Investors in crypto, wine, Birkin handbags face potential tax changes in upcoming budget
Investors with money in everything from cryptocurrencies to wine and even luxury handbags may be caught up in planned changes to capital gains tax that Chancellor of the Exchequer Jim Chalmers will announce on budget night.
As Chalmers promises the budget will include incentives for the start-up sector and venture capital, investors are increasingly concerned about how any changes to CGT will affect returns on assets that are increasingly attractive to young Australians.
As this imprint explained last month, Chalmers will revert to the way capital gains were taxed before the Howard government’s changes in 1999.
Before 1999, the value of assets was adjusted for actual inflation; CGT only applied to the “real” jump in value. This became a flat 50 per cent discount in a move treasurer Peter Costello suggested would make Australia more attractive to investors, particularly the share market.
While most focus will be on shares and property, any changes will impact new asset types.
The investment world has changed dramatically since the introduction of the discount; One of the biggest changes has been the emergence of cryptocurrencies. The global market is worth an estimated US$2.8 trillion ($3.7 trillion) and a quarter of Australian investors are thought to hold crypto assets.
Bitcoin, which accounts for more than half of all crypto value, has experienced a sharp decline in price since late 2025, falling from $124,310 to $81,000 today. However, an investor who has held Bitcoin since the beginning of 2024, when it was sold for $ 44,000, still receives a capital gain of 85 percent.
The luxury investment market has also boomed since the turn of the century, as investors put money into everything from fine wines to luxury watches and even Hermes’ signature Birkin bags. In some cases, these purchases may attract the attention of the CGT.
The secondary market for Birkin has evolved considerably over the last two decades; Some bags were worth much more secondhand than new. Knight Frank’s Wealth Report 2025 report. The report shows that handbags are the best-performing luxury asset class in 2024.
Tuan Van Le, managing director and lead lawyer at Challenger Law, said changes to the CGT would likely reduce the incentive for investors to set up their own crypto start-ups if they go beyond ownership.
He said many start-ups offer shares to their employees when starting a business. The tax hit under the pre-1999 system would likely have been greater than the current 50 percent reduction.
“If the initiative is successful, they will pay more taxes than they would have received under the old system,” he said.
“It will be less attractive for people to start their own crypto companies.”
Van Le said changes to negative gearing, which the government is considering restricting the number of homes that can be negatively geared, could encourage people to form companies to invest in property.
He said that although companies would not be negatively affected, the lower tax rate offered under the company structure could encourage investors to structure their financial affairs as companies.
Chartered Accountants ANZ group policy manager Geraldine Magarey argued that the $500 threshold for assets attracting CGT had not changed since the tax was introduced and that it should be indexed.
“Any changes to the capital gains tax regime will require taxpayers to understand how the rules apply to a wide range of assets,” he said.
“If you sell an asset after a short period of time, inflation won’t change much, so indexation may give you less benefit than the current discount. But if you hold an asset for many years, most of the gain is just inflation, so indexation may give long-term holders a fairer outcome.”
John Storey, tax consultant at the Tax Institute, said that ultimately crypto and other assets are the same as any other asset when it comes to CGT.
“There are a few special circumstances that affect these assets, but otherwise they are taxed like any other investment,” he said.
“We don’t yet know how any 50 percent CGT discount changes will affect crypto, but early indications are that any changes will apply across the board, so cryptocurrency will be affected in the same way as other assets.”
Chalmers refused to be briefed on how the tax could be changed, dismissing suggestions that it would harm start-ups and venture capital.
He said the budget’s tax package would include “tough but necessary” reforms focused on helping young people enter the property market rather than targeting the investor sector.
“I think what people will see in the budget on Tuesday is a lot of effort, including new policies to support start-ups and venture capital. We see these as a really important part of the economy and increasingly so,” he told Sky News.
“Without any announcement in Tuesday night’s budget, there is a focus on startups and venture capital, which is a positive.”
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Shane Wright is senior economic correspondent for The Sydney Morning Herald and The Age.Connect with: X or email.
