Last night, Federal Treasurer Jim Chalmers handed down the 2026-27 Federal Budget.
The 2026–27 Federal Budget has several measures relevant to MTA members, although many of the impacts will be indirect. This Budget is shaped by the global fuel instability, inflation, tax reform, workforce pressures and the transition to cleaner energy.
The Budget published an estimated $28.3 billion deficit in 2025-26, although there are hopes for improvement to $25.3 billion by 2029-30. Economic growth is also forecast to slow from 2.25% in 2025-26 to 1.75% in 2026-27.
Below are the key takeaways from this years Federal Budget for the automotive industry.
- Capital Gains Tax – From 1 July 2027, the 50% capital gains tax discount will be replaced by cost base indexation for assets held for more than 12 months, with a 30% minimum tax on net capital gains. The budget also limits negative gearing for residential property to new builds. The changes apply to all CGT assets held by individuals, trusts and partnerships, with transitional arrangements so the changes only apply to gains arising on or after 1 July 2027.
- Negative Gearing – Investment properties bought after 7.30pm on 12 May 2026 will no longer be able to claim negative gearing from 1 July 2027. New builds and some government housing programs open to investors are exempt.
- Fuel Excise – From 1 April 2026, fuel excise and excise-equivalent customs duty rates applying to most fuel products will be reduced for three months. The heavy vehicle road user charge will also be reduced from 32.4 cents per litre to 0 over the same period.
- Fuel Security – The Government has also announced a broader National Fuel Security Plan, including work to increase fuel reserves, fuel and fertiliser security facility providing gup to $7.5 billion in financial support to increase supply and storage of fuel and fertiliser. There is also a $3.2 billion Australian Fuel Security Reserve and $10 million for feasibility studies into new or expanded refinery capability.
- Skills and Training – The Budget provides $2.9 billion in 2026-27 to support state skills and workforce development services. South Australia is allocated $181 million under the National Skills Agreement in 2026–27 and the Northern Territory $37.4 million. The Budget also includes $85.2 million over four years from 2026-27 for better recognition of migrant skills through faster and more flexible skills assessments. This includes $75.1 million for a new Trades Recognition Australia skills assessment system for priority trades.
- DRIVEN – The Budget confirms $15.4 million will be reprofiled over 4 years from 2025-26 to expand the scope of DRIVEN by an extra year.
- Right to Repair – The Budget’s regulatory reform material confirms the government is continuing work through National Competition Policy to extend the right to repair to agricultural machinery.
- Electric Vehicles – The Electric Car Discount will be retained but reduced over time. Eligible EVs up to $75,000 provided before 1 April 2029 will continue to receive the current full FBT exemption, while eligible EVs above $75,000 and up to the fuel-efficient luxury car tax threshold will receive a 25% FBT discount from 1 April 2027. From 1 April 2029, a permanent 25% FBT discount will apply for eligible EVs up to the fuel-efficient luxury car tax threshold.
- E-bikes – $6.6 has been allocated into strengthening Australia’s product safety framework and safety standards, including by improving product recalls, online marketplace reforms and introducing national consistent standards for e-bikes.
One important policy change not included in this year’s Federal Budget is the introduction of an EV Road User Charge to offset the reduction in revenue from the fuel excise as more Australians transition to zero and low emission vehicles. However, the Treasurer has signalled that this change is still on the table.
Overall, this is not a Budget that directly resolves the pressures facing automotive businesses. It does, however, include useful signals on roads, fuel relief, skills recognition, EV readiness and small business investment.
As we distil and analyse the broader implications of this Budget, we will provide further commentary on the Federal Budget in this Friday’s CEO Update.
