In a landmark ruling that could reshape the tax landscape for cryptocurrency investors, an Australian court has determined that Bitcoin should be classified as a form of currency rather than property. This decision, reported by the Australian Financial Review (AFR), marks a pivotal shift in how digital assets may be treated under tax law — not just in Australia, but potentially around the world.
The verdict emerged from a criminal case involving former federal police officer William Wheatley, who was accused of stealing 81.6 Bitcoin in 2019. In delivering the judgment, Victorian Supreme Court Justice Michael O’Connell ruled that Bitcoin functions more like Australian dollars than stocks, gold, or foreign currencies, effectively categorizing it as legal tender within the context of the case.
This reclassification carries profound implications: if upheld on appeal, Bitcoin transactions could fall outside the scope of capital gains tax (CGT) in Australia — a move that would fundamentally alter the financial incentives for crypto investors.
👉 Discover how this ruling could change global crypto tax strategies
Current Crypto Tax Framework in Australia
Since 2014, the Australian Taxation Office (ATO) has treated cryptocurrencies as CGT assets. Under this framework:
- Selling Bitcoin for fiat currency (like AUD)
- Trading Bitcoin for other cryptocurrencies
- Using Bitcoin to purchase goods or services
…all constitute taxable events. Investors must calculate capital gains or losses based on the difference between acquisition and disposal value, reporting these to the ATO accordingly.
This long-standing policy has created compliance challenges and discouraged broader adoption, especially among retail investors wary of complex reporting requirements and potential tax liabilities.
However, Justice O’Connell’s ruling directly challenges this foundation. By defining Bitcoin as currency, not property, the court implies that gains from its use or exchange should be treated similarly to foreign currency transactions — which are generally not subject to CGT unless conducted as part of a business or investment enterprise.
Adrian Cartland, a leading tax lawyer quoted in the AFR report, described the decision as “a complete upheaval” of the ATO’s current stance. He emphasized:
“If Bitcoin is recognized as Australian currency, then it’s not a CGT asset. That means acquiring or disposing of Bitcoin would have no tax consequences.”
While this interpretation applies narrowly to the current case, its precedent-setting nature opens the door for broader legal and fiscal reform.
Potential for Massive Tax Refunds
One of the most striking implications of this ruling is the possibility of retroactive tax refunds for past Bitcoin transactions. If higher courts uphold the decision, thousands of Australian investors who previously paid CGT on crypto trades may be eligible to reclaim those taxes.
Cartland estimates that up to AUD 1 billion (approximately USD 640 million) could be at stake in potential refunds. While the ATO has not confirmed exact figures, it acknowledges that any change in asset classification would require a comprehensive reassessment of prior tax assessments.
Such a reversal would represent one of the largest taxpayer reimbursements tied to digital assets in history — and send a strong signal about the evolving legal recognition of cryptocurrencies.
👉 See how investors are preparing for new crypto tax paradigms
Frequently Asked Questions (FAQ)
Q: Does this mean all cryptocurrencies are now tax-free in Australia?
A: Not yet. The ruling specifically addressed Bitcoin in a narrow legal context. Other cryptocurrencies may still be classified as property unless similar court decisions apply. Wider legislative changes would be needed to extend this treatment across all digital assets.
Q: Will I get my past crypto taxes refunded automatically?
A: No. Even if the ruling stands, investors will likely need to file formal claims with the ATO. There is no automatic refund process at this stage, and outcomes will depend on future appeals and official guidance.
Q: How does this affect everyday Bitcoin users?
A: If implemented broadly, everyday transactions using Bitcoin — such as buying coffee or paying bills — could become tax-neutral, just like spending cash. This removes a major friction point for mainstream adoption.
Q: Could this decision be overturned?
A: Yes. The ruling came from a single judge in a criminal case and hasn’t been tested in appellate courts. The ATO may challenge it, meaning final clarity could take months or years.
Q: Is Australia now a crypto-friendly jurisdiction?
A: This decision strengthens Australia’s position as a forward-thinking market for digital finance. While regulatory frameworks remain under development, this legal interpretation shows growing judicial recognition of Bitcoin’s monetary function.
Global Context: How Does Taiwan Handle Crypto Taxes?
While Australia debates reclassifying Bitcoin as currency, Taiwan has taken a different approach, introducing detailed but controversial crypto tax guidelines in early 2025.
According to a report submitted by Taiwan’s Ministry of Finance to the legislature:
- Cryptocurrencies with securities-like features: Gains are treated as “securities transaction income.” While individual investors currently benefit from suspended securities transaction taxes, enterprises must include these gains in their basic taxable income.
Non-security cryptocurrencies:
- Individuals: Profits from occasional trades are considered “property transaction income,” taxed under comprehensive income tax after deducting costs.
- Businesses: Must report gains as regular business income under corporate tax rules.
These rules have sparked public backlash on platforms like PTT, with critics citing vague definitions, lack of public consultation, and misalignment with international trends. Experts warn that without dedicated legislation and clearer definitions, enforcement risks alienating both investors and innovators.
Some suggest Taiwan look to Australia’s evolving model — where judicial insight drives policy evolution — rather than imposing rigid frameworks prematurely.
The Bigger Picture: Toward a New Era of Crypto Recognition
This Australian ruling isn’t just about taxes — it reflects a deeper shift in how institutions understand the nature of money in the digital age. By likening Bitcoin to the Australian dollar, the court acknowledges its role as a medium of exchange, not merely a speculative asset.
Such recognition aligns with growing global momentum toward treating certain cryptocurrencies as functional money — especially when used for payments or peer-to-peer transfers.
As more jurisdictions grapple with crypto regulation, this case offers a compelling blueprint: let courts interpret technology through existing legal principles, then allow lawmakers to refine policy based on real-world outcomes.
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Final Thoughts
The Australian court’s decision to classify Bitcoin as currency rather than property could mark a turning point in crypto taxation. While challenges remain — including potential appeals and administrative hurdles — the message is clear: Bitcoin is increasingly seen not as a commodity, but as money.
For investors, this opens exciting possibilities: simplified compliance, reduced tax burdens, and greater confidence in long-term holding strategies. For governments, it presents an opportunity to modernize outdated frameworks and foster innovation.
As legal systems adapt to technological progress, rulings like this one may become catalysts for broader financial transformation — one blockchain transaction at a time.
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