From setting up a self-managed superannuation fund (SMSF) or a company to simply leaving Australia, here are some strategies Australian Bitcoin holders can use to respond to the significant capital gains tax (CGT) increase in 2027.
The Australian government's May budget decision to eliminate the 50% capital gains tax discount for all investments caught crypto asset holders by surprise. The new proposal effectively doubles the taxable portion of gains, leaving only a minimal inflation adjustment.
However, if you start preparing now, there are still legitimate ways to minimize the capital gains tax (CGT) you’ll owe.
Some Australian crypto holders have taken more drastic measures—for example, Fred Schebesta, founder of Finder and a crypto entrepreneur, is relocating to Singapore, where the CGT rate is 0%, calling the tax changes a “death blow.” However, there are less extreme ways to reduce CGT bills, including setting up a self-managed superannuation fund (SMSF), establishing a company to trade crypto at the corporate tax rate, or simply hoping the opposition will overturn these changes after the next election.
How will CGT change starting July 1, 2027?
Since 1999, Australian asset holders have only paid tax on half of their capital gains. Starting July 1, 2027, they will be taxed at their full income tax rate—meaning that if your income and gains fall between AUD 45,000 and AUD 135,000, the CGT rate will be 30%; for the portion between AUD 135,000 and AUD 190,000, it will be 37%; and any amount above that will be taxed at 47%. (All figures in this article are in Australian dollars.)
To make matters worse, low-income individuals who do not receive benefits, such as students and retirees, will be subject to a minimum CGT rate of 30% on any gains, no matter how small.
The only available discount currently is an adjustment for the impact of inflation on the cost base. For example, if you purchased a property in 2027 for AUD 1 million and sold it 10 years later for AUD 1.5 million, with an inflation rate of 3%, you would not pay tax on approximately AUD 344,000 of the gain attributable to inflation.
Swyftx CEO Andrea Yuen explained: "The challenge with CGT changes for cryptocurrencies is that indexation benefits assets with slower growth more than those with rapid growth."
Therefore, if you buy Bitcoin for AUD 10,000 and sell it for AUD 100,000 ten years later, the inflation adjustment would be approximately AUD 3,439. Under the old system, you would pay tax on a gain of AUD 45,000; under the new system, you will pay tax on a gain of AUD 86,561.
Stockspot analyst Chris Bryki compared the performance of 10 different asset classes under the new rules. He wrote in The Australian newspaper: “Cryptocurrency is at the bottom because nearly all of its returns come from capital appreciation.”
An investment that is already speculative becomes even less attractive after taxes.
Here are some strategies to help cryptocurrency holders adapt to change, ranging from nearly effortless to completely restructuring one’s life.
1. Looking forward to a major bull market before July
Any gains you realize before July 1, 2027, will be taxed under the current 50% discount regime. Therefore, it may be optimal to aim for a strong bull market before then to elevate your portfolio to the highest possible level. You should accurately record the value of each cryptocurrency asset you hold on that date, as any gains generated from that value will be taxed at a higher rate.
Ben Simpson, founder of the crypto advisory firm Collective Shift, said that Bitcoin’s performance since mid-year, amid a challenging macro environment, suggests there is still potential for further gains before July.
However, Simpson (who emphasized that he is not a financial advisor) added, "I probably wouldn't bet my entire net worth on the idea that we're about to enter a major bull market."
I believe the halving in May 2028 is when we’ll see the majority of our returns. So I don’t think this will be beneficial for investors.
Yuen pointed out that you don’t control the price. “If you’re just hoping for the price to go up, that’s not a strategy,” she said.
2. Parties that vote to overturn the CGT changes
The official opposition coalition and the emerging opposition party, One Nation, have both pledged to overturn these changes. If crypto voters are sufficiently motivated by this single issue, they could indeed influence a change in government through their votes. However, the ruling Labor Party holds 94 out of 150 seats in the House of Representatives, making it difficult to unseat them. If a government change does occur—and the relevant legislation passes through the Senate in time—the changes could theoretically be reversed before anyone needs to file taxes starting July 1, 2028.
However, any changes to the tax system are more likely to occur after that. Adrian Forza, head of Crypto Tax Australia, said this would make calculating gains extremely difficult.
Doing three calculations will be cumbersome, but it will be better for the public in the long run.
3. Transfer cryptocurrency assets into a self-managed pension fund
Australia’s retirement funds are called superannuation funds, and once you reach age 60, you can access the investments within them tax-free—even if those assets continue to appreciate. Unfortunately, no retail superannuation funds allow clients to invest in cryptocurrencies, so if you want to protect your crypto gains this way, you must set up a self-managed super fund (SMSF). About one-third of Simpson’s high-net-worth clients invest in cryptocurrencies through SMSFs. “Buying Bitcoin and holding it there long-term is a very sound strategy,” he says, but cautions against over-investing in altcoins. “You’re betting your retirement—something meant for ultra-long-term holding—on short-term altcoins.”
Australia's superannuation fund AMP has invested in Bitcoin, but does not allow its clients to do so directly.
The 27-year-old founder explained that the biggest drawback of an SMSF is that young crypto investors cannot access these funds for decades.
You have to wait until retirement to access it, right? So you can’t actually benefit from these gains earlier in life.
More realistically, this is better suited for investors over 50 who are wealthier, as they have a shorter waiting period.
You must first sell any crypto assets, pay taxes, and then repurchase them through the SMSF, while also considering annual contribution caps. Forza says that with some strategic planning, you should be able to contribute close to AUD 400,000.
Please refer to the detailed report released in December for guidance on setting up a crypto SMSF.
4. Hold Bitcoin through borrowing to avoid triggering a CGT event
Some billionaires use the strategy of borrowing against their assets to avoid taxes, as repaying loans is often cheaper than selling assets and paying taxes.
Bitcoin holders now have access to a range of lending platforms, including BlockEarner, Veild, and Swyftx, which allow you to borrow using BTC as collateral with a similar strategy.
Yuen smiled and said, “We want to bring this strategy to the masses, not just billionaires.”
But if you don’t have the deep pockets of a billionaire, this approach can be risky. Borrowers face higher interest rates, relatively short loan terms (usually 12 months), and the potential loss of their Bitcoin if market conditions turn unfavorable. You also can’t borrow the full value—Swyftx’s loan-to-value ratio is approximately 40%. She says, “If your collateral drops below a certain level, you’ll receive a margin call. My view is that this is essentially a bet that prices will rise. You need to believe that crypto will go up—or at least won’t fall enough to trigger a margin call… otherwise, crypto-backed loans don’t make sense for you.”
But she warned that this is a leveraged bet, best suited for experienced investors.
Over the past year, Bitcoin has declined by 28%, so those who borrowed a year ago may now face margin calls or even liquidation as interest costs accumulate.
Forza notes that, in certain cases, lending crypto assets may also constitute a CGT event, such as when lending through DeFi. If you deposit ETH into Aave, it is automatically converted to WETH, which is a taxable event; when you withdraw ETH, another taxable event occurs.
Borrowing from centralized lenders like BlockEarner or Swyftx is still in a gray area, as the Australian Taxation Office (ATO) has not yet clarified whether this constitutes a taxable event. “If you’re talking about borrowing $10,000 AUD, that’s fine. But if you have three or five bitcoins, I wouldn’t take that risk, because if the market moves against you, you’ll still end up owing taxes,” he said. “Vield is the only entity in Australia that has received a private ruling confirming that its product does not constitute a taxable event. No other institution has.”
Swftxy confirmed that it did not receive a private ruling and advised clients to seek tax advice; BlockEarner did not respond to requests for comment.
In the second part of our Australian CGT series, launching later this week, we’ll cover four additional strategies to minimize your crypto tax liability, including setting up a company or leaving the country entirely.
Also read: The $79 trillion baby boomer generation is finally embracing Bitcoin
Australia
Tax reduction
Taxation
Retirement
Bitcoin
More related content
After Bitwise called the selling "short-term," Bitcoin ETFs saw $1.16 billion in outflows.
After the Democrats swept Congress, Bitcoin rebounded from its seven-week low below $76,000.
Analysts say the stock market has already priced in "political gridlock," and Bitcoin holds at $76,000.
After Bitwise called the selling "short-term," Bitcoin ETFs saw $1.16 billion in outflows.
After the Democrats swept Congress, Bitcoin rebounded from its seven-week low below $76,000.
Analysts say the stock market has already priced in "political gridlock," and Bitcoin holds at $76,000.