Australian Court Ruling Classifies Bitcoin as Money, Could Trigger $640M in Tax Refunds

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BTCPEERS2025/05/19 12:40

By:Albert Morgan

Australian Court Ruling Classifies Bitcoin as Money, Could Trigger $640M in Tax Refunds image 0

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. According to Cointelegraph, the ruling emerged from a criminal case involving federal police officer William Wheatley, who allegedly stole 81.6 Bitcoin in 2019. Judge Michael O'Connell of Victoria determined that Bitcoin qualifies as a form of money rather than property, likening the digital asset to Australian dollars instead of shares, gold, or foreign currency.

This judicial interpretation could set a legal precedent, potentially placing Bitcoin transactions outside the scope of Australia's current CGT regime that has governed cryptocurrency taxation for over a decade.

Ruling Contradicts Long-Standing ATO Position

The court's position represents a direct challenge to the Australian Taxation Office (ATO), which has classified cryptocurrencies as CGT assets since 2014. Under current ATO guidance, any disposal of Bitcoin—whether selling for fiat currency, exchanging for another cryptocurrency, or using it to purchase goods and services—constitutes a taxable event.

Tax lawyer Adrian Cartland described the verdict as one that "totally upends" the ATO's current position in an interview with the Australian Financial Review (AFR). "It was held that Bitcoin is Australian money," Cartland explained. "That is, it is not a CGT asset. Therefore, acquisitions and disposals of Bitcoin have no tax consequences," he added.

The ruling's practical implications are substantial. If upheld on appeal, Cartland estimates potential tax refunds totaling 1 billion Australian dollars ($640 million). However, the ATO has not confirmed these figures, stating there are no official estimates on potential refund amounts if the case changes how Bitcoin is taxed in Australia.

Global Context of Cryptocurrency Taxation

The Australian ruling comes amid evolving cryptocurrency tax approaches worldwide. According to Koinly, Australia has traditionally applied a progressive tax rate system to crypto gains, with short-term gains taxed at standard income rates and long-term gains (assets held over 12 months) receiving a 50% Capital Gains Tax discount.

In contrast to Australia's potential shift, the United States maintains its classification of cryptocurrencies as property subject to capital gains tax. Decrypt reports that for 2025, the IRS has introduced new reporting requirements, including Form 1099-DA for cryptocurrency exchanges to report transactions, and shifted to wallet-by-wallet accounting for cost basis calculation.

Elsewhere, several jurisdictions have established themselves as crypto tax havens. Global Citizen Solutions notes that Switzerland exempts capital gains from cryptocurrency investments at the federal level, while cantons set lower tax rates on crypto gains than on other income types. Portugal, the UAE, and Malta offer similarly favorable treatment, with minimal or zero taxation on long-term crypto holdings.

Implications for Financial Markets and Institutions

The classification of Bitcoin as money rather than an asset has broader implications beyond individual tax considerations. Traditional financial institutions have maintained cautious approaches to cryptocurrency integration, with many banks restricting customer interactions with crypto exchanges.

According to Compare Banks, the attitude of banks toward cryptocurrencies ranges from outright exclusion to creating controlled pathways for engagement. In the UK, several high-street banks block payments to and from major Bitcoin exchanges, citing risk management concerns, while digital challengers like Revolut and Monzo continue to support cryptocurrency transactions.

A recognition of Bitcoin as money would fundamentally alter this relationship, potentially requiring financial institutions to treat Bitcoin more like foreign currency than a speculative investment. This shift would align with broader global trends, as BTC Network reports that corporate treasury strategies increasingly incorporate Bitcoin holdings, with improved accounting treatment expected by late 2025 allowing fair market value reporting rather than the current "indefinite-lived intangible asset" classification.

What This Means for the Future

If the Australian ruling stands, its effects could extend beyond immediate tax implications. The recognition of Bitcoin as money rather than property challenges fundamental assumptions about cryptocurrency's role in the financial system and could influence regulatory approaches in other jurisdictions.

The case raises questions about the appropriate classification of digital assets in a rapidly evolving financial landscape. With countries like El Salvador adopting Bitcoin as legal tender and others developing central bank digital currencies (CBDCs), the boundary between traditional currency and digital assets continues to blur.

For Australian cryptocurrency users, the case creates significant uncertainty while the legal process unfolds. Those who have paid capital gains tax on Bitcoin transactions since 2014 may have grounds for refund claims if the precedent holds, while future transactions could potentially occur without tax consequences.

The ATO will likely appeal the decision, setting the stage for a protracted legal battle with systemic implications for Australia's approach to digital asset regulation. The outcome will be closely watched by tax authorities, financial regulators, and cryptocurrency enthusiasts worldwide as a potential bellwether for similar reconsiderations globally.