Should Australia go nuclear on crypto taxes or find other ways to save?

Some Australian crypto investors are moving overseas to avoid a major capital gains tax increase scheduled for July 2027. However, industry experts point out that there are less drastic ways to reduce tax liability without uprooting one's life. Fred Schebesta, founder of Finder.com, has become a tax exile in Singapore, while Ben Simpson of Collective Shift notes that several members have already left the country. Andrea Yuen, CEO of Swyftx, cautions that moving purely for tax reasons is a drastic step and emphasizes that lifestyle factors also matter.

From July, the top rate on long-term crypto gains will increase to 47%, minus inflation effects on the cost basis. For single crypto investors, top crypto hubs like Singapore, Portugal, Malta, UAE, and Hong Kong offer 0% capital gains taxes. However, leaving Australia requires cutting ties and facing potential exit taxes, similar to the case of Roger Ver, who faced major charges after giving up US residency.

Leaving Australia to avoid crypto taxes involves cutting ties and facing heavy exit taxes.

Should Australia go nuclear on crypto taxes?

For investors staying in Australia, setting up a company structure is one alternative to mitigate tax impacts. Simpson, who is 27, avoids locking up his crypto in a self-managed super fund and instead trades through a company to benefit from the 25% company tax rate. While this allows lower taxation on trades over time, pulling funds out requires paying the difference up to personal income tax rates.

Adrian Forza of Crypto Tax Australia notes that exit taxes can be difficult to stomach because individuals must sell off holdings when leaving. The 50% CGT discount has also been replaced by an indexation discount factoring in inflation.

Why it matters

The upcoming changes to Australia's capital gains tax will significantly impact local crypto investors, prompting decisions between relocating abroad, utilizing company structures, or employing retirement funds to mitigate financial burdens.