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2025-05-21 02:45:33
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Wealth
Personal Finance
Capital gains tax
This court case could make your bitcoin profits tax-free
Joanna Mather
Joanna MatherWealth editor
Updated May 19, 2025 – 4.38pm,
first published at 12.18pm
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A judge says bitcoin is just another form of money, which means it could be exempt from capital gains tax – a decision that upends the Australian Taxation Office’s approach to taxing cryptocurrency and could open the door to millions in refunds.
The judgment – made public for the first time here – was made as part of a criminal case brought against a former Australian Federal Police officer who allegedly stole 81.6 bitcoin in 2019, then valued at approximately $492,000. Today it would be worth just over $13 million.
Wheatley’s defence team argued that bitcoin is information, not property, and therefore cannot be stolen. Michaela Pollock
Victorian magistrate Michael O’Connell said bitcoin was property, but akin to Australian dollars rather than foreign currency, shares or gold.
The implication is that just like exchanging a $20 note for two $10 notes, no tax is payable.
If upheld on appeal, the interlocutory decision could mean taxpayers who’ve paid capital gains tax on bitcoin transactions are eligible for refunds collectively worth as much as $1 billion, said tax lawyer Adrian Cartland, who acted as co-barrister for the defence.
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“The reasoning totally upends the ATO’s view because it was held that bitcoin is Australian money,” he said. “That is, it is not a CGT asset. Therefore, acquisitions and disposals of bitcoin have no tax consequences.”
Tax lawyer Adrian Cartland. Ben Searcy Photography
Ex-AFP cop William Wheatley’s defence team argued that bitcoin is information – specifically, a credit entry on a ledger in software – not property, and therefore cannot be stolen.
The ATO has treated cryptocurrency as though it is property with CGT applicable since 2014. Over that period, it has accrued between $500 million and $1 billion in CGT and income tax, Cartland estimates, although the ATO said there were no official figures.
Prosecutors from Australia’s National Anti-Corruption Commission alleged Wheatley stole 81.616 bitcoin from a cryptocurrency wallet identified as part of an investigation targeting drug traffickers.
“Mere information is not property,” Cartland told The Australian Financial Review.