05-22-2025 
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A recent court decision in Australia relating to Bitcoin could open the door to as much as USD$640 million in capital gains tax (CGT) refunds and revolutionize how digital assets are taxed in the country, after a judge ruled that Bitcoin should be treated like local money.
The case in question was the criminal case involving federal police officer William Wheatley, who allegedly stole 81.6 BTC in 2019 during a drug investigation. At the time of the alleged crime, the assets were worth around AU$492,000 (US$317,266), at current market prices, the value would be more than AU$13 million (US$8.3 million).
However, the value of the assets in question did not make the ruling significant.
As reported on May 19 by local outlet the Australian Financial Review (AFR), Judge Michael O’Connell of Victoria ruled that Bitcoin qualifies as property of a similar nature to the Australian dollar, rather than a speculative asset, such as a foreign currency, shares, or gold—which is how the Australian Taxation Office (ATO) currently treats it for taxation purposes.
This new interpretation of Bitcoin—and by extension many other digital assets—as property akin to the local currency could set a significant legal precedent in Australia, potentially placing them outside the scope of the country’s current regime for CGT—a tax on the profit when you sell or “dispose of” or use an asset that’s increased in value.
In turn, this would likely lead to a huge stream of tax refund applications from the approximately 31-32.5% of Australians who own or have owned digital assets—according to the 2025 Independent Reserve Cryptocurrency Index (IRCI).
Australia’s currency digital asset tax rules
Currently, in Australia, how a person uses or transacts with digital assets will determine how they are treated for tax purposes.
As explained by the ATO: “The most common use of crypto assets is as an investment (investors acquire and hold crypto assets to make a financial profit from holding or disposing of them). As a general rule, for investors: crypto assets are taxed as CGT assets, including for self-managed super funds (SMSFs) investing in crypto assets rewards for staking crypto are ordinary income for tax purposes.”
However, there is an exemption, which is when digital assets are not kept mainly for investment but for “personal use,” with the caveat that capital gain on a personal use asset is also subject to CGT if it cost more than AU$10,000 (US$6,418) to acquire the asset.According to the ATO, “a crypto asset (such as BTC, a cryptocurrency) is a personal use asset if you keep or use it mainly for personal use, for example, to buy items for personal use or consumption.”
This is often determined by the timing of the ‘disposal’. Based on the current rules, a digital asset acquired and used in a short period of time to buy items for personal use or consumption is likely to be considered a personal-use asset. On the other hand, a digital asset acquired and held for some time before being used, or if only a small proportion of it is used, to buy items for personal use or consumption, is less likely to be considered a personal-use asset.
Therefore, due to how the vast majority of people interact with digital currencies, particularly BTC—as high-risk high-reward speculative investments, to buy and hold in the hopes that the price will go up, rather than as a currency to spend for “personal use”—many Australian holders and traders of digital assets have been subject to CGT.
This is the current taxation approach, which the ATO has stuck to since 2014. In other words, any time digital assets are sold, exchanged, or used to purchase goods and services, the holders who deal with the digital assets are expected to calculate and pay CGT.
Judge O’Connell’s ruling potentially shakes things up in that he classified Bitcoin as more similar to Australian money, and while foreign currency is subject to CGT, Australian currency is not.
The ruling’s implications
In an interview with AFR, tax lawyer Adrian Cartland said the verdict “totally upends” the ATO’s current position.
Cartland’s interpretation of the ruling was that it essentially makes Bitcoin equivalent to Australian money, for tax purposes: “That is, it is not a CGT asset. Therefore, acquisitions and disposals of Bitcoin have no tax consequences.”
If the ruling is upheld on appeal, Cartland estimated that potential tax refunds could total AU$1 billion (US$640 million).
However, it’s possible that the ruling could be overturned on appeal, or—considering the potential far-reaching implications of the ruling—it could be amended to liken Bitcoin to foreign currency, rather than Australian money, which would put it back within the realm of the current CGT regime.
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