Australia plans to revise its capital gains tax rules from next July, with the top rate on long-term crypto gains set to rise to 47% and asset cost bases adjusted for inflation. Investors weighing the change could move overseas or hold and trade crypto through a company, but both options bring costs and conditions. For some, continuing to invest in crypto may make more sense than changing investments solely for tax reasons.
Moving overseas can bring tax and lifestyle costs
Crypto hubs including Singapore, Portugal, Malta, the United Arab Emirates and Hong Kong do not charge capital gains tax on long-term crypto gains. Australian entrepreneur and Finder.com founder Fred Schebesta has moved to Singapore. For investors with few family ties and the flexibility to relocate, leaving Australia could make a difference to their tax bill.
Relocation, however, involves more than changing an address. Ben Simpson, founder of crypto advisory firm Collective Shift, said some of the firm’s members have already left, including for the Bahamas. He considered doing the same, but concluded after researching the rules that changing tax residency could require cutting most ties with Australia, including access to healthcare and day-to-day connections, as well as limiting visits back to the country.
Sywftx CEO Andrea Yuen, who lived in Singapore for 30 years, is familiar with the benefits of a jurisdiction without capital gains tax. But she said tax was not the reason she returned to Australia. She cautioned against making a move based on crypto taxes alone, noting that family, lifestyle and other personal considerations also matter.
Leaving Australia may also trigger an exit tax. Adrian Forza, head of Crypto Tax Australia, said investors with substantial unrealised gains could owe tax on relevant assets when they depart and might need to sell some holdings to raise the funds. In some cases, payment can be deferred until the assets are sold, but the tax would then be calculated on the full gain at the time of sale. For investors who expect Bitcoin to keep appreciating, paying exit tax earlier could be advantageous, though the decision depends on individual circumstances.
Bitcoin investor Roger Ver gave up his US residency in 2014. Ten years later, he was arrested and charged over allegations that he had failed to properly report the value of his crypto assets and pay exit tax. He was forced to pay nearly $50 million to resolve the case. The episode illustrates the complexity of cross-border reporting and exit-tax rules, which vary by country.
A company can defer some tax, but withdrawals still count
Simpson, 27, did not want to lock his crypto assets away in a retirement account for the long term, so he chose to hold and trade them through a company, which can qualify for a 25% corporate tax rate. Setting up a company requires registration with the Australian Securities and Investments Commission (ASIC), along with annual fees, accounting and tax-return costs. Paying himself a salary also means handling payroll software and pension contributions. He can withdraw funds through dividends when needed.
The main benefit of the structure is cash flow while trading. If an investor sells one crypto asset and reinvests the proceeds in another, profits can initially be taxed at the company rate of 25%, rather than immediately at the individual top rate of 47%. That leaves more capital available to reinvest after each sale. But a company does not eliminate personal tax: when shareholders take out funds, they may owe the difference between the company rate and their personal marginal rate. For someone in the top tax bracket, the overall rate could still reach 47%.
Nor is the 25% company rate guaranteed. Businesses that do not meet the relevant criteria may face a 30% rate. Forza said a company structure may be worth considering for active traders earning around A$150,000 to A$200,000 or more a year, particularly after changes to capital gains tax concessions. For someone who simply buys Bitcoin and holds it, the accounting and administrative burden may outweigh any tax benefit.
Inflation adjustment is not a tax exemption
Australia plans to replace the existing 50% capital gains tax discount with an inflation-indexed adjustment. The new calculation would account for inflation in an asset’s original purchase cost, potentially reducing taxable gains for long-term investors in shares or index funds. But the adjustment is intended to strip out the effect of inflation, not exempt real investment gains from tax.
Simpson said the proposed changes raise the tax cost for crypto investors, but argued that Bitcoin’s potential growth could still outweigh tax considerations. He said that two years ago he advised his younger sister, a basketball player with a modest income, to buy Bitcoin rather than leave the money in a savings account. Her portfolio is now up about 40% to 50%, he said. That is one investor’s experience, not an indication of future returns or the results others might achieve.
Yuen also noted that crypto assets can post double-digit returns in a matter of months or even double in value, but that volatility can produce losses as well. Simpson believes Bitcoin could continue to outperform some ETF investments after tax over the long term. Higher-risk altcoins, by contrast, may deliver larger gains or substantial losses. The tax changes do not remove the risks of investing: an investor’s location, trading frequency, holding structure and ability to realise gains will all affect the eventual tax outcome.