The 2026 Federal Budget: What It Means for Australian Crypto Investors

Last reviewed by Oliver Woodbridge, on 21 May 2026

Summary

The 2026 Federal Budget introduces the most significant overhaul of Australia’s tax system in over 25 years. From 1 July 2027, the 50% CGT discount will be abolished and replaced with cost base indexation, and a 30% minimum tax rate will apply to capital gains. From 1 July 2028, discretionary trusts will face a 30% minimum tax at the trustee level. Negative gearing on established residential property will be restricted for properties purchased after Budget night. SMSFs are largely unaffected and emerge as the most tax-effective vehicle for long-term crypto investors. Tax On Chain, led by Directors Rafael Franco (CA) and Oliver Woodbridge (CA), is a specialist crypto accounting firm and trusted adviser to businesses and crypto investors navigating structuring, tax and self-managed superfunds (SMSFs). 

This article outlines what the changes mean for crypto investors holding assets personally, through trusts, companies, or SMSFs, and how to think about structuring before the rules take effect.

“This is the most significant overhaul of taxation in a generation, effecting all Australians with crypto investors squarely in the firing line,”
says Rafael Franco, Director and Chartered Accountant at Tax On Chain.

The 2026 Federal Budget delivered the most significant overhaul of Australia’s tax system in over 25 years. If you hold crypto, whether personally, through a trust, or in a company, here’s what you need to know.

Before diving in, it’s worth noting that much of what has been announced remains at a high level. Draft legislation has not yet been released for most of these measures and the practical mechanics are still to be worked through. The information below reflects what has been announced as at Budget night (May 2026) and is subject to change. As always, speak to your accountant before making any decisions based on these changes.

Capital Gains Tax – The Biggest Change

The 50% CGT discount that most Australians have relied on for decades is being abolished for most assets from 1 July 2027. In its place, the Government is reintroducing cost base indexation. Your cost base will be adjusted for inflation, with only the real gain above inflation will be taxed.

For crypto investors this is significant. The 50% CGT discount has been one of the primary tax benefits of holding crypto as a long-term investment. Losing it means that from 1 July 2027, gains on crypto held longer than 12 months will no longer be halved before being taxed. Instead, only the inflation-adjusted gain is excluded.

On top of this, a 30% minimum tax rate will apply to capital gains from 1 July 2027. Even if your marginal tax rate is lower in a given year, you will pay at least 30% on any capital gain. The strategy of deferring crypto sales to low-income years to reduce CGT is effectively being removed.

For assets acquired before 1 July 2027 and sold after that date, transitional rules are expected to apply. Broadly, any gain accrued prior to 1 July 2027 should continue to qualify for the existing 50% CGT discount, while gains accrued after that date would be subject to the proposed indexation and minimum tax rules. As a result, calculating capital gains on transitional assets will likely be complex. 

Who wins and who loses under indexation?

Not all investments are affected equally by the switch from the 50% discount to cost base indexation. The key variable is the relationship between an asset’s growth rate and the rate of inflation.

High-growth, low-yield assets like most cryptocurrencies are the biggest losers. Where an asset doubles, triples, or grows tenfold in value, the inflation adjustment on the cost base is trivial relative to the overall gain. Almost all of the gain remains taxable, and the 50% discount that previously sheltered half of it is gone. For crypto investors expecting significant appreciation, this change is punishing.

Lower-growth, income-generating assets such as dividend-paying shares and government bonds fare comparatively better under indexation. Where an asset grows at a rate closer to inflation, indexation shelters a meaningful proportion of the gain. In some cases, particularly where inflation is elevated and asset growth is modest, the indexed cost base could approach the sale price, resulting in a minimal taxable gain.

The blunt summary: indexation rewards patience in stable, inflation-correlated assets and punishes high-conviction growth investing.

Negative Gearing – Property Specific, But Worth Noting

Negative gearing on established residential properties will be restricted from 1 July 2027 for properties purchased after Budget night. New builds will retain full negative gearing deductibility.

While this change is primarily directed at property investors, it is likely to drive more creative investment strategies. One we expect to see more of is debt recycling, where investors borrow against existing property holdings and deploy those funds into other income-producing assets such as shares and crypto. Importantly, the interest deductibility rules for investments other than established residential property remain unchanged. Investors can still negatively gear into other asset classes. Debt recycling effectively allows property equity to be converted into tax-deductible investment debt, and crypto and shares remain valid assets for this purpose.

Trusts – A Structural Shake-Up

From 1 July 2028, discretionary trusts will be subject to a 30% minimum tax on trust income, paid at the trustee level. Beneficiaries will receive a non-refundable credit for the tax paid. Those beneficiaries who fall into personal tax rates above 30% will pay top up tax, and those on rates below 30% lose the excess credit. The effectiveness of distributing trust income to individuals in lower tax brackets has been significantly reduced. 

For crypto investors using a family trust to hold crypto assets, the tax advantages that made this structure attractive are now significantly diminished.

Importantly, there is no grandfathering for existing trusts, which will be caught by the new rules from 1 July 2028. However, the Government has indicated that a restructure window of approximately three years will be available for those who wish to move assets out of a discretionary trust. There is time to plan rather than act immediately. Rollover relief is expected to be available to facilitate restructuring without triggering immediate CGT, though the precise scope and mechanics of that relief are yet to be legislated.

Unlike individual beneficiaries who receive a non-refundable credit, corporate beneficiaries are expected to receive no credit at all for the tax paid at the trustee level. This effectively results in the same income being taxed twice. This appears to be a deliberate design choice to prevent distributions being routed through a corporate beneficiary to access the lower corporate tax rate, a common planning strategy that the Government is clearly targeting.

One important detail that remains unclear is whether the 30% minimum tax applies exclusively to discretionary trusts or extends to other trust structures. If the changes are limited to discretionary trusts, this leaves the door open for more sophisticated structures such as fixed trusts or hybrid trusts to remain viable tax planning tools. This is an area we are watching closely and will update on as draft legislation emerges.

What This Means for Investment Structures Going Forward

The budget changes collectively make structuring decisions more complex and more consequential. Here is how we think different investor types are likely to adapt.

Personal name – now the least tax effective option for significant gains

Holding assets personally is simple, but for crypto investors expecting large gains it is now the worst structural choice available. This cannot be overstated. Previously, even investors in the top marginal tax bracket could access the 50% CGT discount, effectively halving their tax rate on long-term gains to around 23.5%. From 1 July 2027, that concession is gone. Any significant capital gain realised personally above $190,000 will be taxed at the top marginal rate of 47%. For the crypto investor who has accumulated meaningful wealth in their own name and is expecting a large exit, this is an enormous and irreversible change. Investing in your personal name, once a relatively straightforward and tax-effective approach for long-term holders, is now likely to become the least advantageous option for high-growth assets. 

Trusts – reduced but not irrelevant

While the tax benefits of discretionary trusts have been significantly curtailed, their non-tax advantages remain intact and should not be overlooked. Asset protection, estate planning flexibility, and the ability to separate legal and beneficial ownership remain compelling reasons to include a trust in an investment structure. For investors with beneficiaries that would fall in or around the 30% tax bracket, the minimum trust tax may not represent a significant additional cost. The key planning question is no longer whether a trust saves tax, for many it will not, but whether the asset protection and structural flexibility justifies the compliance cost. In many cases, particularly for higher net worth investors, the answer remains yes. Trusts should still be considered as part of a broader investment structure, particularly in combination with other entities.

Companies – short-term traders and a new role for long-term investors

Companies remain the preferred vehicle for active and short-term crypto traders and crypto-native businesses. The 25% corporate tax rate is materially below the top marginal individual rate of 47%, and the changes to CGT do not affect companies in the same way given they do not access the CGT discount in any case. For traders generating frequent, short-term gains, the corporate rate advantage remains compelling.

Beyond trading, we expect companies to emerge as a more prominent long-term investment vehicle in the post-2027 environment. Capital gains realised within a passive investment company are taxed at a flat 30% corporate rate, significantly lower than the 47% top marginal rate. With the significant curtailment of discretionary trust tax flexibility, we anticipate a meaningful shift towards companies as an accumulation vehicle for longer-term investors.

At Tax On Chain, we are actively exploring creative company structures that may provide some of the flexibility that discretionary trusts currently offer. One area of interest is the use of multiple share classes within a company. For example, structuring a company so that dividends can be declared to a specific class of shares independently of other share classes. This allows the company to direct returns to particular shareholders, potentially in lower tax brackets, in a manner that mirrors the income splitting flexibility of a discretionary trust, while operating within the corporate framework. The rules around this type of structure require careful navigation, but it is a legitimate and increasingly relevant space.

“With discretionary trusts being neutralised from a tax perspective, we anticipate strong interest in company structures that can replicate some of that flexibility through multi-share class arrangements,”
 says Oliver Woodbridge, Director and Chartered Accountant at Tax On Chain.

SMSFs – the standout winner

SMSFs are largely unaffected by these changes and remain the most tax-effective investment vehicle available to Australian investors. Gains on assets held in an SMSF in accumulation phase are taxed at 15%, with a one-third CGT discount available for assets held over 12 months, reducing the effective rate to 10%. In pension phase, tax on both income and capital gains is 0%. For investors with long term conviction in high growth assets like crypto, allocating through superannuation makes more sense than ever from a tax perspective in the post-2027 environment.

“SMSFs were already a popular vehicle for long-term crypto investors as they are effectively  the only way to obtain direct exposure to digital assets through superannuation. With these changes bringing significant tax increases outside of superannuation, the case for holding crypto and other assets inside super has become substantially stronger,”
says Rafael Franco, Director and Chartered Accountant at Tax On Chain.

Offshore structures – high net worth investors

For higher net worth investors who want to remain Australian tax residents, we expect to see increased interest in compliant offshore structures, such as entities in tax haven jurisdictions, for holding investment assets. These structures come with significant setup costs, ongoing compliance obligations, and must be carefully managed to avoid Australia’s controlled foreign company and transferor trust provisions. They are not accessible or practical for most investors, but for those with the means to justify the cost, they represent a legitimate planning option in an environment where domestic tax concessions are being progressively wound back.

Bottom Line

Much is still unclear and nothing has been legislated, but investment structuring is now crucial for all investors. Without careful planning, you risk giving up to 47% of your realised gains to tax. The changes to CGT, trusts, and negative gearing represent a generational shift in how wealth is taxed in Australia, and the window to act under the current rules is finite.

It is also worth noting that these proposed changes have been received largely negatively by the investment and business community, and significant public backlash is already building. There remains a real possibility that political pressure causes the Government to water down, delay, or modify some of the proposed measures before they are legislated. While planning is essential, the final shape of these rules may look different to what has been announced.

We will continue to provide insights and updates as more information becomes available and draft legislation is released. If you would like to discuss what these changes mean for your situation, book a consultation with our team.

Frequently Asked Questions

When do the new CGT rules take effect for Australian crypto investors?

The 50% CGT discount is being abolished from 1 July 2027 and replaced with cost base indexation. A 30% minimum tax rate will also apply to capital gains from the same date.

Will the 50% CGT discount still apply to crypto held before 1 July 2027?

Transitional rules are expected to apply. Broadly, the pre-2027 gain retains the 50% discount and the post-2027 gain is subject to the new indexation and minimum tax rules. Draft legislation has not yet been released, so the precise mechanics are still to be confirmed.

How will discretionary trusts be taxed under the 2026 Budget changes?

From 1 July 2028, discretionary trusts will be subject to a 30% minimum tax on trust income, paid at the trustee level. Beneficiaries will receive a non-refundable credit for the tax paid. Beneficiaries on rates above 30% top up, and those below 30% lose the excess credit, effectively putting a 30% floor on all trust income. There is no grandfathering for existing trusts.

Are SMSFs affected by the 2026 Budget changes?

SMSFs are largely unaffected. Gains on assets held in an SMSF in accumulation phase are still taxed at 15%, with a one-third CGT discount available for assets held over 12 months, reducing the effective rate to 10%. In pension phase, tax on both income and capital gains is 0%. SMSFs emerge as the most tax-effective vehicle for long-term crypto investors in the post-2027 environment.

Can crypto still be used as part of a debt recycling strategy?

Yes. The interest deductibility rules for investments other than established residential property remain unchanged. Crypto and shares remain valid assets to negatively gear into, which means debt recycling using crypto as the income-producing asset is still a viable strategy.

Should I restructure my crypto holdings before 1 July 2027?

At this stage, it is difficult to plan with certainty given none of the measures have been legislated and there is still considerable scope for change prior to 1 July 2027. That said, holding significant crypto wealth in your personal name under these proposed changes is now likely to become the least tax-effective option for large future gains. Speak to your accountant before making any structural decisions. 

Has any of this been legislated yet?

No. Draft legislation has not yet been released for the announced measures. The information above reflects what has been announced as at Budget night (May 2026) and is subject to change. Significant public backlash means there is a real possibility some measures will be watered down or modified before they are legislated.

 

 

This article is general information only and does not constitute personal tax, financial, or legal advice. Tax laws and Government policy are subject to change. You should speak to a qualified adviser about your specific circumstances before making any structural or investment decisions.