Australia plans to remove the 50% capital gains tax (CGT) discount for investment assets from July 1, 2027, potentially leaving crypto investors liable for tax on a larger share of their gains. Keeping records of asset values, using a self-managed super fund (SMSF) or borrowing against Bitcoin are among the options investors are weighing, but each comes with trade-offs, including locked-up funds, ongoing costs and liquidation risk.
Fred Schebesta, Finder’s founder and a crypto investor, has decided to move to Singapore, describing the tax change as a “heavy blow.” Relocating is not the only option, however. Some investors are considering SMSFs or loans that let them avoid selling their holdings. The tax treatment and practical costs of these strategies depend on the circumstances.
How the CGT rules are set to change in July 2027
Since 1999, Australian investors have generally included only half of their capital gains in taxable income. Under the proposed system, gains would be taxed at personal income tax rates, with an inflation adjustment to the asset’s cost base replacing the 50% discount.
The rates cited are 30% on the portion of income and capital gains between A$45,000 and A$135,000, 37% between A$135,000 and A$190,000, and 47% above A$190,000. The minimum CGT rate would also be 30% for low-income earners who do not receive benefits, including students and retirees.
Indexing the cost base for inflation is more beneficial for assets held over a longer period that have risen at a relatively steady pace. For example, if a property bought for A$1 million in 2027 is sold for A$1.5 million 10 years later, and annual inflation averages 3%, about A$344,000 of the nominal gain would be attributed to inflation and excluded from the taxable gain.
Swyftx CEO Andrea Yuen said the adjustment is likely to offer less relief for crypto assets, whose prices can rise much faster than inflation. If Bitcoin is bought for A$10,000 and sold for A$100,000 10 years later, the inflation adjustment would be about A$3,439. Under the current rules, the taxable gain would be A$45,000; under the proposed system, it would be about A$86,600.
Stockspot analyst Chris Brycki compared 10 asset classes under the proposed rules. He said crypto ranked last because its returns come almost entirely from capital appreciation, leaving after-tax returns more exposed to the change.
Gains before July 2027 remain under the current rules
Gains realised before July 1, 2027, would still qualify for the existing 50% discount. Investors who continue to hold assets beyond that date will have a particular reason to record the value of each crypto asset on July 1: subsequent gains would be subject to the new rules.
Ben Simpson, founder of Collective Shift, said Bitcoin’s performance since mid-year despite an unfavourable macroeconomic backdrop could offer some indication of market conditions before the change takes effect. But he cautioned against relying on a major rally, saying the Bitcoin halving in May 2028 may be the main source of returns. Yuen also noted that investors cannot control market prices and that simply waiting for prices to rise is not a reliable tax strategy.
Opposition pledges to reverse the change, but timing is uncertain
The Coalition and One Nation have both pledged to repeal the tax change. However, the governing Australian Labor Party (ALP) holds 94 of the 150 seats in the House of Representatives, making a change of government difficult. Even if the government changes, it is uncertain whether legislation could pass the Senate in time or the policy could be reversed before the first tax return due under the new rules on July 1, 2028.
Adrian Forza, a director at Crypto Tax Australia, said repeated changes during a transition could require taxpayers to calculate gains under different rules, making returns harder to prepare. Over the longer term, he said, policy changes could also benefit the public. Whether the rules are reversed, and when, remains a key variable for crypto investors’ tax planning.
SMSFs can hold crypto, but access to funds is restricted
Australian SMSFs let members manage their own retirement savings. In general, members can withdraw funds tax-free from age 60, while investments held in the fund can continue to grow. Retail super funds do not allow customers to invest directly in crypto, so investors seeking crypto exposure through superannuation generally need to establish an SMSF.
Simpson said about one-third of his high-net-worth clients invest in crypto through SMSFs. He sees buying and accumulating Bitcoin within a fund as one option, but does not recommend putting large amounts of retirement savings into short-term, highly volatile altcoins. Access to the money is a key constraint: younger investors may have to wait decades to use those assets, making SMSFs more suitable for people closer to retirement who can afford the setup costs.
SMSFs also involve audits, compliance paperwork and recurring fees, typically around A$2,000 to A$4,000 a year. Online providers such as Stake offer plans that can reduce total annual fees to about A$1,330 when investments are limited to Bitcoin or Ethereum ETFs. Investors would also need to sell existing crypto and pay any tax due before the SMSF repurchases the assets, while taking annual contribution limits into account. Forza said that, with appropriate arrangements, a fund balance close to A$400,000 can be achievable in some cases.
Bitcoin-backed loans carry interest and liquidation risk
Block Earner, Veild and Swyftx are among the providers offering loans secured by Bitcoin. Borrowing can let holders avoid selling their coins for the time being, but these loans are typically short-term, carry high interest rates and are limited to less than the value of the collateral. Swyftx’s loan-to-value ratio is about 40%.
If the collateral’s price falls to a specified level, borrowers may face a margin call or have their assets sold. Yuen said the strategy effectively depends on the borrower’s view of Bitcoin’s price. Simpson said that if a loan carries a 10% interest rate and Bitcoin compounds at 33% a year, borrowing could work out better mathematically than selling and paying CGT. But it is a leveraged strategy, better suited to experienced investors with enough funds to manage a downturn. He advises against it for people who already have high crypto exposure and little spare capital.
At the time of publication, Bitcoin was down 28% over the previous year. In that market, borrowers could face margin calls or liquidation as well as interest costs. The actual risk depends on the loan terms, collateral ratio and market movements.
Tax treatment of crypto-backed borrowing remains unclear
Borrowing does not necessarily avoid a CGT event in every case. Forza cited the example of depositing ETH on the decentralised finance platform Aave, where the asset is automatically converted to WETH. That conversion could be a taxable event, and withdrawing ETH could potentially trigger another tax event.
For centralised lending services such as Block Earner and Swyftx, the Australian Taxation Office (ATO) has not clarified whether the arrangements trigger a taxable event. Forza said Veild is the only related Australian provider to have obtained a private ruling confirming its product does not trigger one. Swyftx said it had not obtained a private ruling and advises customers to seek tax advice; Block Earner did not respond to a request for comment.
Before using a Bitcoin-backed loan, investors therefore need to check the tax treatment of the specific product as well as its interest rate and collateral terms. The proposed CGT changes are due to take effect on July 1, 2027, while whether a loan creates a tax liability will depend on its structure and how it is assessed.