Australian judge Michael O’Connell has ruled that Bitcoin is “comparable” to Australian dollars and should therefore be exempt from the capital gains tax (CGT), Crypto News Australia reported on Tuesday (May 20).
The decision was made during a hearing for William Wheatley, a former Australian Federal Police officer. He was accused of stealing 81.6 BTC in 2019; at the time they were worth AU$492,000, but now their value would be AU$13 million.
O’Connell said Bitcoin is a type of property, describing it as more similar to Australian dollars than it is to gold or shares.
According to this year's Independent Reserve Cryptocurrency Index, released in February, 31 percent of Australians have invested in or have at least held crypto, with 70 percent of these investors holding Bitcoin.
The Independent Reserve also states in a recent article that while 14.3 percent of Australians have held off on investing in crypto due to economic conditions, 42.9 percent believe cryptocurrencies will be widely accepted by people and businesses in the future. Meanwhile, 73.4 percent consider Bitcoin to be money, a store of value or an investment asset.
“Locally, while the sector is experiencing robust growth, challenges in regulatory clarity and market volatility persist,” the outlet notes. “The actions of traditional financial institutions, such as banks blocking or delaying crypto investment activities, highlight the need for clear and supportive regulation to ensure the sector’s legitimacy and continued growth.”
Taxation lawyer Adrian Cartland, co-barrister for the defense in Wheatley’s case, said that should the ruling be upheld, up to AU$1 billion in CGT could be refunded to Bitcoin holders who paid CGT on their transactions.
“Recognising crypto as property would either make huge parts of the digital economy into property — such as points in Space Invaders or ‘likes’ on Instagram — or would be inconsistent with other laws,” he said, highlighting the implications of the ruling. “Love and affection are valuable, and so are services, but they are not property.”
If upheld on appeal, the ruling would only apply to Bitcoin and impact transactions made from 2019.
The Australian government released a Board of Taxation review on the tax treatment of digital assets and transactions on March 21. There were no new crypto-specific proposals on tax legislation, implying that existing tax laws remain in place.
“While there hasn’t been new public guidance released yet, we see this as part of a longer-term shift,” Crypto Tax Calculator CEO Shane Brunette said. “The government is signalling that it wants to give the Australian Tax Office room to engage more closely with industry and provide clarity through practice, rather than rewriting the rules all at once.”
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Securities Disclosure: I, Gabrielle de la Cruz, hold no direct investment interest in any company mentioned in this article.
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