- Australian Judge rules Bitcoin should be treated as money, not a taxable asset.
- Decision contradicts decade-long ATO position on cryptocurrency taxation.
- According to a tax attorney, if the decision is upheld, possible refunds might total $640 million.
A judge in Australia decided that Bitcoin should be treated as money rather than a taxable asset, which may significantly change the nation’s cryptocurrency tax environment. The decision might result in capital gains tax (CGT) returns of over $640 million for Bitcoin transactions.
The May 19 ruling resulted from a criminal case involving federal police officer William Wheatley, who was accused of stealing 81.6 Bitcoin in 2019, according to the Australian Financial Review (AFR). When stolen, the assets were valued at approximately $492,000. Today, these same tokens would be worth over $13 million at current market prices.
In his decision, Victoria Judge Michael O’Connell concluded that Bitcoin is a type of money rather than property. The judge likened the digital asset to Australian dollars instead of comparing it to assets like shares, gold, or foreign currency.
This interpretation could establish a legal precedent that places Bitcoin transactions outside the scope of Australia’s current CGT regime, with far-reaching implications for crypto investors and the Australian tax system.
Ruling challenges decade of tax guidance
Tax lawyer Adrian Cartland told the AFR that the verdict “totally upends” the Australian Taxation Office’s (ATO) long-standing position on cryptocurrency taxation.
Cryptocurrency assets have been categorized as CGT assets by the ATO since 2014, meaning that users must pay tax when they sell or trade them. This framework has served as the foundation for taxing cryptocurrency transactions in Australia for over a decade. The recent ruling challenges this approach by recognizing Bitcoin’s monetary nature rather than treating it as property, potentially exempting it from CGT altogether.
Cartland calculates that tax refunds for taxpayers who previously paid CGT on Bitcoin transactions might reach about $1 billion ($640 million) if the decision is upheld following any possible challenges.
The ATO has not, however, verified these numbers, claiming that there are no formal projections of the potential return amount in the event that the case modifies Australia’s taxation of Bitcoin.
