Australia to Remove 50% Capital Gains Tax Discount on Long-Term Holding of Cryptocurrency, New Rule to Take Effect in July 2027

BlockBeats News, July 17, according to Forbes, Australia is set to make significant changes to its Capital Gains Tax (CGT) system, impacting long-term investors including cryptocurrency holders. The current 50% capital gains tax discount for assets held over 12 months will be removed starting from July 1, 2027.

The new system will introduce "cost base indexation" and a minimum 30% capital gains tax rate to replace the current discount mechanism. The cost base indexation will allow investors to adjust the original cost of the asset based on inflationary factors to reduce some of the gains attributed to inflation; meanwhile, the new rule sets a minimum 30% tax rate on capital gains.

Under the transition arrangements, capital gains generated before July 1, 2027, will generally still be eligible for the old system, meaning the continued 50% discount. Gains realized after July 1, 2027, will fall under the new tax regime, requiring long-term holders of crypto assets to potentially calculate gains for each of the two phases separately.

Australian cryptocurrency investors will need to prepare transaction records, cost bases, and asset valuations as of the 2027 transition date in advance to accurately differentiate between gains under the old and new tax systems. At the same time, some long-term holders may need to assess whether to sell assets before the new rules take effect to take advantage of the current tax benefits.