Australia is once again in the spotlight of the global tax policy conversation. The country is introducing a controversial tax on unrealized capital gains, a move that may dramatically shift how high-net-worth individuals manage their assets. Alongside this, Australia’s financial intelligence agency is implementing stricter regulations on cryptocurrency ATMs in an effort to reduce fraud. Together, these policies signal a tightening of Australia’s grip on digital finance and high-value portfolios.
This in-depth article explores the context, impact, criticism, and implications of both major changes: the proposed tax on unrealized gains and the new crypto ATM rules. Whether you are an investor, tax advisor, or simply keeping an eye on global tax trends, these developments are worth understanding in detail.
Part 1: Unrealized Capital Gains Tax – What Is It?
The Basics
Effective from July 1, 2025, the Australian government plans to implement a 15% tax on unrealized capital gains for individuals whose superannuation fund balances exceed 3 million Australian dollars. This means if your retirement savings or portfolio grows in value, even if you have not sold anything, you will be taxed on the paper gain.
Unrealized capital gains refer to the increase in value of an asset that has not yet been sold. In most countries, capital gains are only taxed when the asset is sold and the gain is realized. This new policy in Australia changes that by taxing gains based purely on valuation increases, regardless of whether a transaction has taken place.
Who Will Be Affected?
This new tax will apply to individuals whose super balances exceed the 3 million AUD threshold. Based on current figures, that is a relatively small group, less than 1% of Australians. However, critics have pointed out that because the threshold is not indexed to inflation, more and more people will fall into this bracket over time.
In the first year alone, approximately 80,000 individuals are expected to be affected. Over the next decade, that number could increase significantly as portfolio values rise and inflation erodes the real value of the threshold.
How the Tax Works
Here is a simplified breakdown of how this tax would be calculated:
Suppose your superannuation balance is 4 million AUD at the end of the financial year.
The amount over the 3 million threshold is 1 million AUD.
Any earnings or increase in value on that excess amount would be taxed at an additional 15%.
The existing 15% tax on superannuation earnings still applies, bringing the total effective tax on excess earnings to 30%.
This means that if your super fund grows by 200,000 AUD and 25% of that growth occurred in the portion over the 3 million mark, then 25% of the earnings would be taxed at 30%, and the remaining 75% at 15%.
Importantly, the tax applies even if the fund’s assets have not been sold. That is the heart of the controversy.
Arguments in Favor
Supporters of the policy argue that the current system allows the wealthiest Australians to accumulate massive untaxed gains within superannuation accounts. These accounts were originally designed to fund basic retirement needs, not serve as tax shelters.
The government has framed the reform as a way to make the tax system fairer and more sustainable, especially as it faces long-term spending challenges related to healthcare, infrastructure, and aging demographics.
Some economists also support the move as a logical progression toward taxing wealth more effectively. They argue that unrealized gains are a form of economic income that should not be entirely exempt from taxation.
The Backlash
The proposal has met fierce resistance from financial professionals, political opponents, and high-net-worth individuals. Here is why:
1. Liquidity Issues
Because the tax applies even if the gains have not been realized, some investors may be forced to sell assets just to pay the tax bill. This could be particularly problematic for those holding illiquid assets such as real estate, private equity, or shares in private companies.
2. Administrative Complexity
Calculating the fair market value of all assets annually, especially those that are not publicly traded, adds a significant compliance burden. Disputes over valuation are almost inevitable.
3. Impact on Self-Managed Super Funds (SMSFs)
SMSFs with concentrated holdings in property or start-ups are particularly at risk. These funds may be asset-rich but cash-poor, meaning they could struggle to generate the liquidity needed to cover the tax.
4. Deterrent to Investment
Critics argue that the tax disincentivizes long-term investment and saving, particularly in innovative sectors like technology and venture capital. These sectors often generate large gains over time without regular income streams.
5. No Inflation Adjustment
Perhaps the most frequently cited flaw is the lack of inflation indexing. Without it, more middle-income Australians may be dragged into the tax net over time, especially as asset prices continue to grow.
What This Means for Australian Investors
The move sets a precedent that could influence tax policy in other parts of the world. For Australians, it sends a clear message: accumulating significant wealth inside superannuation will now come with an additional layer of taxation.
Investors will need to consider new strategies to manage their portfolios. Some may reduce contributions to their super funds once the balance approaches the 3 million AUD threshold. Others might diversify into assets that are easier to value or liquidate.
There could also be increased interest in offshore investment vehicles and financial emigration. However, both come with their own risks and regulations.
Part 2: Australia’s Crypto ATM Crackdown
While the tax on unrealized gains dominates headlines, another regulatory development is also making waves. AUSTRAC’s new rules for crypto ATM operators are designed to reduce fraud and improve oversight.
What Is Changing?
Australia’s financial intelligence agency, AUSTRAC, has introduced stricter compliance requirements for operators of cryptocurrency ATMs. These include:
- A cash transaction limit of 5,000 AUD per user per day
- Enhanced customer verification procedures
- Stronger transaction monitoring and reporting obligations
The changes come in response to a growing number of fraud cases linked to crypto ATMs. According to government reports, more than 150 scams involving these machines were reported over the past year, with total losses exceeding 3.1 million AUD.
Why Target Crypto ATMs?
Crypto ATMs are relatively easy to use and often require minimal identification compared to traditional exchanges. This makes them attractive not just to legitimate users, but also to fraudsters.
The new rules aim to make it harder for criminals to launder money or target vulnerable populations. Older Australians have been disproportionately affected by crypto-related scams.
According to official data, nearly 72% of crypto ATM transaction volumes are from individuals over the age of 50. Many of these users were tricked into depositing large sums of money following instructions from scammers posing as government agents, bank employees, or romantic partners.
Industry Reaction
Crypto businesses have voiced concern that the new regulations could stifle innovation and push legitimate activity underground. Smaller operators may find the compliance costs too high to bear, leading to a consolidation of the industry.
Others argue that tighter regulation is necessary to maintain public trust and reduce the risk of consumer harm. Given the growing mainstream interest in crypto, regulators are trying to strike a balance between encouraging innovation and protecting users.
Combined Impact: A Shift Toward Tighter Financial Control
These two regulatory moves, taxing unrealized gains and tightening crypto ATM operations, indicate a broader trend. Australia is becoming more aggressive in how it monitors, regulates, and taxes financial activity, especially in areas that have previously enjoyed more flexibility.
This reflects a global shift. Governments around the world are struggling to keep up with rapidly evolving financial instruments and digital assets. From the United States to Europe and now Australia, policymakers are rethinking what should be taxed and when.
Looking Ahead: What Should You Do?
If you are an Australian investor or an advisor to high-net-worth clients, here are a few practical steps you may want to consider:
- Review your superannuation balance and assess how close you are to the 3 million AUD threshold
- Evaluate your portfolio’s liquidity, especially if it includes property, start-up equity, or crypto
- Stay updated on asset valuations. Accurate reporting will become even more important
- Consider tax planning strategies to spread out gains or reduce exposure to unrealized appreciation
- Monitor crypto regulations and ensure that any ATM or exchange usage is compliant with the latest AUSTRAC standards
Conclusion
Australia’s decision to tax unrealized capital gains is not just a domestic issue. It is a bold experiment that could influence global tax policy in the years to come. Combined with a tighter grip on cryptocurrency usage, it paints a picture of a country moving quickly to close tax loopholes and regulate digital finance more stringently.
For investors, the message is clear. Old strategies may no longer be sufficient. Whether you are managing a retirement fund, building a digital asset portfolio, or advising clients, it is time to reassess your approach. In an era where tax policy and financial regulation are evolving rapidly, staying ahead of the curve is not optional. It is essential.