Australia’s proposed capital gains tax (CGT) changes could significantly reduce profits for cryptocurrency traders, especially those with lower incomes. The reform may also discourage long-term investment strategies, according to several crypto executives.
The ruling Labor Party announced the proposed reform on Tuesday as part of the fiscal year 2027 budget. It introduces a minimum 30% tax on capital gains and removes the 50% CGT discount for assets held longer than 12 months. This marks a major shift for investors who previously benefited from lower tax rates on long-term holdings.
Robin Singh, CEO of crypto tax platform Koinly, described the changes as a mixed bag. He noted that the new system theoretically protects investors from being taxed on purely inflationary gains. In practice, though, most crypto investors will end up paying more tax. Low-income earners will likely feel the biggest impact.
Singh provided an example: “A lower-income earner who would have paid around $3,800 under the old rules, 19% on a $20,000 discounted gain, will pay $10,200 under the new ones. That’s nearly triple. For students, part-time workers and anyone without significant other income, this is the biggest shift.”
Shift in Investor Behavior
Many younger investors, particularly Gen Z and Millennials, have viewed crypto as a path to wealth and financial security. A 2025 report from crypto exchange Independent Reserve found that 30% of people invest in crypto to diversify their portfolio, while 25% trade to get rich.
Jonathon Miller, Kraken’s Australian general manager, agreed that the changes will make long-term crypto holding less attractive. He said the bigger risk is that reducing the benefit of long-term holding discourages patient investing. This is especially true in a market where assets can be traded around the clock. Miller warned the change could push some investors toward shorter-term behavior, which is not always the best strategy for building long-term wealth.
Andrea Yuen, co-CEO of Australian crypto trading platform Swyftx, expects the tax changes to prompt traders to seek other avenues for long-term wealth creation. She anticipates a significant trend toward crypto allocations within retirement portfolios and self-managed super funds (SMSFs). Australian exchange BTC Markets reported a 69% year-on-year increase in SMSF registrations during the 2024–2025 financial year.
Legislative Hurdles Ahead
The Australian government argues the changes will curb investor appetite for property purchases. Without tax incentives, property becomes less attractive as an investment. Officials hope this will free up housing supply. The new measures will apply only to gains accrued after July 1, 2027. New homes are exempt from the changes.
Critics, however, argue the reform could push up housing prices, stifle investment, and add pressure to new housing supply. The tax reforms still need to pass through the Australian Parliament. Angus Taylor, leader of the Liberal Party, has vowed to oppose the measures and repeal them if his party forms government after the next federal election in 2028.
The Labor Party needs 76 votes in the House of Representatives and 39 votes in the Senate to pass the reforms. Labor currently holds 94 seats in the House and 30 in the Senate. The outcome remains uncertain, and the debate over these tax changes is likely to continue for some time.
