Australia's looming overhaul of capital gains tax (CGT) on cryptocurrency — set to lift the top rate on long-term gains to 47% from July 2027 — is prompting some investors to consider drastic measures, from relocating overseas to winding down their crypto holdings altogether.

The first part of this series on Australia's crypto tax hike outlined four ways to soften the impact, including borrowing against Bitcoin or setting up a self-managed super fund (SMSF). While an SMSF offers the greatest tax advantages, it is generally suitable only for older investors, or those willing to lock up their crypto for decades until retirement. For younger investors, moving overseas could reduce future crypto tax bills to zero — but there are less drastic options for saving on tax as well.

The change matters because the incoming 47% top rate matches the top marginal income tax rate, erasing the tax edge long-term investors previously held under Australia's 50% CGT discount — and because the new rules do not take effect until July 2027, investors still have a window in which to weigh the options below.

The 'nuclear option': leaving for a zero-CGT jurisdiction

The impending changes have already inspired Fred Schebesta, founder of Finder.com, to become a tax exile in Singapore. From July 2027, the top rate on real, long-term crypto gains — calculated after adjusting the cost basis for inflation — will rise to 47%.

For upwardly mobile, single crypto investors, leaving the country rather than handing almost half of their gains to the government may look increasingly attractive. Many of the world's top crypto hubs — Singapore, Portugal, Malta, the UAE and Hong Kong — levy 0% capital gains tax on long-term crypto gains in a bid to attract wealthy investors. Measured against Australia's incoming top rate, that is a gap of 47 percentage points on every long-term gain.

Ben Simpson, founder of crypto advisory service Collective Shift, said some of his members have already made the move. “Yeah, we’ve had a number of people that have sort of packed up and gone basically, ‘f—- this. I’m off to the Bahamas or whatnot,’” he said.

Andrea Yuen, CEO of Sywftx, said she is keenly aware of the tax advantages of living outside Australia. “I lived in Singapore for 30 years. I do miss my no capital gains tax,” she said. But she did not move there for tax reasons, and cautioned that uprooting one's life to avoid tax is a drastic step.

“I would never say that we should structure our lives only to think about tax outcomes,” she said. “There are many other wonderful reasons why I’ve come back to Australia and continued to live in Australia.”

“I think if you’re moving countries solely based on a decision about whether you know your crypto is going to get taxed, then you probably need to think a little bit harder.”

Simpson has weighed the idea himself, given that he already spends half the year in the United States running Collective Shift US, but the residency rules put him off. “You really have to cut pretty much all ties to Australia. So if you are genuinely happy to leave and don’t want to come back for the majority of the year, and cut your healthcare and cut all your ties back to Australia, then that is a strategy.”

There are cautionary precedents. Roger Ver, known as “Bitcoin Jesus,” gave up his US residency in 2014, and ten years later he was arrested and charged over failing to correctly report the value of his crypto holdings and pay exit taxes. He was forced to pay almost $50 million to make the case go away. Australians leaving the country face a similar hurdle in the form of a hefty exit tax on departure, which may require selling off a decent portion of their holdings.

“They tax you on the way out. If you’ve got a lot of gains or profits you’re sitting on, they’ll catch you when you leave,” said Adrian Forza, director of Crypto Tax Australia. “Arguably it’d be bigger in the future, but it’s still difficult to stomach selling off everything to leave.”

Forza explained that investors also have the option of deferring Australian taxes until later — but the tax would then be levied on the full value of the gain after the asset is sold. Anyone expecting Bitcoin to rise would therefore be better off paying the exit tax before leaving.

Trading through a company at the 25% rate

At 27, Simpson has little appetite for locking up his crypto portfolio for four decades. Instead, he trades and holds crypto through a company to benefit from the 25% company tax rate.

Running a single-person company is easier than it might seem, but it is not worth the hassle without a reasonable amount of capital and a plan to make a lot of trades. It requires registering the company with the Australian Securities and Investments Commission (ASIC) and paying an annual fee, paying an accountant to produce financial statements and/or an annual company tax return, and managing payroll software and payday superannuation contributions if the owner plans to pay themselves an income. Dividends can be paid out at any time when funds are needed.

“The company structure is good if you’re wanting to cap the capital gains tax at the company tax rate,” Simpson said, though he flagged a significant catch: when funds are taken out of the company, the difference between the 25% company tax rate and the owner's personal tax rate must be paid. “You still need to pay your marginal income tax rates. If you’re on the top tax rate, like 47%.”

That raises an obvious question: if income tax must be paid eventually at the same rate as the new CGT, what is the benefit of paying a few thousand dollars and completing a pile of paperwork to run a company?

Simpson explained that the key advantage arises while the portfolio is being built through trading in and out of different coins: only the 25% company rate is payable on each sale. That means paying up to 22 percentage points less than CGT every time a position is exited — a saving that becomes more significant over time.

“Instead of paying 47% because you’ve just taken the profits… then the CGT amount is only 25% — the company tax rate. So when you put that money back in, you’ve got more capital to play with.”

There is a caveat: companies that do not trade enough may be taxed at 30% instead. Forza said the advantages are greater for those on higher incomes.

“If you’re a single person, then you’ve got a company, and you’re earning, you know, 150 grand a year, um, or over 200, then yeah, definitely a company would be the way to go, especially now that the CGT discount has gone out the window.”

For investors who simply plan to hold their Bitcoin, however, the structure is not particularly useful. There are some potential advantages, but arguably not enough of them to be worth the hassle.

Getting out of crypto entirely?

Australia's 50% CGT discount has been replaced by an indexation discount, which takes into account how inflation has eroded the price an investor originally paid for an asset. Investors who buy and hold dividend stocks or index funds for a long period will therefore receive a bigger CGT discount. Should crypto investors drop their holdings for exchange-traded funds (ETFs) to pay less tax?

The short answer is no: the new CGT “discount” is largely an illusion, as it simply measures the real gain after inflation.

Simpson said crypto has been hit hard by the CGT changes, but it still offers the best risk-reward opportunity. “For us in Bitcoin, the growth ... heavily outweighs the tax considerations. In my point of view. If you’ve got the right portfolio, that can give you the right upside.”

The report notes that history suggests that, despite volatility and years-long bear markets, returns from investing in Bitcoin over time would still leave investors ahead of ETF investors even after paying more tax. Investing further down the risk curve in altcoins, however, can either pay off handsomely or end in total disaster. JPMorgan assumes that Bitcoin will compound by 10% on average in the years ahead, according to figures cited by JPMorgan/Bitcoin Archive.

Simpson said he convinced his younger sister, a basketball player on a low income, to invest in Bitcoin two years ago rather than putting money into a savings account. “She’s up like 40% or 50% in her portfolio and she’s like, ‘wow, this is going to get me so much further towards buying a house one day than sitting in cash and losing 10% [to inflation over time],’” he said.

“That’s why I think Bitcoin makes so much sense to accumulate. And the tax considerations are not really there for most people I think.”

Yuen said crypto is one of the few asset classes that offers investors the chance to make double-digit returns in a few months, or to potentially double their money. Even after paying the new taxes, crypto investors achieving those sorts of returns would still be ahead.

“My dad always said to me, it’s a good thing, if you’ve made profits, you should be happy to pay some tax on it.”

Perhaps no one is happy about it — but investors would still be making money.

This article is a rewritten version of a report first published by Cointelegraph Magazine.