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Australia to End 50% Crypto Capital Gains Discount on July 1, 2027, Replacing It With Cost-Base Indexation and a 30% Minimum Tax
Australia’s Treasury Laws Amendment (Tax Reform No. 1) Act 2026, assented on 26 June 2026, introduces the most significant change to the country’s capital gains tax (CGT) regime in over 25 years. The legislation removes the 50 % CGT discount that has applied to assets held for at least 12 months, including cryptocurrencies, and replaces it with a cost‑base indexation system and a 30 % minimum tax on real gains.
Under the existing framework, a crypto holder who sold an asset after a 12‑month holding period could reduce the taxable portion of the gain by half. For example, a $20,000 gain would be taxed on $10,000, potentially saving the investor a substantial amount of tax depending on their marginal rate. The new law eliminates that discount for disposals on or after 1 July 2027.
The replacement system works in two parts. First, cost‑base indexation adjusts the original purchase price upward to reflect inflation, using the consumer price index (CPI). The indexed cost base is then subtracted from the sale proceeds to calculate the taxable gain. This approach aims to tax only the real appreciation of the asset, not gains that arise solely from inflation.
Second, the legislation imposes a floor of 30 % on the tax payable on capital gains that fall under the new rules. The tax on a gain will be the greater of the amount calculated using the taxpayer’s marginal income‑tax rate or 30 % of the gain. For many lower‑income investors who previously benefited from the 50 % discount, the new minimum rate could result in a higher tax liability. Higher‑income investors, whose marginal rates already exceed 30 %, may see a more nuanced impact.
Transition provisions protect gains that accrued before 1 July 2027. According to the Act, the old discount regime applies to the portion of a gain that was realised before the transition date. Gains that accrue from 1 July 2027 onward are subject to the new indexation and minimum‑tax rules. Consequently, investors who hold crypto assets across the transition will need to split their gains into pre‑ and post‑transition portions and apply the appropriate tax treatment to each.
Recordkeeping therefore becomes critical. To qualify for the pre‑2027 treatment, investors must be able to substantiate the value of their holdings on the transition date. Centralised exchanges typically provide price data that can support this valuation, but assets held in self‑custody or in illiquid positions may require additional documentation. Incomplete records could reduce the amount of gain that benefits from the older discount.
The Treasury Laws Amendment also includes guidance for taxpayers to model unrealised gains under both regimes. The Australian Taxation Office (ATO) notes that investors should review their positions with a qualified tax adviser to determine whether disposing of long‑held assets before 1 July 2027 would be more tax‑efficient than holding them through the transition.
The law’s effective date is 1 July 2027, giving investors a full year to prepare. The ATO has issued a technical guidance document outlining the calculation steps for cost‑base indexation and the application of the 30 % minimum tax. The guidance also clarifies how to handle complex scenarios such as hard forks, airdrops, and split treatments.
In summary, Australian crypto investors will no longer be able to rely on the 50 % CGT discount after 1 July 2027. The new regime will tax real gains after adjusting for inflation and will enforce a 30 % minimum tax rate. Investors should prioritise accurate recordkeeping, assess the tax impact of their holdings, and seek professional advice to navigate the transition.
Under the existing framework, a crypto holder who sold an asset after a 12‑month holding period could reduce the taxable portion of the gain by half. For example, a $20,000 gain would be taxed on $10,000, potentially saving the investor a substantial amount of tax depending on their marginal rate. The new law eliminates that discount for disposals on or after 1 July 2027.
The replacement system works in two parts. First, cost‑base indexation adjusts the original purchase price upward to reflect inflation, using the consumer price index (CPI). The indexed cost base is then subtracted from the sale proceeds to calculate the taxable gain. This approach aims to tax only the real appreciation of the asset, not gains that arise solely from inflation.
Second, the legislation imposes a floor of 30 % on the tax payable on capital gains that fall under the new rules. The tax on a gain will be the greater of the amount calculated using the taxpayer’s marginal income‑tax rate or 30 % of the gain. For many lower‑income investors who previously benefited from the 50 % discount, the new minimum rate could result in a higher tax liability. Higher‑income investors, whose marginal rates already exceed 30 %, may see a more nuanced impact.
Transition provisions protect gains that accrued before 1 July 2027. According to the Act, the old discount regime applies to the portion of a gain that was realised before the transition date. Gains that accrue from 1 July 2027 onward are subject to the new indexation and minimum‑tax rules. Consequently, investors who hold crypto assets across the transition will need to split their gains into pre‑ and post‑transition portions and apply the appropriate tax treatment to each.
Recordkeeping therefore becomes critical. To qualify for the pre‑2027 treatment, investors must be able to substantiate the value of their holdings on the transition date. Centralised exchanges typically provide price data that can support this valuation, but assets held in self‑custody or in illiquid positions may require additional documentation. Incomplete records could reduce the amount of gain that benefits from the older discount.
The Treasury Laws Amendment also includes guidance for taxpayers to model unrealised gains under both regimes. The Australian Taxation Office (ATO) notes that investors should review their positions with a qualified tax adviser to determine whether disposing of long‑held assets before 1 July 2027 would be more tax‑efficient than holding them through the transition.
The law’s effective date is 1 July 2027, giving investors a full year to prepare. The ATO has issued a technical guidance document outlining the calculation steps for cost‑base indexation and the application of the 30 % minimum tax. The guidance also clarifies how to handle complex scenarios such as hard forks, airdrops, and split treatments.
In summary, Australian crypto investors will no longer be able to rely on the 50 % CGT discount after 1 July 2027. The new regime will tax real gains after adjusting for inflation and will enforce a 30 % minimum tax rate. Investors should prioritise accurate recordkeeping, assess the tax impact of their holdings, and seek professional advice to navigate the transition.
