Crypto Gains Under Threat As Australia Weighs Tax Reform

A one-year grace period will soften the blow for some investors, but the clock is already ticking. Assets acquired after May 10 will fall under the transition window, while those bought before that date will see their final tax bill calculated proportionally, based on how long they were held under each tax system.

What Is Actually Changing

Australia currently gives investors a 50% capital gains tax discount on assets held for more than 12 months — including crypto.

The Albanese government’s fiscal year 2027 budget, due Tuesday, is expected to scrap that discount entirely. In its place, a new model would tax the full real gain on an asset, adjusted for inflation over the period it was held. The changes would take effect in July 2027.

The Australian Financial Review first reported the plans, citing people with knowledge of the budget. Crypto holders, sharemarket investors, landlords, and business owners would all be affected.

Winners And Losers

Not everyone is alarmed. Scott Phillips, chief investment officer at The Motley Fool, said investors will likely pay more tax under the new setup — but will still walk away with strong returns.

“Not for nothing, but when people say a CGT change would hit founders and growth investors, they’re not wrong. But implicit in that argument is that those groups will be making a motza in the first place. That’s all the incentive they will need,” he said.

Others are less calm. Chris Joye, a portfolio manager at Coolabah Capital Investments, warned that the proposed changes would effectively double the tax rate on assets like shares, commercial property, and rental housing.

He put the new effective rate at around 46% to 47%, up from roughly 23.5% today. His concern is that investors will respond by pulling money out of productive assets and funneling it into owner-occupied homes, which carry no capital gains tax.

“The single biggest winner from the budget: the tax-free owner-occupied home, which is where people will put their money,” Joye said.

Long-term crypto investors are squarely in the crosshairs. Under the current system, holding Bitcoin or any other digital asset beyond 12 months cuts the taxable gain in half.

Under the proposed model, the full gain — minus an inflation adjustment — gets taxed. For high-income earners sitting on assets that have not grown far beyond inflation, the tax hit could be considerably larger than what they face today.

Featured image from andy/stock.adobe.com, chart from TradingView