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A court decision in Australia could open the door to as much as $640 million in capital gains tax (CGT) refunds on Bitcoin transactions after a judge ruled that crypto should be treated as money rather than a taxable asset.
On May 19, the Australian Financial Review (AFR) reported that the decision arose within a criminal case involving federal police officer William Wheatley, who allegedly stole 81.6 Bitcoin (BTC) in 2019. At the time, the assets were worth roughly $492,000. At current market prices, the tokens are valued at more than $13 million.
In the case, Judge Michael O’Connell of Victoria ruled that Bitcoin qualifies as a form of money rather than property, likening the digital asset to Australian dollars rather than to shares, gold or foreign currency.
The interpretation could set a legal precedent, potentially placing Bitcoin transactions outside the scope of Australia’s current CGT regime.
New court ruling challenges Australian crypto tax laws
In an AFR interview, tax lawyer Adrian Cartland said the verdict “totally upends” the Australian Taxation Office’s (ATO) current position.
Since 2014, the ATO has classified crypto assets as CGT assets. This means that users must pay tax when selling or trading them. Under the ATO’s guidance, any disposal of Bitcoin, including selling it for fiat, exchanging it for another crypto or using it to purchase goods or services, constitutes a CGT event.
This framework has been the basis for taxing cryptocurrency transactions in Australia for over a decade. However, the recent ruling challenges the approach by suggesting that Bitcoin functions more like money than property. This potentially exempts it from CGT.
Related: Australian feds seize mansion, Bitcoin allegedly linked to crypto exchange hack
Tax refunds could reach $640 million
Cartland said it was held that Bitcoin is Australian money. “That is, it is not a CGT asset. Therefore, acquisitions and disposals of Bitcoin have no tax consequences,” the tax lawyer added.
If the ruling is upheld on the appeal, Cartland estimates that there could be potential tax refunds totalling 1 billion Australian dollars ($640 million).
However, while Cartland thinks there could be up to a billion in refunds, the ATO said there were no official figures that confirm the amount to be potentially refunded if the case changes how Bitcoin is taxed in Australia.
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