A landmark ruling by an Australian judge may pave the way for up to $640 million (AU$1 billion) in Bitcoin tax refunds, challenging the longstanding tax treatment of cryptocurrencies by the Australian Taxation Office (ATO).
Court Ruling Redefines Bitcoin’s Legal Status
The case arose from criminal proceedings involving federal police officer William Wheatley, who was accused of stealing 81.6 Bitcoins in 2019. At the time of the theft, the assets were valued at approximately $492,000. Their current worth has soared to over $13 million.
During the trial, Judge Michael O’Connell of Victoria ruled that Bitcoin should be regarded as a form of money rather than property. He compared the digital currency to the Australian dollar, diverging from the ATO’s classification of Bitcoin as a capital gains tax (CGT) asset.
Decade-Old Tax Framework Challenged
Since 2014, the ATO has treated cryptocurrencies as assets subject to CGT. Under existing guidance, any disposal of Bitcoin — whether through sale, trade, or using it to buy goods or services — is considered a CGT event, requiring the payment of tax on profits.
However, the recent court ruling significantly challenges this perspective. If Bitcoin is legally recognised as money, it could be exempt from CGT, thereby changing how thousands of Australians report and pay tax on crypto transactions.
Potential for Mass Tax Refunds
Tax lawyer Adrian Cartland described the ruling as a decision that “totally upends” the ATO’s current position. According to Cartland, if Bitcoin is considered Australian money, then transactions involving it would not trigger tax obligations.
“This means acquisitions and disposals of Bitcoin have no tax consequences,” Cartland explained in an interview with the Australian Financial Review (AFR). He estimates that, should the ruling be upheld on appeal, tax refunds could total up to AU$1 billion (roughly $640 million).
ATO Yet to Confirm Impact
Despite the ruling, the ATO has not confirmed any official figures regarding the potential refunds or whether a policy shift is under consideration. The office has also not made any statement on whether it will appeal the decision or amend its guidance.
The implications of the court’s ruling could be far-reaching, potentially reshaping the tax treatment of digital assets in Australia. However, until the decision is tested in higher courts or acknowledged in new legislation, the future of crypto taxation remains uncertain.
What Comes Next?
While the immediate impact of the court decision is limited to the Wheatley case, the precedent it sets could influence how other courts interpret cryptocurrency-related matters. It also puts pressure on lawmakers and tax authorities to revisit the legal and tax frameworks surrounding digital assets.
For now, Australian crypto users and investors await further developments that could bring significant changes to how their transactions are taxed — or potentially, refunded.
