A ruling was issued by a judge in Australia stating that Bitcoin is to be regarded as money rather than a taxable asset, potentially reshaping the country’s approach to cryptocurrency taxation. This decision could lead to capital gains tax (CGT) refunds exceeding $640 million for Bitcoin-related transactions.
The ruling delivered on May 19 stemmed from a criminal case involving federal police officer William Wheatley, who had been accused of the theft of 81.6 Bitcoin in 2019, as reported by the Australian Financial Review (AFR). At the time of the alleged theft, the assets were valued at around $492,000, while their current market value now exceeds $13 million.
In his ruling, Judge Michael O’Connell of Victoria determined that Bitcoin should be regarded as a form of money rather than classified as property. The digital asset was compared by the judge to Australian dollars, rather than to investment assets such as shares, gold, or foreign currencies.
This interpretation has the potential to set a legal precedent that would exclude Bitcoin transactions from being subject to Australia’s existing capital gains tax (CGT) framework, potentially resulting in significant consequences for cryptocurrency investors and the broader Australian tax structure.
Court Ruling Disrupts Ten Years of Tax Policy
It was stated by tax lawyer Adrian Cartland in an interview with the AFR that the ruling “completely disrupts” the long-established stance held by the Australian Taxation Office (ATO) regarding the taxation of cryptocurrency.
Since 2014, cryptocurrency assets have been classified by the Australian Taxation Office (ATO) as capital gains tax (CGT) assets, requiring users to pay taxes upon their sale or exchange. This classification has functioned as the basis for the taxation of cryptocurrency transactions in Australia for more than ten years. However, the recent court ruling contests this framework by acknowledging Bitcoin as a form of money rather than property, potentially removing it from CGT liability entirely.
It has been estimated by Cartland that, if the ruling is upheld after any potential appeals, tax refunds to individuals who previously paid capital gains tax on Bitcoin transactions could total approximately $1 billion (equivalent to $640 million).
However, the Australian Taxation Office (ATO) has not confirmed these figures, stating that no official estimates have been prepared regarding the potential refund amount should the case alter the taxation framework for Bitcoin in Australia.
