Australia is overhauling how it taxes cryptocurrency profits. The government confirmed this week that it will phase out the 50% capital gains tax discount currently available to individuals who hold crypto for more than 12 months. Starting in the 2027 tax year, long-term crypto investors will instead be taxed under an inflation-adjusted cost-base model — a shift that could substantially raise liabilities for anyone sitting on large unrealized gains.
What changes, and when
The current rule lets crypto investors cut their taxable gain in half if they hold for at least a year. That discount disappears entirely for assets acquired after 30 June 2026. From 1 July 2026 (the start of the 2027 financial year), the new system applies: investors will adjust their original purchase price upward by the consumer price index over the holding period. The gain is then the difference between the inflation-adjusted cost base and the sale price. The longer you hold, the bigger the CPI adjustment — but for periods of low inflation, the tax bill will almost certainly be higher than it would have been under the old 50% discount.
Why the government moved now
The 50% discount was originally designed to reward patient capital in shares and property, but critics argued it gave crypto investors — who often saw massive run-ups — an outsized benefit. Treasury data cited in the policy paper showed the discount was costing the budget roughly A$1.1 billion a year in foregone revenue, with cryptocurrency holdings accounting for a growing slice. By switching to indexation, the government aims to tax real economic gains rather than nominal ones, while still offering some relief for long-term holders against inflation.
What this means for holders
For anyone who bought bitcoin or Ethereum in early 2024 and hasn't sold yet, the window to claim the 50% discount closes in just over a year. Selling after 30 June 2026 triggers the new rules. The Australian Taxation Office has already updated its guidance page, warning investors to factor the change into their exit strategies. The practical effect: a holder who bought at 30,000 AUD and sells at 80,000 AUD after two years under the old system would have paid tax on 25,000 AUD (half the 50,000 gain). Under the new model, if cumulative inflation over those two years is 6%, the cost base becomes 31,800 AUD, leaving a taxable gain of 48,200 AUD — nearly double.
Legislation is expected to be tabled in parliament this spring. The tax office has also flagged that it will issue a compliance bulletin focused on crypto investors who try to rebase their holdings via structured products before the cutoff. For now, the main deadline is clear: any qualifying sale before 1 July 2026 still gets the 50% discount. After that, the math changes — and not in most investors' favor.
