally program and extend the program by an additional year to better meet industry needs
- $14.6 million over five years from 2025–26 (and $0.7 million in 2030–31) to maintain proportionate battery system inspections under the Cheaper Home Batteries program.
The provision of an equity injection is a financial transaction within the general government sector and has no direct impact on underlying cash or fiscal balance.
The cost of this measure will be met from savings identified in the Climate Change, Energy, the Environment and Water portfolio.
This measure builds on the 2022–23 October Budget measure titled Powering Australia – Driving the Nation Fund – establishment, the 2023–24 Budget measure titled Ensuring the Supply of Reliable, Secure and Affordable Energy, the 2024–25 Budget measure titled Harnessing the Energy Transition to Benefit Consumers, and the 2025 PEFO measure titled Cheaper Home Batteries Program.
Source: Budget Paper No 2, p46.
Energy Sovereignty – Fuel Security and Resilience
The Government will provide up to $11.9 billion over five years from 2025–26 to support Australian households, businesses and industry through the National Fuel Security Plan, including:
- the establishment of a Fuel and Fertiliser Security Facility to increase additional supply and storage of fuel and fertiliser by providing up to USD5.0 billion (approximately AUD7.5 billion) in financial support including loans, equity, guarantees, insurance and price support
- the establishment of a $3.2 billion Australian Fuel Security Reserve to increase long term fuel supply and storage in combination with an increase to the Minimum Stockholding Obligation (MSO), to increase Australia’s fuel reserves to 50 days
- the National Reconstruction Fund Corporation to deliver the $1.0 billion Economic Resilience Program from 2025–26 to support freight, fuel, fertiliser and other critical supply chains affected by global market disruptions
- $55.0 million in 2026–27 to deliver the Transport Resilience and Capacity Kickstart pilot program to incentivise increased freight volumes by rail and maritime transport$54.7 million over five years from 2025–26 (and $8.9 million per year ongoing) to support ongoing management of Australia’s fuel security framework, including oversight of the Fuel Security Services Payment, the MSO and the National Fuel Security Plan communications campaign
- $40.5 million in 2026–27 to accelerate the electrification of Australia Post’s delivery fleet
- $10.0 million over two years from 2026–27 for the Australian Energy Regulator to expand electricity market monitoring and reporting activities
- $10.0 million in 2026–27 to support feasibility studies into new or expanded fuel refining capabilities, to be co‑funded with state and territory jurisdictions
- $9.2 million over two years from 2025–26, terminating 31 December 2026, for the Department of the Prime Minister and Cabinet to establish a Fuel Supply Taskforce to coordinate Australia’s fuel security during Middle East conflict‑related disruptions
- $4.5 million over three years from 2026–27 for the Commonwealth Scientific and Industrial Research Organisation to maintain and enhance its Transport Network Strategic Investment Tool to model transport options to support resilience and enhance responses to disruption
- $4.0 million over three years from 2026–27 to develop a green fuel bunkering strategy to support the Government’s existing $1.1 billion Cleaner Fuels program, with costs to be met from within the existing resources of the Department of Infrastructure, Transport, Regional Development, Communications, Sport and the Arts
- ongoing funding from 2025–26 for the Department of Industry, Science and Resources to maintain its industry and supply chain analytical platform to monitor supply chains.
The Government has also passed legislation to double the maximum penalties for major contraventions of the Competition and Consumer Act 2010 and the Australian Consumer Law from $50.0 million to $100.0 million, and tasked the Australian Competition and Consumer Commission (ACCC) to undertake weekly public reporting on fuel price movements and market conditions to deter harmful conduct in the fuel industry and supply chains during the Middle East conflict.
The Government will also introduce legislation to streamline the ACCC’s authorisation and class exemption powers to allow industry to coordinate under exceptional circumstances where it provides broader benefits.
The cost of this measure is partially offset.
The Treasury manages Commonwealth payments to the states and territories.
The financial implications of some elements of this measure are not for publication (nfp) as disclosure would compromise commercial negotiations.
This measure builds on the 2024–25 Budget measure titled Supporting Safe and Responsible AI and the 2025–26 MYEFO measure titled Maintaining Australia’s Liquid Fuel Security.
Source: Budget Paper No 2, p65-66.
Energy Sovereignty – Establishing a Domestic Gas Reservation
The Government will provide $35.5 million over four years from 2026–27 to ensure a secure and ongoing supply of affordable gas through the domestic wholesale gas market, including via the establishment of a Domestic Gas Reservation Mechanism. Funding includes:
- $30.6 million over four years from 2026–27 to develop and implement the Domestic Gas Reservation Mechanism and for gas market analysis and policy development to support market reliability and energy security
- $4.9 million in 2026–27 to modernise offshore resources regulation to support gas investment and help mitigate supply shortfalls, including providing more clarity on consultation requirements for offshore resources approvals.
The domestic gas reservation percentage will be set at the equivalent to 20 per cent of exports. The Domestic Gas Reservation Mechanism will commence on 1 July 2027.
The Government will also continue the policy and coordination functions of the Offshore Decommissioning Directorate.
The cost of this measure will be met from savings identified in the Industry, Science and Resources portfolio and the Climate Change, Energy, the Environment and Water portfolio.
This measure builds on the 2022–23 October Budget measure titled Support for Energy Security and Reliability, the 2023–24 Budget measure titled Working with the Australian Resources Industry on the Pathway to Net Zero, the 2024–25 Budget measure titled Supporting Safety and Responsible Decommissioning in the Offshore Resources Sector, and the 2025–26 MYEFO measure titled A Rapidly Transforming Energy System.
Source: Budget Paper No 2, p67.
Government Response to the Antisemitic Bondi Terrorist Attack
The Government will provide $604.2 million over five years from 2025–26 (and $8.1 million per year ongoing) in response to the antisemitic Bondi terrorist attack on 14 December 2025.
Source: Budget Paper No 2, p67.
2026 National Defence Strategy and Integrated Investment Program
The Government will provide additional funding of $6.8 billion over four years from 2026–27 (and $35.6 billion over ten years from 2026–27) to support the delivery of the 2026 National Defence Strategy and Integrated Investment Program to enhance Defence capability, preparedness and resilience.
Source: Budget Paper No 2, p71.
Australian Naval Infrastructure Equity Injection
The Government will provide Australian Naval Infrastructure Pty Ltd (ANI) with an equity injection over four years from 2026–27 to support construction of the Nuclear‑Powered Submarine Construction Yard in South Australia.
Source: Budget Paper No 2, p72.
Continuing to Support Veterans and their Families
The Government will provide $173.7 million over five years from 2025–26 (and $58.8 million per year ongoing) to continue supporting veterans and their families.
Source: Budget Paper No 2, p72.
Defence Assistance
The Government has provided $6.7 million in 2025–26 for military assistance.
Source: Budget Paper No 2, p73.
Nuclear-Powered Submarine Program – continuation of government resourcing
The Government will provide $863.8 million over four years from 2026–27 for continued support to the Nuclear‑Powered Submarine program.
Source: Budget Paper No 2, p75.
Nuclear-Powered Submarine Program – further program support
The Government will provide $218.4 million over eight years from 2026–27 for continued support to the Nuclear‑Powered Submarine program.
Source: Budget Paper No 2, p76.
Education Portfolio – schools reform
The Government will provide $5.6 million over two years from 2026–27 to undertake exploratory work with states and territories on options for a viable pathway to establish a new Teaching and Learning Commission to provide better coordination between curriculum, teaching, assessment, research and reporting practices through integrating agencies.
Source: Budget Paper No 2, p79.
Improving Outcomes in Australian Schools
The Government will provide $26.1 million over four years from 2026–27 (and $5.0 million per year ongoing) to support measures which will contribute to improving educational outcomes in Australian schools.
Source: Budget Paper No 2, p79.
Supplementary Funding for the Inclusion Support Program
The Government will provide $54.8 million in 2026–27 to help early childhood education and care services increase their capacity to support the inclusion of children with additional needs, through tailored support and funding to services.
Source: Budget Paper No 2, p81.
Employment and Workplace Relations and Skills – reprioritisation
The Government will achieve savings of $297.9 million over five years from 2025–26 (and $106.3 million per year ongoing) by better targeting apprenticeship supports and redirecting uncommitted funding across programs in the Employment and Workplace Relations portfolio. Savings include:
- $266.2 million over four years from 2026–27 (and $106.3 million per year ongoing) through reforms to the Australian Apprenticeships Incentive System, redirecting employer incentives to small and medium employers and Group Training Organisations, and better aligning support with national priorities through changes to the Australian Apprenticeships Priority List methodology and incentive rates from 1 January 2027, consistent with the Strategic Review of the Australian Apprenticeship Incentive System
- $25.3 million over four years from 2025–26 by returning uncommitted funding for states and territories from National Skills Agreement policy initiatives
- $6.4 million in 2025–26 by returning uncommitted funding from grant programs.
The Treasury manages Commonwealth payments to the states and territories.
The savings from this measure will be redirected to other Government policy priorities in the Employment and Workplace Relations portfolio.
Source: Budget Paper No 2, p82.
Employment Services and Support – additional funding
The Government will provide $316.1 million over five years from 2025–26 (and $36.7 million per year ongoing) to continue supporting Australians into employment and improve participant experience.
Source: Budget Paper No 2, p83.
Skills and Training – additional supports
The Government will provide funding of $36.7 million over four years from 2026–27 (and $9.1 million per year ongoing) to extend support for skills and training priorities.
Source: Budget Paper No 2, p84.
Workplace Relations – additional supports
The Government will provide $11.2 million over two years from 2026–27 to progress the Government’s workplace relations agenda.
Source: Budget Paper No 2, p84.
Boosting Productivity – Digital ID
The Government will provide $654.3 million over four years from 2026–27 (and $166.7 million per year ongoing) to meet its legislative commitments under the Digital ID Act 2024 and maintain the security and reliability of the Australian Government’s Digital ID System.
Source: Budget Paper No 2, p86.
Services Australia – additional resourcing
The Government will provide additional funding of $2.2 billion over five years from 2025–26 to improve the way Services Australia delivers services to the Australian community, including:
- $1.7 billion over two years from 2026–27 for frontline staff to help manage claims and maintain service standards and to continue emergency response capability
- $287.0 million over three years from 2025–26 to continue to enhance safety and security at Services Australia centres and respond to recommendations of the Security Risk Management Review for Services Australia, including an increased security presence, enhancements to service centre design, incident management systems and security monitoring, staff training and staff protection through the Commonwealth Workplace Protection Orders scheme
- $160.4 million over four years from 2025–26 for the Services Australia Cyber Security Uplift program
- $26.5 million over three years from 2025–26 to improve the functionality, availability and security of the myGov platform
- $19.8 million in 2025–26 for planning, feasibility assessment and proof‑of‑concept activities for the Services Australia long‑term ICT architecture strategy.
The Government will evaluate future staffing needs for Services Australia alongside ongoing improvements to myGov service delivery.
The Government has already provided partial funding for this measure.
The cost of this measure will be partially met from within Services Australia’s existing resources, from savings identified within Services Australia and from a reprioritisation of funding from the 2023–24 MYEFO measure titled Income Management and Enhanced Income Management – transition arrangements.
The financial implications for some elements of this measure are not for publication (nfp) due to contractual sensitivities.
This measure builds on the 2024–25 Budget measure titled Services Australia – additional resourcing.
See also the related payment measure titled Income Management in the Social Services portfolio.
Source: Budget Paper No 2, p88-89.
Better Care for Older Australians
The Government will provide $565.1 million over four years from 2026–27 (and $2.1 million per year ongoing) for strengthened regulatory, governance and quality arrangements, sector viability and workforce supports to provide better care for older Australians.
Source: Budget Paper No 2, p94.
Improving Access and Uptake of Medicines and Vaccines
The Government will provide $590.7 million over five years from 2025–26 (and $60.9 million per year ongoing) to improve access to medicines, vaccines and health technologies for Australians.
Source: Budget Paper No 2, p98.
Improving Access to Home Care
The Government will provide $1.4 billion over four years from 2026–27 (and $377.3 million per year ongoing) to improve affordability and access to home care supports.
Source: Budget Paper No 2, p99.
Mental Health
The Government will provide $283.2 million over four years from 2025–26 to continue to strengthen Australia’s mental health and suicide prevention system.
Source: Budget Paper No 2, p99.
Modernising Private Health
The Government will achieve savings of $3.0 billion over four years from 2026–27 (and $1.0 billion per year ongoing) by removing the age‑based uplift of the Private Health Insurance Rebate (the PHI Rebate) from 1 April 2027, to enable a simplified and more equitable distribution of the PHI Rebate and help to improve intergenerational equity.
Source: Budget Paper No 2, p101.
National Health Reform Agreement – hospital funding and Commonwealth investment in the public hospital system
The Government will provide $220.3 billion over five years from 2026–27 to the states and territories for public hospital services and the implementation of the 2026–2031 Addendum to the National Health Reform Agreement (NHRA).
Source: Budget Paper No 2, p101.
Pharmaceutical Benefits Scheme New and Amended Listings
The Government will provide $5.9 billion over five years from 2025–26 for new and amended listings on the Pharmaceutical Benefits Scheme (PBS) and Repatriation Pharmaceutical Benefits Scheme.
Source: Budget Paper No 2, p103.
Preventive Health
The Government will provide $488.2 million over five years from 2025–26 (and $107.8 million per year ongoing) to improve health outcomes through preventive health, equitable access and early intervention.
Source: Budget Paper No 2, p104.
Reinvesting in Health, Disability and Ageing Programs
The Government has identified a further $2.7 billion over five years from 2025–26 from health, disability and ageing programs which will be reinvested in new or expanded health, disability and ageing services.
Source: Budget Paper No 2, p105.
Residential Aged Care Supply and Equity of Access
The Government will provide $606.5 million over four years from 2026–27 (and an additional $3.0 billion from 2030–31 to 2035–36) to respond to the Residential Aged Care Accommodation Pricing Review to stimulate an increase in bed supply and to protect equity of access for supported residents.
Source: Budget Paper No 2, p105.
Securing the National Disability Insurance Scheme for Future Generations
The Government will provide $1.7 billion over five years from 2025–26 (and $110.9 million per year ongoing) to support people with disability and to improve the quality of supports delivered through the National Disability Insurance Scheme (NDIS).
Source: Budget Paper No 2, p106.
Strengthening Medicare
The Government will provide $2.1 billion over five years from 2025–26 (and $599.6 million per year ongoing) to ensure all Australians have affordable access to high quality primary and specialist health care services and to increase access to bulk billing.
Source: Budget Paper No 2, p109.
Thriving Kids
The Government will provide $2.0 billion over five years from 2026–27 to deliver national services, fund enabling supports and contribute to state and territory services for the Thriving Kids program. Together with investments from states and territories, Thriving Kids will support children aged eight and under with developmental delay and/or autism with low to moderate support needs, as well as their families, carers and kin.
Source: Budget Paper No 2, p112.
2023–30 Australian Cyber Security Strategy – Horizon 2
The Government will provide $89.3 million over four years from 2026–27 to sustain and enhance cyber security initiatives.
Source: Budget Paper No 2, p114.
Strengthening the Integrity of the Migration System
The Government will provide $167.4 million over four years from 2026–27 to strengthen the integrity of Australia’s migration system.
Source: Budget Paper No 2, p119.
Supporting Border Security
The Government will provide $88.6 million in 2026–27 to support Australia’s border security.
Source: Budget Paper No 2, p120.
Continuing Investment in Australia’s Critical Minerals
The Government will provide $173.3 million over five years from 2025–26 to support growth of Australia’s critical minerals industry.
Source: Budget Paper No 2, p121.
Supporting Australian Industry
The Government will provide funding to support Australia’s heavy industry, including manufacturing.
Source: Budget Paper No 2, p122.
Building a Better Future Through Considered Infrastructure Investment
The Government will provide $8.6 billion over 11 years from 2025–26 (and $75.7 million per year ongoing) for road and rail infrastructure priorities to support productivity and jobs.
Source: Budget Paper No 2, p124.
Boosting Home Ownership
The Government will provide $2.1 billion over five years from 2025–26 to support increased housing supply and research. Funding includes:
- $2.0 billion over four years from 2026–27 for the Housing Support Program – Local Infrastructure Fund to provide funding via states and territories (states) to support local governments and state utility providers to expedite the delivery of housing enabling infrastructure, with funding contingent on states committing to reforms to improve productivity in the housing sector, including faster and simpler approvals, releasing more land ready to build homes, and delivering a genuinely national construction code
- $56.4 million over four years from 2025–26 for the Treasury to support the oversight and delivery of key programs under the Government’s Homes for Australia plan and for a public campaign to inform taxpayers of the changes to the tax system
- $2.1 million in 2026–27 to extend Commonwealth funding to support the Australian Housing and Urban Research Institute.
This measure builds on and extends the 2024–25 Budget measure titled Housing Support.
Source: Budget Paper No 2, p139.
Boosting Productivity – Better Regulation
The Government will provide $198.1 million over two years from 2026–27 to boost productivity through streamlining regulatory systems and secure access to data. Funding includes:
- $136.1 million over two years from 2026–27 to complete the second tranche of stabilisation and uplift of Australia’s business registers, including synchronising director information with the Australian Charities and Not‑for Profits Commission’s Charities Register, linking Director IDs to the Companies Register, uplifting Australian Business Number (ABN) authentication and completing the transition of ABN and superannuation lookup functions to the Australian Taxation Office
- $62.0 million over two years from 2026–27 to extend the operation and participation in the Consumer Data Right to continue supporting Australian consumers and businesses and to explore the potential to enable taxpayers to share certain ATO‑held data through the Consumer Data Right.
The Government will also introduce legislation to modernise, simplify and improve regulation in the financial sector. The reforms will:
- reduce unnecessary reporting and disclosure requirements
- implement reforms to regulatory requirements for small and medium‑sized banks
- modernise and simplify financial system frameworks.
This measure builds on the 2025–26 Budget measure titled Treasury Portfolio – additional resourcing.
Source: Budget Paper No 2, p139-140.
Economic Security
The Government will provide $38.9 million over four years from 2026–27 (and $7.3 million per year ongoing) to increase Australia’s economic security and resilience to strategic shocks and threats. Funding includes:
- $20.3 million over four years from 2026–27 (and $5.2 million per year ongoing) for the Treasury to provide a dedicated economic security and sector assessment function to inform policy responses to global shocks and emerging economic threats and support closer collaboration between policy and intelligence agencies
- $18.5 million over four years from 2026–27 (and $2.2 million per year ongoing) to uplift the Australian Securities and Investments Commission (ASIC) and Australian Prudential Regulatory Authority’s (APRA) capability to improve the security of systems of national significance.
The Government will also establish a limited special appropriation to support resolution of any future crisis in the cash distribution network.
Partial costs for this measure will be met through ASIC and APRA cost recovery.
Source: Budget Paper No 2, p141.
Improving Insurance Affordability and Consumer Outcomes
The Government will provide $3.4 million over four years from 2026–27 to support and develop measures that place downward pressure on property insurance costs and reduce unintentional underinsurance.
Source: Budget Paper No 2, p141.
Protecting Consumers and Increasing Competition
The Government will provide $100.0 million over four years from 2026–27 (and $20.1 million per year ongoing) to promote fair competition and protect consumers.
Source: Budget Paper No 2, p142.
Protecting Investors and Strengthening the Superannuation System
The Government will provide $17.8 million over four years from 2026–27 (and $1.4 million per year ongoing) to strengthen governance requirements, supervision and enforcement in relation to managed investment schemes, including:
- $10.3 million in 2026–27 for the Australian Securities and Investments Commission (ASIC) to enhance its ability to utilise data in its supervision of the managed investment scheme sector
- $7.6 million over four years from 2026–27 (and $1.4 million per year ongoing) for ASIC, the Office of the Australian Auditing and Assurance Standards Board and the Treasury to strengthen governance requirements for managed investment schemes
- consulting publicly on new data collection powers in relation to managed investment schemes.
ASIC will partially meet the cost of this measure through cost recovery.
The Government is also publicly consulting on options to strengthen the superannuation performance test to remove any unintended barriers to investment and ensure it remains fit for purpose.
The Government has also passed the Treasury Laws Amendment (Building a Stronger and Fairer Super System) Act 2026 and the Superannuation (Building a Stronger and Fairer Super System) Imposition Act 2026, which received Royal Assent on 13 March 2026.
The financial impacts of this policy were reflected in the 2025–26 MYEFO measure Superannuation reforms – Boosting the Low Income Superannuation Tax Offset and practical changes to Better Targeted Superannuation Concessions. Final policy parameters for the measure are expected to increase receipts by $20.0 million over five years from 2025–26.
Source: Budget Paper No 2, p144.
Support for Small Business
The Government will provide $8.2 million over three years from 2025–26 to extend the Small Business Debt Helpline financial counselling program and the NewAccess for Small Business Owners mental health coaching program to 30 June 2027.
This measure extends the 2024–25 Budget measure titled Supporting Small Businesses.
Source: Budget Paper No 2, p144.
Supporting Youth into Community Housing
The Government will provide $59.4 million over four years from 2026–27 to provide states and territories with funding for community housing providers to supplement rental income for social housing for over 4,000 eligible young people, aged 16‑24, who are in receipt of the Away from Home rate of Youth Allowance or ABSTUDY and who are at risk of, or experiencing, homelessness.
Source: Budget Paper No 2, p144.
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