Australia’s proposed capital gains tax reforms may increase tax liabilities for cryptocurrency investors who keep their assets for longer than 12 months.
Summary
Australia’s proposed tax overhaul could eliminate the long-term CGT discount that currently benefits crypto investors.
According to Koinly, lower-income investors may experience sharper tax increases than wealthier traders under the new framework.
Kraken believes the weaker incentives for long-term holding could encourage more short-term crypto trading after 2027.
The proposal aims to replace the existing 50% CGT discount with an inflation-adjusted taxation model beginning July 1, 2027.
At present, Australian investors who hold assets for more than a year can cut their taxable capital gains by 50%. Under the proposed changes, gains would instead be adjusted for inflation, and taxes would apply only to the real profit remaining after inflation calculations. A minimum 30% tax rate would then apply to net capital gains.
Crypto investors could lose a major tax advantage
The proposed changes are particularly significant for crypto investors because digital assets often appreciate much faster than inflation during strong market rallies. Earlier reports from crypto.news suggested the new structure could result in larger tax obligations for long-term crypto and equity investors compared to the current discount-based system.
Robin Singh, CEO of Koinly, warned that lower-income earners could be impacted the most. He noted that under the proposed system, some investors could face tax bills nearly three times higher than under existing rules when calculated against a $20,000 discounted capital gain.
Singh also argued that removing the 50% CGT discount may weaken incentives for long-term crypto investing. According to him, many traders may choose to adopt shorter trading strategies instead of holding assets for extended periods.
A similar view was shared by Jonathon Miller, who said reduced tax benefits for long-term investing could discourage patient investment strategies in the fast-moving crypto market, where trading occurs around the clock.
Rising retirement demand adds another dimension
The debate arrives as crypto companies increasingly target long-term Australian investors. Earlier, Coinbase Australia introduced support for self-managed super funds (SMSFs), allowing retirement fund trustees to gain exposure to crypto assets through regulated channels.
Reports noted that Australian SMSFs held nearly AU$1.06 trillion in assets by the end of 2025. Coinbase’s expansion into the sector followed its approval for an Australian Financial Services License, while several other crypto platforms have also begun focusing on the retirement investment market.
Reforms still require parliamentary approval
The proposed CGT changes have not yet become law and must still pass through Australia’s Parliament before taking effect. If approved, the transitional rules would only apply to gains generated on or after July 1, 2027.
Accounting firm BDO stated that gains realized before that date would continue to qualify for the existing 50% capital gains discount. The firm also clarified that recipients of income support programs, including Age Pension beneficiaries, would be exempt from the proposed 30% minimum tax rule.
