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.
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.
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).
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
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 their 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.
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.
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).
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
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 their 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.
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.
Will you move? What's the plan? Super sorry that you are going through this
Sombering analysis. Good luck with trying to change the trajectory.
The CGT budget changes suck
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.