The S&P/ASX200 fell 21.7 points by midday, down 0.25 per cent, to 8,649, as the broader All Ordinaries dipped 15.6 points, or 0.18 per cent, to 8,896.
Commonwealth Bank shares tumbled more than nine per cent in early trade to $155.92, heading for their worst day since December 2008, after its $2.7 billion March quarter profit missed expectations.
The result completes an underwhelming quartet of interim results for the big four banks, widely considered as barometers for the Australian economy.
Tax reforms announced in the federal budget, relating to capital gains tax discounts, negative gearing and trusts, were largely in line with expectations but their impact would be felt across many asset classes, IG market analyst Tony Sycamore said.
"They will make long-term investing in both residential property and equities less tax-effective," Mr Sycamore said.
"While the generous grandfathering protects existing owners, younger Australians and new investors now face a meaningfully less attractive regime - one of the more heavily taxed CGT frameworks among developed peers."
Outside of financials, eight of 11 local sectors made gains, led by basic materials as BHP charged to a new all-time high of $61.61 on the back of copper prices, resetting its own record overnight.
Pure copper plays, like Sandfire Resources and Capstone, respectively charged more than six and four per cent higher.
BHP continues to eclipse the Commonwealth Bank as Australia's largest company, with a market capitalisation of $312 billion, compared to CBA's $262 billion valuation.
ASX-listed gold miners also advanced, while the precious metal hovered near $US4,706 ($A6,500) an ounce.
Energy stocks were slightly better than flat, with modest gains for Santos and Woodside, as oil prices firmed amid ongoing US-Iran tensions.
Coal producers were broadly higher, while uranium producers were mixed as Paladin tumbled by a tenth after a March quarter swing to profit wasn't enough to impress investors.
Consumer discretionary stocks rebounded by two per cent after falling the previous three sessions, as gambling machine maker Aristocrat Leisure surged almost eight per cent to $49.49 after a strong first-half update.
The IT sector fell one per cent, with WiseTech  Xero and NextDC all stumbling.
Tuesday night's budget tax reforms will likely make investing in growth stocks and start-ups less attractive to investors, Ebury economist Anthony Malouf said.
"The changes effectively punish assets experiencing rapid growth - such as start-ups and high-growth equities - where gains significantly outpace inflation, leaving outsized real gains fully exposed at marginal rates," he said.
The reforms could dampen risk appetite and broader business investment at the margin, Mr Malouf said.
The Australian dollar is buying 72.43 US cents, up from 72.12 US cents on Tuesday at 5pm.
