The Australian government just announced sweeping changes to how they want capital gains to be taxed moving forwards, and it is nothing short of a rug-pull for Aussie Bitcoiners.
I'm sorry you're mentally struggling with this; and after reading the article I can completely understand why.
This is an important piece, and it ties in to your brief mention of the Fourth Turning. I'm centered around that narrative and have been discussing it in podcasts. Why? Because I think what you are seeing here is the future, and what is coming will be much more egregious than this.
Systems are breaking as the global debt crises enters the final stage of the Fourth Turning. And as societies lose cohesiveness, fairness, and the rule of law you will see governments enact more legislation like this.
There is no limit to where this can go. In my own nation as the system has collapsed in previous cycles, we have seen suspension of fair trial, imprisonment without charge, outright seizure of assets. And also complete collapse of currencies. During the American revolution the "Continental"... worthless. The Southern states paper in the Civil War... worthless.
Financial repression will soon be the next stage here in the US. If you are not aware of what that is you can read the playbook in the IMF's guidelines.
The last thing I will say is this. As this system strains, all the government has to do is paint Bitcoiners as having unearned wealth. "They were lucky. They got in early. They knew something all of us didn't. They are hiding their wealth. They don't want to share."
Your neighbors won't be in the street to picket supporting you in your attempt to push back.
Now, I don't mean that there is not hope here. In fact, this seems so draconian and affects ALL Australians that I believe people WILL picket over this and write some pretty pissed off missives.
All I'm saying if for Bitcoiners there is a deeper message here to think about.
Best to you, James. Fingers crossed that sharp people like yourself can get this fixed.
Thanks James, you are by far my favourite Bitcoin analyst.
We need to do everything in our power to stop this in it's tracks. It truly is 'you'll own nothing and be happy' nail in our kids future. A government that is pushing socialism as 'normal' in the psyche of Australians, and pushing it in all schools including 30k a year schools. This is a longer conversation, but important.
Back to the CGT proposal on the table. We need to watch this space carefully as Politicians have a way of exempting themselves from decisions that effect us in unfair ways. A couple of examples.
Super Tax changes: Division 296 — ordinary Australians got hit, politicians/judges largely escaped via defined benefit schemes, on a Federal and State level
CGT reform — ordinary Australians get hit on shares, investment properties, etc. Politicians also hold those same types of assets personally, so they would in theory be equally subject to it ...
However, the same constitutional protection issue could resurface at the margins. State politicians and judges on defined benefit schemes won't be affected simply because their retirement wealth is in a pension, not in capital assets — so they're again structurally insulated in a way most Australians are not.
Therefore the message we need to get people to understand is ok for thee but not for me is the mantra of those making these decisions that ultimately affect our quality of life.
The first thing that came to my mind when I listened to the budget speech is same old same old. It's not meant to reduce house prices, it's meant to prop them up again. Negative gearing wasn't axed completely - the change only affects existing properties. What's 75,000 extra houses in the grand scheme of things? Nothing, when there is a shortfall of 200k+. They plan for an 55k increase in new immigrants coming in annually. House prices are just going to continue climbing.
What they realised is the young are giving up on dumping their hard earned into the property sinkhole and looking for other avenues to save up. And many of us are smart enough to invest into the very asset the govts want the most. So what better way to point us "in the right direction" again than by orchestrating this tax grab.
Next stop - unrealised capital gains tax. I guarantee they haven't forgotten about it. Just waiting to see how well that's going to work out for the EU countries that already are trying to roll it out.
Hi James, fellow Aussie here. What about borrowing against BTC to get around this? Currently there is no way to do this with native BTC, but there are options using cbBTC on platforms like AAVE or Morpho.
Obviously it is not perfect as it introduces risk (not your keys not your coins) , but just a thought.
You will be taking such a massive haircut every time you sell BTC due to the CGT changes, and you’re also missing out on the continued appreciation of its price
Swapping from BTC to cbBTC is a CGT event, putting cbBTC onto AAVE onto is a CGT event - Advice from my accountant and easily confirmed using AI.
There are many places to lend native BTC and I have used Block Earner, which was a good experience, but I see alot of people recommend LEDN, but in saying that, it may still trigger a CGT event, the change of ownership is a key factor and you may need a platform that gets around this loop hole.
There's Vield as well, which claim not to rehypothecate but the rate is really high at 13%.
Block Earner seems OK, although strangely they also check your income for a bitcoin-backed loan.
Ledn looks good too, although you have to declare that the loan is predominantly for business and/or investment purposes (and NOT for a property).
I suspect that all three of those lenders wouldn't trigger a CGT event, as you're not wrapping your bitcoin, exchanging it for another token, or "selling" it to the lender...
I'm super interested to see where the bitcoin lending market develops in the next 5 years - rates really do need to come down to make it more worthwhile.
Meanwhile in Switzerland we're focused, flourishing, moisturized with a nice round 0% cap gains tax. You can sell your Bitcoin for Francs at something like 99.75% of the spot value, you just need to pay the transaction fees and exchange fees. 😎🇨🇭
Yeah as long as you don't use any Swiss banks or brokerages, which are fee extraction scams, and use the American brokerage IBKR in Switzerland, you're all set!
I'm 17y expat with 2 kids under 6. Love the lifestyle and everything we have built here but its time to leave. Panama's Friendly Nations Residency program is our escape hatch. Not saying it is for everyone as there is no silver bullet but as the custodian of my children's future, I am their caretaker entrusted with protecting, nurturing, and guiding them and finding a place where they are treated best.
Without wanting to sound defeatist, the current lot are making us seriously consider greener pastures in BTC friendlier jurisdictions. We are immigrants and Australia has been good for us, but we learned from our previous country that when the govt shows you who they are its best to believe them and plan your exit accordingly.
My partner and I are seriously thinking about leaving too. We have two 15yr olds that love their schools, so it makes it tough. We checked out El Salvador over the January break, a very interesting country, Bukele is a pillar of strength and one that wants to take his country from the 3rd world to the 1st. Whilst our governments want to take us from the 1st to the 3rd in 'social credit chains'
We are not wealthy, work hard and just tied of the constant government warfare on the people. I seriously wonder what life our kids will have if this keeps going.
Following up on Romiel's point of borrowing against your BTC - from my own research it is dependent on the lender and whether beneficial ownership is transferred to the lender. Based on a quick bit of research using claude to look at the situation in Australia it might be worth checking out Figure Markets (figuremarkets.com) for native BTC backed loans. I have looked at them in the past in preference to LEDN. (I don't work for either companies.).
According to Claude...
"The key point with Australian CGT is that the ATO's test comes down to whether beneficial ownership transfers. With Figure's structure, you retain ownership of the BTC and simply pledge it as collateral, so there is a reasonable argument no CGT event is triggered at drawdown. It is genuinely a grey area and worth getting advice from a crypto specialist accountant before proceeding, but it could be a meaningful option for Aussie holders who want liquidity without selling. The liquidation scenario is a different story though, so keep your LTV conservative. They also don't rehypothecate your BTC."
I hope that is helpful, thanks for all you do mate, you are a legend in the space!
The sheer irony of a centre-left Labor party releasing a budget for "the workers" that actually will keep those workers working forever. After all, if the workers become the rich, what would happen to Labor's voting base?
100% agree with you that it's not time to panic, but we can make our dissatisfaction clearly heard. Even if Labor manages to legislate this budget with the help of the Greens, there's still hope in getting it unwound at the next election.
In the meantime, don't stop investing in growth assets - the last thing you want to do is to interrupt compound growth by selling (not to mention letting an "unrealised capital gains tax" come in).
My condolences, James. This is genuinely terrible, and a pretty brutal gut punch for anyone who’s been building wealth the long way like you have. Four years ago I took the plunge and moved from California (where the top combined rate was 55%) to Puerto Rico (where capital gains are now 0%). Best decision I’ve ever made. I’ll be able to retire at least a decade earlier than I would have under the old regime, all because I finally get to keep my own money instead of handing it over to a government that treats investment success like a crime. Australia’s about to learn the same lesson California did: when you punish people for patiently building capital, they either stop building it… or they stop being your people. Fair dinkum.
The sly way for us would be to borrow against our btc stack which doesn’t trigger the taxes. But we need a big stack asap to be able to utilize that later. The wealthy borrow against their assets and don’t sell. Rates for btc loans will hopefully drop in the future
Checking in from Canada. From one colony to another, keep waiting. Prices will not rise forever. We were in the same position for many years and of course covid made it more insane but that bubble has recently popped and prices in the hot spots are way down. Now everyone that bought the top is in huge trouble with rates rising and prices tanking. All these people are under water and selling at a loss. 20-30-40% off. Don't buy the top!
That's because we've hit the 18.6 year odd real-estate market peak. Prices should come off somewhat but they will be on the rise again after 4 years, and with a vengeance as governments print even more money. Real-estate, like Bitcoin, is valued in a debasing fiat currency (globally) and as BTC rises so will every other hard asset. It's all about the denominator. Pricing property in BTC is our only hope as it outperforms the growth in real-estate. Bitcoin's 4 year cycle vs real-estate's 7-10 year cycles.
Thanks for this content. Fellow Aussie here who'd been hoping to live off sats sales in retirement so will follow this closely. Do you think you might revisit this issue if and when changes occur? I would welcome that!
Sadly, we can expect more of this nonsense in many countries as the fiat Ponzi schemes start to collapse. Here in the UK, the CGT allowance has already been slashed by our joke of a government.
This is a great piece James and should be shared on all social media outlets where the younger generation can actually read it and start to think critically instead of just falling for the usual political platitudes.
Personally I made a decision a few years ago to move "tax residency" elsewhere when I realised Australia was going to tax crypto as 'property'. I am currently in an EU country which allows you to come out in to fiat tax free if you hold crypto for at least two years. However, as the EU gets more desperate, I am sure this will change soon enough as they grasp for more tax revenue.
So I have shifted my focus to Türkiye and am waiting to see if they approve their new "Residency for foreigners' proposal. In this new proposal you pay no CGT or income tax on income derived outside of Türkiye, and you don't have to come in by investment (ie., the usual $400-500K USD). Furthermore 'residency' is accepted as being in the country for more then 6 months. This means you can spend just under half the year back in Australia if you so wish.
In Türkiye now, by comparison, rent is cheap due to their drastic currency devaluation. The food is great, the International schools (if you have kids) are brilliant, the sea is fabulous if you are a swimmer, and Istanbul airport is one of the best connected airports in the world.
A much better option I think then a 3rd world country like El Salvador.
Make your wealth and then after 20 years come back to Australia.
There are options. No-one should feel you have to be stuck in Australia.
I'm sorry you're mentally struggling with this; and after reading the article I can completely understand why.
This is an important piece, and it ties in to your brief mention of the Fourth Turning. I'm centered around that narrative and have been discussing it in podcasts. Why? Because I think what you are seeing here is the future, and what is coming will be much more egregious than this.
Systems are breaking as the global debt crises enters the final stage of the Fourth Turning. And as societies lose cohesiveness, fairness, and the rule of law you will see governments enact more legislation like this.
There is no limit to where this can go. In my own nation as the system has collapsed in previous cycles, we have seen suspension of fair trial, imprisonment without charge, outright seizure of assets. And also complete collapse of currencies. During the American revolution the "Continental"... worthless. The Southern states paper in the Civil War... worthless.
Financial repression will soon be the next stage here in the US. If you are not aware of what that is you can read the playbook in the IMF's guidelines.
The last thing I will say is this. As this system strains, all the government has to do is paint Bitcoiners as having unearned wealth. "They were lucky. They got in early. They knew something all of us didn't. They are hiding their wealth. They don't want to share."
Your neighbors won't be in the street to picket supporting you in your attempt to push back.
Now, I don't mean that there is not hope here. In fact, this seems so draconian and affects ALL Australians that I believe people WILL picket over this and write some pretty pissed off missives.
All I'm saying if for Bitcoiners there is a deeper message here to think about.
Best to you, James. Fingers crossed that sharp people like yourself can get this fixed.
Thanks James, you are by far my favourite Bitcoin analyst.
We need to do everything in our power to stop this in it's tracks. It truly is 'you'll own nothing and be happy' nail in our kids future. A government that is pushing socialism as 'normal' in the psyche of Australians, and pushing it in all schools including 30k a year schools. This is a longer conversation, but important.
Back to the CGT proposal on the table. We need to watch this space carefully as Politicians have a way of exempting themselves from decisions that effect us in unfair ways. A couple of examples.
Super Tax changes: Division 296 — ordinary Australians got hit, politicians/judges largely escaped via defined benefit schemes, on a Federal and State level
CGT reform — ordinary Australians get hit on shares, investment properties, etc. Politicians also hold those same types of assets personally, so they would in theory be equally subject to it ...
However, the same constitutional protection issue could resurface at the margins. State politicians and judges on defined benefit schemes won't be affected simply because their retirement wealth is in a pension, not in capital assets — so they're again structurally insulated in a way most Australians are not.
Therefore the message we need to get people to understand is ok for thee but not for me is the mantra of those making these decisions that ultimately affect our quality of life.
The first thing that came to my mind when I listened to the budget speech is same old same old. It's not meant to reduce house prices, it's meant to prop them up again. Negative gearing wasn't axed completely - the change only affects existing properties. What's 75,000 extra houses in the grand scheme of things? Nothing, when there is a shortfall of 200k+. They plan for an 55k increase in new immigrants coming in annually. House prices are just going to continue climbing.
What they realised is the young are giving up on dumping their hard earned into the property sinkhole and looking for other avenues to save up. And many of us are smart enough to invest into the very asset the govts want the most. So what better way to point us "in the right direction" again than by orchestrating this tax grab.
Next stop - unrealised capital gains tax. I guarantee they haven't forgotten about it. Just waiting to see how well that's going to work out for the EU countries that already are trying to roll it out.
Hi James, fellow Aussie here. What about borrowing against BTC to get around this? Currently there is no way to do this with native BTC, but there are options using cbBTC on platforms like AAVE or Morpho.
Obviously it is not perfect as it introduces risk (not your keys not your coins) , but just a thought.
You will be taking such a massive haircut every time you sell BTC due to the CGT changes, and you’re also missing out on the continued appreciation of its price
Thanks,
Rom
Swapping from BTC to cbBTC is a CGT event, putting cbBTC onto AAVE onto is a CGT event - Advice from my accountant and easily confirmed using AI.
There are many places to lend native BTC and I have used Block Earner, which was a good experience, but I see alot of people recommend LEDN, but in saying that, it may still trigger a CGT event, the change of ownership is a key factor and you may need a platform that gets around this loop hole.
There's Vield as well, which claim not to rehypothecate but the rate is really high at 13%.
Block Earner seems OK, although strangely they also check your income for a bitcoin-backed loan.
Ledn looks good too, although you have to declare that the loan is predominantly for business and/or investment purposes (and NOT for a property).
I suspect that all three of those lenders wouldn't trigger a CGT event, as you're not wrapping your bitcoin, exchanging it for another token, or "selling" it to the lender...
I'm super interested to see where the bitcoin lending market develops in the next 5 years - rates really do need to come down to make it more worthwhile.
Meanwhile in Switzerland we're focused, flourishing, moisturized with a nice round 0% cap gains tax. You can sell your Bitcoin for Francs at something like 99.75% of the spot value, you just need to pay the transaction fees and exchange fees. 😎🇨🇭
Yeah as long as you don't use any Swiss banks or brokerages, which are fee extraction scams, and use the American brokerage IBKR in Switzerland, you're all set!
I'm 17y expat with 2 kids under 6. Love the lifestyle and everything we have built here but its time to leave. Panama's Friendly Nations Residency program is our escape hatch. Not saying it is for everyone as there is no silver bullet but as the custodian of my children's future, I am their caretaker entrusted with protecting, nurturing, and guiding them and finding a place where they are treated best.
Without wanting to sound defeatist, the current lot are making us seriously consider greener pastures in BTC friendlier jurisdictions. We are immigrants and Australia has been good for us, but we learned from our previous country that when the govt shows you who they are its best to believe them and plan your exit accordingly.
My partner and I are seriously thinking about leaving too. We have two 15yr olds that love their schools, so it makes it tough. We checked out El Salvador over the January break, a very interesting country, Bukele is a pillar of strength and one that wants to take his country from the 3rd world to the 1st. Whilst our governments want to take us from the 1st to the 3rd in 'social credit chains'
We are not wealthy, work hard and just tied of the constant government warfare on the people. I seriously wonder what life our kids will have if this keeps going.
Hi James,
Following up on Romiel's point of borrowing against your BTC - from my own research it is dependent on the lender and whether beneficial ownership is transferred to the lender. Based on a quick bit of research using claude to look at the situation in Australia it might be worth checking out Figure Markets (figuremarkets.com) for native BTC backed loans. I have looked at them in the past in preference to LEDN. (I don't work for either companies.).
According to Claude...
"The key point with Australian CGT is that the ATO's test comes down to whether beneficial ownership transfers. With Figure's structure, you retain ownership of the BTC and simply pledge it as collateral, so there is a reasonable argument no CGT event is triggered at drawdown. It is genuinely a grey area and worth getting advice from a crypto specialist accountant before proceeding, but it could be a meaningful option for Aussie holders who want liquidity without selling. The liquidation scenario is a different story though, so keep your LTV conservative. They also don't rehypothecate your BTC."
I hope that is helpful, thanks for all you do mate, you are a legend in the space!
BG
Cheers James.
The sheer irony of a centre-left Labor party releasing a budget for "the workers" that actually will keep those workers working forever. After all, if the workers become the rich, what would happen to Labor's voting base?
100% agree with you that it's not time to panic, but we can make our dissatisfaction clearly heard. Even if Labor manages to legislate this budget with the help of the Greens, there's still hope in getting it unwound at the next election.
In the meantime, don't stop investing in growth assets - the last thing you want to do is to interrupt compound growth by selling (not to mention letting an "unrealised capital gains tax" come in).
My condolences, James. This is genuinely terrible, and a pretty brutal gut punch for anyone who’s been building wealth the long way like you have. Four years ago I took the plunge and moved from California (where the top combined rate was 55%) to Puerto Rico (where capital gains are now 0%). Best decision I’ve ever made. I’ll be able to retire at least a decade earlier than I would have under the old regime, all because I finally get to keep my own money instead of handing it over to a government that treats investment success like a crime. Australia’s about to learn the same lesson California did: when you punish people for patiently building capital, they either stop building it… or they stop being your people. Fair dinkum.
The sly way for us would be to borrow against our btc stack which doesn’t trigger the taxes. But we need a big stack asap to be able to utilize that later. The wealthy borrow against their assets and don’t sell. Rates for btc loans will hopefully drop in the future
Checking in from Canada. From one colony to another, keep waiting. Prices will not rise forever. We were in the same position for many years and of course covid made it more insane but that bubble has recently popped and prices in the hot spots are way down. Now everyone that bought the top is in huge trouble with rates rising and prices tanking. All these people are under water and selling at a loss. 20-30-40% off. Don't buy the top!
That's because we've hit the 18.6 year odd real-estate market peak. Prices should come off somewhat but they will be on the rise again after 4 years, and with a vengeance as governments print even more money. Real-estate, like Bitcoin, is valued in a debasing fiat currency (globally) and as BTC rises so will every other hard asset. It's all about the denominator. Pricing property in BTC is our only hope as it outperforms the growth in real-estate. Bitcoin's 4 year cycle vs real-estate's 7-10 year cycles.
Excellent analysis, James. As always.
Hi James
Thanks for this content. Fellow Aussie here who'd been hoping to live off sats sales in retirement so will follow this closely. Do you think you might revisit this issue if and when changes occur? I would welcome that!
Sadly, we can expect more of this nonsense in many countries as the fiat Ponzi schemes start to collapse. Here in the UK, the CGT allowance has already been slashed by our joke of a government.
This is a great piece James and should be shared on all social media outlets where the younger generation can actually read it and start to think critically instead of just falling for the usual political platitudes.
Personally I made a decision a few years ago to move "tax residency" elsewhere when I realised Australia was going to tax crypto as 'property'. I am currently in an EU country which allows you to come out in to fiat tax free if you hold crypto for at least two years. However, as the EU gets more desperate, I am sure this will change soon enough as they grasp for more tax revenue.
So I have shifted my focus to Türkiye and am waiting to see if they approve their new "Residency for foreigners' proposal. In this new proposal you pay no CGT or income tax on income derived outside of Türkiye, and you don't have to come in by investment (ie., the usual $400-500K USD). Furthermore 'residency' is accepted as being in the country for more then 6 months. This means you can spend just under half the year back in Australia if you so wish.
In Türkiye now, by comparison, rent is cheap due to their drastic currency devaluation. The food is great, the International schools (if you have kids) are brilliant, the sea is fabulous if you are a swimmer, and Istanbul airport is one of the best connected airports in the world.
A much better option I think then a 3rd world country like El Salvador.
Make your wealth and then after 20 years come back to Australia.
There are options. No-one should feel you have to be stuck in Australia.