Did you know 95% of Australians are aware of at least one cryptocurrency, and 70% hold Bitcoin?
Given this, the Australian crypto market is looking strong and could potentially experience increased traction due to a recent court decision. On May 19th, 2025, a judge, in a criminal case, ruled that Bitcoin should be treated as regular money.
His decision has now opened the door to capital gains tax (CGT) refunds amounting to $640 million. Many now believe that tax refund applications are likely to increase by Australians who either currently own or have previously owned digital assets are likely to increase.
Digital Asset Tax Rules In Australia
Tax treatments for digital asset holders in Australia are currently determined by how the asset owner interacts with the asset. Cryptocurrencies are generally used as an investment medium where owners acquire and hold the assets to make a profit by either selling them at a higher price on a later date or by holding on to them as they increase in value.
As for the taxation, crypto assets are categorized and taxed under the CGT category, and crypto asset investments, alongside rewards for staking crypto, are considered ordinary income for tax purposes. Digital assets not mainly used for investment, but for personal use, are exempted from such tax treatment.
However, the capital gain on a personal-use asset is subject to CGT if its acquisition cost of the said asset is more than AU$ 10,000. Cryptocurrencies such as BTC can only be considered a personal-use asset if they are not kept merely as an investment and are utilized to consume items.
Based on the current legal protocols, if a digital asset is acquired and used to consume items, it’s considered a personal-use asset. However, if the same asset was kept for some time before use or only a small portion of it was used, it may not fall under the personal-use asset category.
For years, a vast majority of Australians were subject to CGT, given that digital assets such as BTC are generally bought and then stored with hopes of a price increase, leading to potential profits. The Australian Taxation Office (ATO) has followed this approach since 2014, meaning that for that past decade, anyone who sold, exchanged, or used such digital assets was expected to calculate and pay CGT.
But in a recent turn of events, Judge Michael O’Connell of Victoria has classified Bitcoin as more similar to Australian money, and in Australia, foreign currencies are subject to CGT, but the local currency isn’t.
William Wheatley’s Case And The Ruling On Bitcoin
The recent ruling on Bitcoin was made during a criminal case hearing involving federal police officer William Wheatley. The official was allegedly involved in stealing 81.6 BTC back in 2019 during a drug investigation. At that time, the allegedly stolen assets were worth around AU$ 492,000.
However, in today’s market, 81.6 BTC would hold a monetary worth of more than AU$ 13 million. While the monetary value of the allegedly stolen crypto is significant, it’s not what adds impact to the ruling. During the trial, Judge O’Connell ruled that Bitcoin is classified as property with a similar nature to the Australian dollar.
Given this, BTC can not be seen as a foreign currency, shares, or similar to precious metals, which is how it gets treated during tax time. If BTC is to be interpreted as per the ruling, it, along with other crypto assets, could potentially be placed outside the jurisdiction of the ATO’s CGT structure.
Adrian Cartland, taxation lawyer and part of Wheatley’s defense team, has stated that if the ruling is upheld, BTC holders would be entitled to receive CGT refunds that could potentially amount to AU$ 1 billion ($640 million). He further emphasized that recognising BTC as property similar to the Australian dollar would turn huge parts of the digital economy into property or would be inconsistent with other laws.
As of now, the ATO has not confirmed any official figures hinting at the potential refund amount if the case ends up changing how BTC is taxed in Australia. However, the ruling has had a notable impact and could set a precedent for other digital assets in the future.
Australian Case Ruling Leads To All-Time High BTC Price
Bitcoin has a maximum supply of 21 million, and around 19.87 million are already in circulation, meaning that the crypto that started it all will soon become scarce. As you already know, prices in the crypto industry are largely driven by demand and popularity. An increase or decrease in both demand and popularity is triggered by real-world events like the William Wheatley case.
The ruling was announced on May 19th, 2025, and at that time BTC was priced at $106,430.53. The ruling, if upheld, will lead to CGT refunds and could make crypto tax-free in Australia or, at the very least, offer favorable tax treatment. Such speculations have triggered the BTC popularity and demand, causing prices to reach an all-time high of $111,970.17.
While there have been a few dips in the BTC price, the overall trajectory, ever since the ruling, appears to be positive.
Looking Ahead
Judge O’Connell’s ruling has had a notable impact on BTC prices. If upheld, it would mandate that the Australian government pay a total of AU$ 1 billion in CGT refunds to Bitcoin holders. In addition, if the ruling is turned into a law, it will continue to drive the BTC demand, causing a surge in the price and increased profits for those who currently hold the digital asset.
Frequently Asked Questions (FAQs)
Can I claim a tax refund on a past Bitcoin transaction?
Yes, if the ruling to consider BTC as a property similar to Australian money is upheld, those who engaged in the BTC transactions may be entitled to a CGT refund.
Is Bitcoin treated like Australian money?
No, Bitcoin is not currently treated as Australian money, and any transactions involving BTC are subject to CGT.
How much will I get from the Bitcoin CGT refund?
While the exact amount each BTC holder could get as a CGT refund remains unknown, experts have mentioned that the total CGT refund could be around AU$ 1 billion. The ATO, however, has not confirmed any figures.
