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Ripper Wealth

TAX ESSENTIALS FOR CRYPTO INVESTORS • STEP 3 OF 4

Try It: Crypto Tax Calculator

In investing, what is comfortable is rarely profitable.

Robert Arnott

Compare selling vs borrowing against your crypto. See how capital gains tax and loan costs impact your decision.

Your Learning Journey

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This Step Takes: 20 minutes

Use the interactive calculator to model your crypto tax scenario and explore the sell vs borrow decision.

What You'll Do

Model your crypto tax scenario with our interactive calculator.

Sell vs Borrow Calculator

Enter your crypto position and see the tax implications of selling vs taking a loan against your holdings.

Full CGT Calculator (Budget 2026-27 rules) →|Full Sell vs Borrow Calculator →

Investment Details

CGT treatment: Sale on/after 1 July 2027 with pre-2027 purchase: gain splits at market value at 1 July 2027.

Value at 1 July 2027

Results & Comparison

CGT on the Sell Leg⚖️ apportioned at MV at 1 Jul 2027

Pre-2027 Slice (50% disc.)

Pre-cutoff gain:$13,776
Tax:$2,204
Brackets
30%$2,066
Medicare 2%$138

Post-2027 Slice (indexed)

Real gain:$23,854
Tax:$7,633
Brackets
Stacked on $80,000 income + $6,888 pre-2027 gain
30% × $23,854$7,156
Medicare 2%$477
Total CGT:$9,837
▲ New regime costs more:$5,618

Borrow Instead (No CGT Event)

Loan Amount:$20,000
LTV Ratio:40.0%
Total Interest:$1,100
Monthly Payment:$1,758
Tax Deduction (if eligible):$0 (not deductible for private use)
Deductibility depends on the use of the borrowed money (ATO); legal basis not verified in this release
Net Interest Cost (after tax):$1,100

Sell vs Borrow: Bottom Line

CGT if you sell today (your regime):$9,837

For reference: legacy 50% discount only: $6,400 CGT (+$3,437 difference)

Net interest cost (after tax deduction):$1,100
Cost difference:$8,738 (Borrowing cheaper)
Collateral risk threshold:Price drop of 53%

Parameters checked on 22 Oct 2026 · Source: ATO · FY2030-31

FY2027-28 rates applied (latest legislated). CPI: ABS 6401.0 to 2026Q3. Medicare low-income reduction, LITO and Division 293 are not modelled.

Key Risk for This Asset Type

  • Automatic liquidation if price drops below LTV threshold (typically 70-85%)
  • Most providers are international; verify ASIC licensing
  • Interest rates are typically higher than traditional assets (8-15% p.a.)

Educational Note: Budget 2026-27

General information only. Not personal financial advice. Uses Australian resident income tax rates for the financial year of sale (FY2030-31) plus a flat 2% Medicare levy. Rates for FY2027-28 onward: Treasury Laws Amendment (More Cost of Living Relief) Act 2025 (No. 28), Sch 1. CGT treatment derived from purchase and sale dates: pre-2027 sale → 50% discount; pre-2027 purchase with post-2027 sale → split at the value just before 1 July 2027 (Tax Reform No. 1 Act 2026, s 112-155); post-2027 purchase → inflation-indexed + top-up to the 30% minimum tax. CPI data sourced from ABS 6401.0. Interest deduction benefit uses bracket-stacking (incremental rate). Consult a registered tax agent for your specific situation.

How This Calculator Works

The Sell Strategy calculates your capital gains tax based on purchase price, current value, and holding period (12+ months = 50% CGT discount). The Borrow Strategy shows loan costs including interest, LTV ratio, and margin call risk. Compare both to make an informed decision.

When Selling Makes Sense

Sometimes paying the tax and cashing out is the right move.

You've Hit Your Target

If you've reached your investment goal or price target, selling locks in profits. Pay the tax and move on with certainty.

Market Looks Risky

If you think the market will drop significantly, selling now (even with CGT) beats holding and losing value. Borrowing exposes you to margin calls.

You Need Full Amount

If you need 100% of the value (e.g., buying a house), selling is cleaner. Loans cap at 50-70% LTV, and you still owe the principal back.

No Long-Term Conviction

If you don't believe in the asset long-term, why hold it? Sell, pay the tax, and redeploy capital into better opportunities.

Pro Tip: Tax Loss Harvesting

If you have losing positions, sell them to offset gains. Then rebuy after 30 days to avoid wash sale rules (ATO scrutiny). This reduces your net tax bill.

When Borrowing Makes Sense

Crypto-backed loans can avoid triggering CGT and preserve your position.

You Expect Price Growth

If you think the asset will appreciate significantly, borrowing lets you keep exposure. You get liquidity now without selling the upside.

Short-Term Cash Need

For temporary liquidity needs (6-12 months), borrowing can be cheaper than the CGT you'd pay. Repay the loan and keep your crypto intact.

Under 12-Month Holding

If you've held crypto for less than 12 months, selling triggers full CGT (no 50% discount). Borrowing lets you wait for the discount.

Low LTV Required

If you only need 20-30% of your crypto's value, the LTV is conservative. Low margin call risk makes borrowing safer.

Borrowing Risks

  • Margin calls if crypto price drops below LTV threshold
  • Interest costs can exceed CGT if held too long
  • Most crypto lenders aren't regulated by ASIC (counterparty risk)
  • You still owe the loan principal. It's not "free money"

Key Takeaways

CGT Is Real

Selling crypto triggers capital gains tax. The 12-month discount cuts it in half. Plan your timing carefully!

Borrowing Has Trade-offs

Crypto-backed loans avoid CGT but cost interest and carry margin call risk. Only borrow if you're bullish long-term.

Check Lender Regulation

Most crypto lenders aren't ASIC-licensed. Verify their Australian Credit Licence or understand the counterparty risk.

💡 The Decision Framework

Sell if: You've hit targets, market looks risky, or you need certainty. Borrow if: You're bullish long-term, need short-term liquidity, or want to wait for the CGT discount.

Tax-101 for Crypto - Try It: Complete

  • Selling crypto triggers CGT. Calculate it before deciding to sell
  • Borrowing against crypto avoids CGT but costs interest and carries margin call risk
  • The 12-month CGT discount (50%) can make waiting worthwhile if you're under the threshold

Homework

Reflect

Based on your current crypto holdings, would selling or borrowing make more sense? Why?

Action

If you have crypto, run your numbers through the calculator above. Write down your sell vs borrow decision and the reasoning.

What's Next?

5 minutes

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