Commonwealth Budget FY2027: Capital Gain Pain

The FY2027 Australian Budget features significant tax reforms focused on housing and capital gains while maintaining a deficit of 1.0% of GDP. Goldman Sachs assesses the budget as expansionary in the near term and expects an RBA rate hike in June.

Key Takeaways

• 1.The FY2027 Budget introduces major tax reforms to the housing sector, specifically reducing the 50% capital gains tax discount and limiting negative gearing for established dwellings.
• 2.The budget stance is incrementally expansionary for growth in the near term, with a fiscal impulse of +0.2ppt in 1H2026 rising to +0.6ppt by end-2027.
• 3.Goldman Sachs expects a further tightening of RBA monetary policy, forecasting a +25bp hike to 4.60% in June 2026 due to inflation risks.

Table of Contents

• Commonwealth Budget 2026-27: Key Takeaways
• Key Numbers
• The Budget's Flagship Policies
• Box: Changes to Australia's Capital Gains Tax Policy and Negative Gearing
• Fiscal Policy Incrementally Expansionary for Growth
• Fiscal Sustainability Projected to Worsen but Australia Still Compares Favourably to Peers
• Macro Outlook Weaker Amid Higher Oil Prices
• Lower Net Debt and Lower Expected Interest Payments

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