The head of a thriving cryptocurrency firm in Australia has advised young Australians to contemplate relocating abroad if they aspire to launch their own ventures.
Michael Kong, who is at the helm of Sonic Labs, criticized the government’s decision to eliminate the Capital Gains Tax (CGT) discount, describing it as a major setback for budding entrepreneurs in the startup scene.
Kong shared his insights with Fred Schebesta, the founder of the financial comparison platform Finder, during an episode of the Crypto Finder podcast.
In their detailed conversation, they explored how the newly proposed CGT changes in the Federal Budget could unfavorably impact business owners. Kong argued that many Australians might find greater success by establishing their enterprises in foreign markets.
“If the Budget is approved and tax policies remain unchanged by 2028, I would honestly suggest considering a temporary or permanent move,” Kong advised.
“There are countries with far more advantageous tax systems and regulatory environments,” he added, hinting at more favorable options abroad for entrepreneurs.
CGT is a levy applied to the profit made from selling assets that have been held for over 12 months. It is charged as income tax, which those in the highest tax bracket would pay at a rate of 47 per cent.
This had led to viral memes proclaiming the Albanese government has made itself a 47 per cent partner in Australian small businesses, but only taxpayers who earn more than $190,000 per year would pay the highest rate.
Michael Kong (above), director of cryptocurrency blockchain business Sonic Labs, criticised Labor’s changes to Capital Gains Tax as a ‘slap in the face’
Mr Kong urged young Aussies wanted to found a business to go overseas as there are jurisdictions that don’t tax as much
Capital Gains Tax is subject to a 50 per cent discount, effectively capping the taxation rate at 23.5 per cent.
But under Labor’s changes, from July 1, 2027, that discount will be replaced with indexation and a minimum taxation rate of 30 per cent.
Under the new rules the value of an asset when it was bought will be adjusted in line with inflation and its owner will only pay tax on the profit after that inflated price.
The highest CGT paid is the same as the highest income tax rate – 47 per cent.
Mr Kong, who co-founded crypto blockchain business Sonic Labs in 2018, said his company has moved its operations to The Bahamas, where tax and regulation systems are more welcoming to crypto entrepreneurs.
He believes the Albanese Government overlooked the effects of the CGT changes on asset-driven businesses because its not a ‘popular political issue’, like housing.
‘I think the politicians don’t really care about this new and emerging industry,’ Mr Kong said.
‘You start up a business and it becomes really successful, and then the government can take 47 per cent of whatever you make instead of with the discount, 23.5 per cent.
The Albanese Government will replace the existing CGT discount with indexation from July 1, 2027 (pictured is Prime Minister Anthony Albanese)
‘Why would you want to run a business in Australia when you get taxed up to 47 per cent when you can go to, for example, Singapore or even New Zealand just across the pond, and you’re paying zero per cent capital gains?’
The sale of personal crypto assets in Singapore is, usually, not subject to tax, but companies trading cryptocurrency are.
New Zealand, like Australia, treats the sale of crypto and other assets as part of income, meaning profit is subject to income tax.
Mr Kong claimed the high tax rate, a maximum of 47 per cent, on asset sales was against the Aussie ideal of ‘having a fair go’.
‘It’s like a race to the bottom where everyone is just trying to take money from someone else and instead of actually trying to do work,’ he said.
He urged young Australian entrepreneurs to ‘go to a jurisdiction where you think that your efforts are going to be more rewarded … it’s just going to be a lot easier for you to build wealth’.
‘It is a real slap in the face,’ Mr Kong said.
‘…Your money is going to government programs, so-called infrastructure, the costs are just way overblown, you’re not getting any value for money and you just feel like other people who maybe don’t want to take the level of risk and put in as much effort.’
