From setting up self-managed pension funds ( SMSF ) or companies, to simply leaving Australia, here are some strategies that Bitcoin holders in Australia can use to cope with the significant increase in capital gains tax ( CGT ) in 2027.

The Australian government decided to abolish the 50% capital gains tax discount applicable to all investments in its May budget, which came as a surprise to crypto asset holders. The new scheme will effectively double the taxable income, with only a small portion of inflationary discounts being deducted.

However, if you start preparing now, there are still some legal ways to minimize the amount of CGT that you need to pay.

Some Australian crypto holders have taken more drastic measures – for example, the founder of Finder, a crypto entrepreneur named Fred Schebesta, is moving to Singapore, where the tax rate is 0%. He described the change in taxation as a “fatal blow.” However, there are also less extreme ways to reduce crypto-related expenses, such as setting up a self-managed pension fund (SMSF), establishing a company to trade cryptocurrencies at corporate tax rates, or simply hoping that the opposition party will overturn these changes after the next election.

How will CGT change starting from July 1, 2027?

Since 1999, Australian asset holders have only been required to pay tax on half of their capital gains. Starting from July 1, 2027, they will be taxed at the full income tax rate – which means that if your income and gains are between A$45,000 and A$135,000, the tax rate is 30%; the portion between A$135,000 and A$190,000 is 37%; and the portion exceeding this level is 47%. (All figures in this article are in Australian dollars.)

To make matters worse, low-income individuals, such as students and retirees, who do not receive welfare, will have to pay taxes at a rate of at least 30% on any income they earn.

The only discount currently available is an adjustment for the impact of inflation on the cost base. For example, if you buy a property for 1 million Australian dollars in 2027 and sell it for 1.5 million Australian dollars 10 years later, and the inflation rate is 3%, you would not need to pay taxes on the approximately 344,000 Australian dollars due to inflation.

Swyftx CEO Andrea Yuen explained, "For cryptocurrencies, the challenge of CGT changes is that index-based adjustments are more beneficial for assets with slower growth, rather than those with faster growth."

Therefore, if you buy Bitcoin for 10,000 Australian dollars and sell it after 10 years for 100,000 Australian dollars, the inflation discount is only about 3,439 Australian dollars. Under the old system, you would need to pay tax on a profit of 45,000 Australian dollars; under the new system, you will have to pay tax on a profit of 86,561 Australian dollars.

Stockspot Analyst Chris Bryki compared the performance of 10 different asset classes under the new rules. He wrote in the newspaper The Australian: "Cryptocurrencies are at the bottom, as almost all of their returns come from capital appreciation."

"An investment that is inherently speculative will become even less worthwhile after taxes."

Here are some strategies to help crypto holders adapt to changes, ranging from requiring almost no effort to those that involve reorganizing an entire life.

Looking forward to a major bull market before July.

Any profits you earn before July 1, 2027, will be taxed at the current 50% discount rate. Therefore, perhaps the best approach is to hope for a strong bull market that can push your investment portfolio to as high a level as possible before that time. You should accurately record the value of each crypto asset you hold on that day, because any profits generated from that value onward will be taxed at a higher rate.

Encryption consulting service Collective Shift founder Ben Simpson stated that, in a challenging macroeconomic environment, Bitcoin's performance since mid-year indicates the potential for further gains before July.

However, Simpson (who emphasized that he is not a financial advisor) added, "I probably wouldn't bet all of my wealth on the fact that we will experience a major bull market."

"I think it's the halving in May 2028 that will see most of the returns. So I don't think that will be beneficial for investors."

Yuen pointed out that prices are not under your control. “If you’re just hoping for prices to rise, then that can’t really be considered a strategy,” she said.

2. Voting in support will overturn the political party that made changes to CGT.

Both the official opposition alliance party ( The Coalition ) and the emerging opposition party, One Country Party ( One Nation ), have pledged to overturn these changes. If crypto voters are sufficiently concerned about this single issue, it is indeed possible to drive a change of government through voting. However, the ruling Labour Party ( ALP ) holds 94 out of 150 seats in the House of Commons, making it not easy to bring them down from power. If there is indeed a change of government – and if the relevant legislation can be passed by the Senate in a timely manner – theoretically, these changes could even be overturned before anyone needs to file their tax returns starting from July 1, 2028.

But it is more likely that any changes to the tax system will occur after that. Crypto Tax Australia The person in charge Adrian Forza stated that this would make revenue calculation very difficult.

"It would be troublesome to have to perform three calculations, but in the long run, it will be better for the public."

3. Transfer encrypted assets to self-managed pension funds

Pension funds in Australia are known as superannuation funds ( superannuation funds ). Once you reach the age of 60, you can withdraw the investments from these funds tax-free – even though the assets continue to appreciate in value. Unfortunately, no retail pension fund allows customers to invest in cryptocurrencies. Therefore, if you want to protect your cryptocurrency gains in this way, you must set up a SMSF. Among the high-net-worth clients of Simpson, about one-third invest in cryptocurrencies through SMSF. “Buying Bitcoin and continuously accumulating it is a very safe strategy,” he says, but he warns against investing too much in altcoins. “You’re using your retirement savings – which are meant to be held for a very long period – to gamble on short-term altcoins.”

Australian pension funds AMP have already invested in Bitcoin, but they do not allow customers to do so directly.

The 27-year-old founder explained that the biggest downside of SMSF is that young crypto investors will not be able to access this money for several decades.

"You have to wait until retirement to use it, right? So you can't actually take advantage of these benefits at an earlier stage of your life."

To be more realistic, this is more suitable for investors over 50 years old and those who are more affluent, as they will need to wait for a shorter period of time.

You must first sell any crypto assets and pay taxes before you can repurchase them through SMSF. You also need to take into account the annual payment limit. Forza says that with some strategic moves, you should be able to invest nearly 400,000 Australian dollars into it.

Please pay attention to the detailed report released in December to learn how to set up the encryption SMSF.

4. Hold Bitcoin through lending to avoid triggering the CGT event

Some strategies used by billionaires to avoid paying taxes involve borrowing money by mortgaging their assets, as repaying the loan is often cheaper than selling the assets to pay taxes.

Bitcoin holders can now use a range of lending institutions, including BlockEarner, Veild, and Swyftx, which allow you to borrow money using BTC as collateral, adopting a similar strategy.

Yuen said with a smile, "We hope to bring this strategy to the general public, not just to billionaires."

But if you don't have the substantial funds of a billionaire, this approach can be risky. Borrowers face higher interest rates and relatively short loan terms (usually 12 months), and if market trends are unfavorable, they may also lose their Bitcoin. You also won't be able to borrow at full value—the loan-to-value ratio is approximately 40% for Swyftx. She said, “If your collateral falls below a certain level, additional margin will be required. In my opinion, this is a bet that prices will rise. I think you must believe that cryptocurrencies will go up—or at least not fall so low that you end up with additional margin requirements… Otherwise, crypto mortgage loans make no sense for you.”

But she warned that this is a leveraged bet, most suitable for seasoned investors.

Over the past year, Bitcoin has fallen by 28%. Therefore, if someone borrowed money a year ago, with the addition of interest costs, they may now be facing the risk of having to add more margin or even being liquidated.

Forza reminds that in certain circumstances, lending and borrowing of encrypted assets may also constitute a CGT event, such as lending and borrowing in DeFi. If you deposit ETH into Aave, it will be automatically converted into WETH, which is a taxable event; when you withdraw ETH, another taxable event will occur.

Borrowing from centralized lending institutions such as BlockEarner or Swyftx is still considered a grey area at present, and the Australian Taxation Office (ATO) has not yet clarified whether this constitutes a taxable event. “If you’re borrowing ten thousand Australian dollars, that’s fine. But if you have three to five bitcoins, I wouldn’t take that risk, because if the trend turns against you, you’ll still have to pay taxes in the end,” he said. “Vield is the only institution in Australia that has obtained a private ruling confirming that its products do not constitute a taxable event. None of the others have.”

Swftxy has confirmed that they did not receive a private ruling and suggested that clients should seek tax advice; BlockEarner, on the other hand, did not respond to requests for comments.

In the second part of our special feature on Australian CGT to be released later this week, we will introduce four additional strategies to help minimize the tax burden of cryptocurrency, including setting up a company or completely leaving the country.

Also read: The Baby Boomers, worth $79 trillion, are finally starting to accept Bitcoin

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