Australia considers replacing 50% capital gains tax discount on crypto

Australia’s Labor government has proposed replacing the country’s long-standing capital gains tax discount with an inflation-indexed model that could raise tax liabilities for crypto investors holding assets over extended periods.

The Australian Financial Review reported on Sunday, citing people familiar with the fiscal year 2027 budget, that the Albanese government plans to remove the current 50% capital gains tax discount as part of a wider package of tax changes tied to investment and housing policy. Under the existing system, Australians who hold assets for more than 12 months can reduce taxable capital gains by half.

Instead of the discount model, the proposed framework would tax inflation-adjusted real gains across the full holding period of an asset. Long-term investors with modest inflation-adjusted returns could end up paying more tax, particularly higher-income earners with exposure to shares, crypto, and commercial assets.

Changes outlined in the federal budget are expected to take effect from July 2027, according to the AFR report. Assets purchased after May 10 would receive a one-year transition arrangement before the new rules fully apply. Investments acquired before that date would retain partial access to the current discount system, with tax treatment calculated proportionally based on how long the asset was held under each regime.

Criticism from market participants surfaced shortly after details of the proposal emerged. Chris Joye, portfolio manager at Coolabah Capital Investments, argued that the changes would discourage investment across productive sectors of the economy.

“After the budget doubles the capital gains tax on productive businesses and assets from about 23.5% to 46-47%, investors will understandably pull money from businesses, shares, commercial property and rental housing and plough it into their tax-free owner-occupied home,” Joye said.

Joye added that owner-occupied housing would become “the single biggest winner from the budget” because investors would redirect capital toward tax-advantaged property instead of business or market investments.

Scott Phillips, chief investment officer at investment advice firm The Motley Fool, took a different view. In comments posted on X, Phillips said investors affected by the changes would still have strong incentives to pursue long-term growth opportunities because profitable investments would continue generating substantial returns even with higher tax obligations.

The proposed tax overhaul arrives as Australian policymakers continue shaping rules around digital assets and tokenized finance. In April, a draft payments vision co-developed by the Account-to-Account Payments Roundtable identified stablecoins and tokenized liabilities as technologies moving “from experimentation to adoption.”

Members of the roundtable include AusPayNet, Australian Payments Plus, the Reserve Bank of Australia, and the Commonwealth Treasury. The draft stated that account-to-account payment infrastructure may eventually need to support interoperability between traditional bank money and tokenized fiat representations.