The 2026-27 Australian Federal Budget introduces significant tax reforms impacting the horse industry, particularly around discretionary trusts, capital gains tax (CGT), and asset write-offs. Notably, a new 30% minimum tax on discretionary trust income from July 2028 will apply, but primary producers, including horse breeders, are exempt—providing a crucial tax advantage for rural and breeding operations. The instant asset write-off of $20,000 for businesses under $10 million turnover is now permanent, benefiting horse trainers and syndicators whose horse interests qualify as depreciable assets, though breeders treating horses as trading stock do not qualify. Additionally, loss carry-back provisions return for companies under $1 billion turnover, allowing tax refunds on prior years’ profits, and start-up companies under $10 million turnover can access refundable tax offsets on losses from 2028.

From July 2027, the CGT discount will be replaced by inflation-adjusted indexation and a minimum 30% tax on capital gains, fundamentally altering how gains on assets, including horse properties, are taxed. This change will increase the importance of accurate asset valuations and may raise tax liabilities for hobbyists selling horses at a profit. Superannuation funds and small business CGT concessions remain exempt, offering some relief. Overall, horse industry participants are urged to review and possibly restructure their tax arrangements in the next 18-24 months to adapt to these reforms and optimize their tax positions under the new rules.