2026 Federal Budget: what it means for your dental practice

The 2026-27 Federal Budget dropped on May 12. The media ran with CGT and negative gearing for a week. Property investors panicked. And if you own an independent dental practice, the stuff that actually affects your business got buried somewhere around paragraph 15.

Here's what I think matters. Some of these measures haven't passed into law yet, so treat this as planning context, not tax advice. Talk to your adviser before making structural decisions.

1. The $20,000 instant asset write-off is permanent

Finally.

This thing has been extended year by year since 2023. Every June, you had to guess whether it'd survive another 12 months. That's done. From 1 July 2026, it's permanent for businesses with turnover under $10 million.

Most solo and two-chair practices in Australia should fall under that threshold. If you buy a dental chair, an autoclave, an intraoral scanner, anything under $20,000, you deduct the full cost in the year you start using it. No depreciating over 5-7 years. The whole amount comes off your taxable income immediately.

Quick maths: 3 items at $18,000 each is $54,000 off your taxable income in one hit, instead of roughly $7,700 under the old depreciation schedule. At a 37% marginal rate, that's about $17,000 more cash in your pocket this FY.

The permanence is the real win. You can plan purchases around clinical need now, not a June 30 deadline that may or may not get renewed.

2. CGT discount is being replaced

If you ever plan to sell your practice, pay attention.

From 1 July 2027, the 50% CGT discount (the one that's been around since 1999) gets scrapped. Replaced with cost base indexation (your cost base adjusts for inflation) plus a minimum 30% tax rate on capital gains. This measure is proposed but not yet legislated.

Small business CGT concessions are preserved. The 15-year exemption, the retirement exemption, the active asset test: all still there. If you've owned and run the practice for 15+ years and qualify for the small business concessions, the practical impact is probably limited.

Where it bites: shorter holding periods. Or if the sale includes assets outside the small business concessions, like the property the practice sits on (if you own it personally). Your CGT bill could be higher under the new rules.

If you're thinking about selling in the next 2-3 years, get tax advice before 1 July 2027. When you sell just became as important as what you sell for.

3. Trust tax reform

This is the one I'd be paying the most attention to.

From 1 July 2028, a 30% minimum tax on most distributions from discretionary trusts. The classic strategy of distributing practice income to a spouse on a lower marginal rate, or to adult children, to reduce the total tax bill? Being wound down.

Lots of dental practices operate through family trusts. If yours distributes $100,000 to a spouse on a 19% marginal rate, you're currently saving roughly $18,000 compared to the owner's 45% rate. Under the new rules, that distribution gets taxed at 30% minimum regardless. The tax benefit is materially reduced, and for some families may disappear altogether.

Three years of rollover relief from 1 July 2027. That's the window to restructure out of trust arrangements without triggering CGT or income tax. Company, partnership, sole trader: each has a different after-tax profile and you need to model them.

I'd expect a wave of restructuring across the dental sector in 2027-28. Practices with clean financials will be able to run the scenarios properly. Everyone else will be scrambling.

(Important caveat: the trust tax measure is announced policy, not yet legislated. The detail matters, and the detail isn't final. But the direction is clear enough to start planning.)

4. Dental funding: permanent but frozen

The government permanently funded the Public Dental Services for Adults agreement. Good news on the surface. State and territory dental services don't have to operate under rolling 1-2 year extensions anymore.

The catch: $107.8 million per year. Same number since 2017. Population has grown. Inflation has eaten into it. The real value of that funding has been shrinking for 9 years and this budget didn't fix it.

For private practice owners, public waitlists stay long. Patients who can't get timely public treatment keep flowing into private clinics. Whether they can afford the gap is another question, and one that makes your accounts receivable process matter more, not less.

CDBS got extended too: up to $1,000 for eligible children aged 2-17 through state and territory services. If you see paediatric patients and accept CDBS, that revenue stream stays.

5. Loss carry-back is back

Companies with turnover under $1 billion can carry back a tax loss and offset it against tax paid in the previous 2 years. This existed during COVID, expired, and is now back permanently from 1 July 2026.

Practical scenario: your practice operates as a company. You have a rough year (extended leave, major equipment failure, big fit-out investment). You can use that year's loss to get a refund on tax you already paid. Cash back when you need it.

Sole traders and partnerships: this one isn't for you. Company structures only.

So what do you actually do with this?

If you operate through a discretionary trust, start the conversation with your tax adviser now. Not in 2028. Model the impact. Understand the rollover relief window. Make a decision with time on your side.

If you've been sitting on equipment purchases, the permanent write-off removes the timing anxiety. Buy when the clinic needs it.

And if you're thinking about selling in the next few years, the CGT changes make the timing decision genuinely important. Get your financials clean, your KPIs documented, and your valuation modelled before July 2027.

If your current accountant gives you a phone call in September to lodge last year's return and that's the extent of it, this budget is probably a good moment to ask whether that's enough. These are structural changes. They need planning, not a rushed conversation 3 weeks before a deadline.

We can model the after-tax impact of the budget changes for your practice and show you where your current structure sits. Book a discovery call and we'll walk through it.

Note: Several measures in the 2026-27 Budget (including CGT reform, trust minimum tax, and loss carry-back) are announced policy and have not yet passed into law. This article is general commentary for planning purposes. It is not tax advice. Speak with a registered tax agent or accountant about your specific circumstances before making any structural or financial decisions.

Frequently asked questions

Is the $20,000 instant asset write-off permanent now?

Yes. From 1 July 2026, the $20,000 instant asset write-off is permanent for small businesses with turnover under $10 million. It was previously extended year by year. This gives dental practices certainty when planning equipment purchases.

How do the 2026 CGT changes affect dental practice owners?

From 1 July 2027, the 50% CGT discount is replaced with cost base indexation and a minimum 30% tax on capital gains. Small business CGT concessions are preserved. If you plan to sell your practice, the timing of that sale now matters more than it did before.

What does the trust tax change mean for dentists?

From 1 July 2028, a 30% minimum tax applies to most discretionary trust distributions. Many dental practices operate through family trusts and distribute income to lower-taxed family members. That strategy is being shut down. Three-year rollover relief is available from 1 July 2027 for restructuring.

Did the 2026 budget fund public dental services?

Yes, permanently. But funding stays at $107.8 million per year, the same level since 2017. It hasn't kept pace with population growth or inflation, which means public dental waitlists will remain long and demand on private practices will continue.