A prominent Australian crypto entrepreneur has advised young people to consider leaving the country if the federal budget's proposed tax changes are enacted. Michael Kong, director and chief information officer of blockchain firm Sonic Labs, described Labor's planned capital gains tax (CGT) reforms as a 'slap in the face' for start-up founders, particularly in the crypto industry.
Speaking on the Crypto Finder podcast, Kong told host Fred Schebesta that if the budget passes without significant changes, he would advise a 22-year-old university graduate to 'maybe consider leaving or at least leaving for a period of time.' He cited more favorable tax and regulatory environments in other countries.
Kong, a University of Sydney computer science graduate, co-founded Sonic Labs (formerly Fantom Foundation) and served as CEO until last year. The company is now based in Nassau, The Bahamas, where Kong says the political and regulatory climate is far more welcoming.
Bahamas vs Australia
'This is a small country of a few hundred thousand people, but they've managed to really put in the effort to try and understand this industry and technology industries as a whole,' Kong said. He praised the Bahamas' Digital Assets Regulatory Act (DARE Act), noting that politicians there spent time understanding the industry. 'This is something Australia should do,' he added.
The federal budget has drawn widespread criticism from the business community for proposed changes to CGT, which would replace the 50% discount with inflation indexation across all asset classes including property, shares, and crypto. Under current rules, high-income earners pay a maximum effective CGT rate of 23.5% (half of the top marginal rate of 47%). The new method could push that rate toward 47%, depending on investment performance and inflation.
Impact on Entrepreneurs
'You start up a business and it becomes really successful, and then the government can take upwards of 47% of whatever you make instead of 23.5%,' Kong said. 'Why would you want to run a business in Australia when you get taxed up to 47% when you can go to Singapore or New Zealand and pay zero per cent capital gains?'
Kong lamented that the Australian ideal of a 'fair go' seems to be disappearing. 'When a society engages in that sort of rhetoric rather than trying to work together and think about how to attract talent and investment, it's kind of just like a race to the bottom.'
Broader Criticism
Fred Schebesta, founder of Finder, echoed Kong's sentiments, saying his first reaction to the budget was 'mildly disturbed' and 'ready to leave the country.' He warned Australia is becoming a place where innovative businesses cannot thrive. 'This is a country of government businesses, small businesses that can just survive. That's what this country is becoming. And I think that's anti-Australian.'
Adrian Przelozny, founder of Australian crypto exchange Independent Reserve, also criticized the changes, warning they would punish lower-income earners and young investors. 'Setting a minimum investment tax floor at 30% means they will often face a higher tax rate on their investments,' he said.
