Budget Changes Signal a New Era for Australian Investors
-Investment Markets CEO Darren Connolly says the Budget is a turning point for self-directed investors
Media Release /Opinion /Posted 16 June 2026
The Federal Budget announcements may be over, but the investment consequences are only beginning to be considered and understood by investors and markets.
While much of the political debate has focused on intergenerational equity, investors are now assessing what many consider to be the most significant shift in Australia’s investment framework in decades.
The proposed removal of the 50 per cent capital gains tax discount, restrictions on negative gearing and a minimum tax rate for trusts represent more than just a series of tax measures. Together, they reshape the incentives that have underpinned wealth creation and investment decision making for a generation.
Investment Markets CEO Darren Connolly said the Budget is a turning point for self-directed investors.
“Investors are assessing what these all of these changes mean in practical terms. This is not just a tax story, it will mean a shift in how and where capital is likely to be invested in the years ahead.”
For many investors, the proposed capital gains tax changes are particularly significant. While the Government argues the changes better align taxation with real gains after inflation, the removal of the long-standing CGT discount is expected to increase tax liabilities for many investors who have traditionally relied on long-term capital growth strategies.
The proposed changes could elevate the role of income-generating investments and strengthen the relative appeal of superannuation structures. Dividends, franking credits and reliable cash flow are likely to become increasingly valuable as returns from capital appreciation come under greater pressure.
“The relative attractiveness of income-focused investing is likely to increase,” Mr Connolly said.
“When more of your return is delivered through regular income rather than deferred capital gains, the outcome becomes more predictable under the proposed framework.”
That reality is expected to increase the emphasis on assets capable of generating durable income streams, inflation-linked cash flows, and stronger after-tax outcomes. Investors are likely to become even more interested in fixed income, commercial property and infrastructure investments, and strategies and structures that offer greater tax efficiency and predictable cash flows.
“Even now, of the top 5 most popular listings on the InvestmentMarkets platform, 2 are fixed income funds, 2 commercial property funds and one an infrastructure fund,” Mr Connolly added.
For self-directed investors, the challenge will not be a single policy measure but understanding how investment decisions are impacted by multiple changes across structures, all combined with a higher inflation environment and low productivity and economic growth.
“Investors now face a higher hurdle when it comes to building wealth,” Mr Connolly said.
“When inflation is elevated and more investment gains are subject to taxation, generating a positive real return becomes more difficult. Investors may ultimately require stronger nominal returns simply to maintain the same level of wealth after inflation and tax.”
“The policy settings that shaped investment behaviour over the past twenty years are changing,” Mr Connolly said.
“Whether investors agree with the changes or not, the reality is that self-directed investors will need to understand and adapt to the new environment. Opportunities will still exist, but they may be found in different places.”
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