A recent judicial decision in Australia regarding Bitcoin could revolutionize the way cryptocurrencies are taxed in the country, paving the way for tax refunds estimated at 640 million dollars.
The crux of the matter is a ruling that redefines Bitcoin not as a taxable asset, but as a true form of money.
Bitcoin as money, not as property: Australia’s new decisions and possible refunds
On May 19, the Australian Financial Review reported a news story that could have profound implications for the Australian tax system.
In a criminal proceeding involving the federal agent William Wheatley, accused of having embezzled 81.6 Bitcoin in 2019, the judge Michael O’Connell of the Victoria Court ruled that Bitcoin must be considered money, and not property.
At the time of the theft, the Bitcoins had a total value of about 492,000 dollars. Today, with the increase in market value, those tokens are worth over 13 million dollars.
But the real impact of the ruling does not concern only the criminal case. The judge’s decision could indeed establish a legal precedent capable of radically changing Australia’s fiscal approach towards cryptocurrencies.
The position expressed by Judge O’Connell represents a clear deviation from the official line followed so far by the Australian Taxation Office (ATO).
Since 2014, the ATO has classified cryptocurrencies as assets subject to the Capital Gains Tax (CGT), which is the tax on capital gains.
According to this regulation, every transaction involving the disposal of Bitcoin – whether it is a sale for fiat currency, an exchange with another cryptocurrency, or a purchase of goods and services – is considered a taxable event.
However, according to the new interpretation, Bitcoin should not be treated as an asset, as is the case with stocks, gold, or foreign currencies, but rather as money.
This would place it outside the scope of the CGT, with potentially disruptive consequences for the tax system.
The tax lawyer Adrian Cartland, interviewed by AFR, described the ruling as a turning point: “It completely overturns the current position of the ATO.”
According to Cartland, if the decision were to be confirmed in the subsequent levels of judgment, it could pave the way for tax refunds totaling 1 billion Australian dollars, equivalent to about 640 million US dollars.
The ATO takes time: no official figures
Cartland explained that if Bitcoin is considered Australian money, then “it is not a CGT asset. Therefore, acquisitions and disposals of Bitcoin have no tax consequences.”
In other words, those who have paid taxes on capital gains from Bitcoin transactions might be entitled to a refund.
Despite the enthusiasm of some industry experts, the Australian Taxation Office has maintained a cautious stance.
The entity has stated that there are no official figures confirming the amount of potential refunds, should the ruling actually change the way Bitcoin is taxed in Australia.
The case, despite having originated in a criminal context, could therefore have systemic repercussions on the tax treatment of cryptocurrencies.
If Bitcoin were recognized as a legal currency or in any case as a means of exchange, the entire regulatory framework built over the last ten years by the ATO could be called into question.
The ruling by Judge O’Connell is not just an innovative interpretation, but also a potential legal precedent that could be invoked in other similar cases.
In a constantly evolving sector like that of cryptocurrencies, judicial decisions take on even greater weight, especially in the absence of a clear and uniform regulation.
The fact that a court has compared Bitcoin to Australian dollars, rather than to assets like gold or stocks, could mark the beginning of a new regulatory era.
An evolving scenario
In the meantime, the cryptocurrency sector in Australia is watching closely. Investors, tax advisors, and companies in the industry are assessing the practical implications of the ruling.
If confirmed, the decision could not only reduce the tax burden for thousands of taxpayers, but also encourage the use of Bitcoin as a means of payment.
However, regulatory uncertainty could also generate confusion and disputes, especially if the ATO were to decide to formally oppose the new interpretation.
In any case, the ruling has already had the merit of reigniting the debate on the taxation of cryptocurrencies and on the need to update tax laws to keep pace with technological innovation.
In a global context where cryptocurrencies are gaining more and more space in the real economy, the decision of the Australian court could represent a significant precedent for other countries as well.
If Bitcoin is money, then perhaps it’s time to rethink the way we treat it from a tax perspective.