Key Highlights:
- A Victorian judge rules that Bitcoin is money, not subject to Capital Gains Tax (CGT).
- This challenges the Australian Taxation Office’s (ATO) decade-long stance.
- If upheld, the ruling could lead to up to $640 million in CGT refunds for Bitcoin investors.
- The decision stems from a 2019 criminal case involving a federal police officer.
- This could reshape cryptocurrency tax law across Australia.
Bitcoin Ruled as Currency, Not Property
In a groundbreaking decision on May 19, Judge Michael O’Connell of Victoria ruled that Bitcoin should be considered money rather than a taxable asset. This directly opposes the position held by the Australian Taxation Office (ATO) since 2014, which treated digital currencies as property subject to Capital Gains Tax (CGT).
The Case Behind the Ruling
The case stems from a 2019 criminal trial in which federal police officer William Wheatley seized 81.6 BTC, then valued at approximately $492,000. That same stash would be worth over $13 million today.
Bitcoin Is Dollar-Like, Not Like Property
According to Judge O’Connell, Bitcoin functions more like Australian dollars than it does property such as shares, gold, or foreign currency. Therefore, Bitcoin transactions should not fall under CGT provisions, which typically apply to property-based assets.
Legal Experts React
Tax lawyer Adrian Cartland told the Australian Financial Review that the ruling:
“Completely turns the previous stand of the ATO on the taxation of cryptocurrencies.”
Since 2014, the ATO has classified digital currencies as CGT assets, making this ruling a potential disruptor of over a decade of tax policy.
Could Refunds Be Coming?
If this ruling is upheld, Cartland estimates that up to $640 million—or possibly $1 billion—in CGT could be refunded to investors. However, the ATO has yet to release any official forecasts or acknowledge liability.
What Comes Next?
While this decision marks a potential turning point, it is not yet final. It could be appealed or clarified further before being adopted into national tax law. Nevertheless, the impact is significant, with potential implications for thousands of Australian cryptocurrency investors.
Conclusion: A New Era in Crypto Taxation?
This ruling may mark the beginning of a legal and financial shift in how cryptocurrencies are treated in Australia. Whether it results in sweeping changes or faces reversal in higher courts, the message is clear: Bitcoin’s legal status is evolving, and so are the tax implications that come with it.