An Australian court ruling may pave the way for up to $640 million in capital gains tax (CGT) reimbursements concerning Bitcoin transactions, following a judge’s determination that cryptocurrency should be regarded as currency instead of a taxable asset.
On May 19, the Australian Financial Review (AFR) announced that the ruling stemmed from a criminal case involving federal officer William Wheatley, who reportedly unlawfully acquired 81.6 Bitcoin (BTC) in 2019. At the time, the digital currency had an approximate value of $492,000. Presently, the assets are estimated to be worth over $13 million.
In this case, Judge Michael O’Connell from Victoria decided that Bitcoin should be classified as a kind of currency instead of property, comparing the digital asset to Australian dollars rather than shares, precious metals, or foreign currencies.
This interpretation has the potential to establish a legal precedent, possibly placing Bitcoin transactions beyond the purview of Australia’s existing CGT framework.
New court ruling questions Australian crypto taxation laws
In an AFR interview, tax attorney Adrian Cartland stated that the ruling “completely disrupts” the current stance of the Australian Taxation Office (ATO).
Since 2014, the ATO has designated cryptocurrency as CGT assets. This categorization obliges users to pay taxes upon selling or exchanging them. According to the ATO’s guidelines, any transaction involving Bitcoin—such as trading it for fiat, exchanging for another cryptocurrency, or using it for purchases—qualifies as a CGT event.
This framework has governed the taxation of cryptocurrency transactions in Australia for over a decade. However, the recent ruling contests this by suggesting that Bitcoin operates more like money than property, which could exempt it from CGT.
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Potential tax refunds may reach $640 million
Cartland articulated that Bitcoin is deemed as Australian currency. “That is, it is not categorized as a CGT asset. Consequently, acquiring and relinquishing Bitcoin incurs no tax implications,” he further noted.
If the ruling is affirmed upon appeal, Cartland projects that possible tax refunds could amount to 1 billion Australian dollars ($640 million).
Nonetheless, while Cartland believes refunds could reach up to a billion, the ATO indicated that no official estimates exist to verify the potential refund amount if the taxation of Bitcoin in Australia shifts.
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