Australia to Scrap 50% Capital Gains Tax Discount on Crypto and Other Assets From July 2027
Summary
- The Australian government said it plans to abolish the 50% capital gains tax (CGT) discount on investment assets, including cryptocurrencies, from July 1, 2027.
- After the overhaul, the full capital gain will be taxed at income tax rates, except for limited deductions tied to inflation, increasing the tax burden.
- Chris Brickey, a Stockspot analyst, said cryptocurrencies will generate lower after-tax returns because nearly all of their gains come from capital gains.
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Australia will scrap the 50% tax discount on capital gains from investment assets, including cryptocurrencies. Analysts say the change will hit crypto relatively hard because a large share of returns in the asset class comes from price appreciation.
Cointelegraph reported on November 4 that the Australian government plans to end the 50% capital gains tax, or CGT, discount from July 1, 2027. Under the current system, only half of eligible capital gains are included in taxable income. After the overhaul, the full gain will be taxed at income tax rates, aside from limited deductions tied to inflation.
The change does not create a separate tax on cryptocurrencies. Instead, it revises the tax framework for investment assets more broadly. With a larger share of capital gains counted as taxable income, investors' tax burdens will vary depending on their income levels and realized gains.
Chris Brickey, a Stockspot analyst, wrote in an op-ed for The Australian that crypto would face the biggest increase in tax burden among 10 asset classes because almost all of its returns come from capital gains. He added that after-tax returns would fall further for an asset already seen as highly speculative.
Political wrangling over whether to reverse the overhaul is also continuing. The opposition Coalition and One Nation have pledged to restore the discount. Still, with the ruling Labor Party holding a majority in the House of Representatives, it is unclear whether the policy will ultimately be changed.
