Australian crypto holders may be due billions in refunds in landmark tax case

Source Cryptopolitan

A recent ruling by an Australian court could change how cryptocurrencies, particularly Bitcoin, are taxed, which could result in billions of dollars in refunds to crypto investors across the country. 

The landmark judgment came when the Judge handling the criminal case involving stolen Bitcoin declared that the cryptocurrency should be treated as another form of money, raising serious questions about the legality of the Australian Taxation Office (ATO) taxation of crypto gains.

A Bitcoin theft case with major tax implications

The case involved the criminal trial of William Wheatley, a former Australian Federal Police officer (AFP), who in 2019 allegedly stole 81.6 Bitcoins during a drug investigation. At the time, the stolen Bitcoin was worth around AUD 730,000. Today, that same stash is valued at over AUD 20 million (USD 13 million), highlighting just how much Bitcoin has appreciated.

But it wasn’t the theft that raised eyebrows in the crypto and legal communities; it was Victorian magistrate Michael O’Connell’s interpretation of what Bitcoin actually is.

In delivering the ruling, the judge referred to Bitcoin as property of a similar nature to the Australian dollar (AUD) rather than a speculative asset, such as a foreign currency, shares, or gold, which is how the ATO currently treats it for taxation purposes.

Wheatley’s defence team is basing its argument on the claim that Bitcoin is information, a credit entry in a ledger in software, and not a property, meaning it can’t be stolen.

Challenging the ATO’s capital gains framework

The ATO currently classifies cryptocurrencies as assets, meaning that any time they are sold, exchanged, or even used to purchase goods and services, the holders who deal with the digital assets are expected to calculate and pay capital gains tax.

However, if Bitcoin is legally considered a currency like the AUD, as the judge suggested, then those gains could fall outside of the ATO’s capital gains tax regime.

While the judge didn’t explicitly speak on its tax implications, it can be subject to varying interpretations. This has led analysts to say that the case could potentially go to the Australian High Courts for further conclusion on what the ruling means for the tax body, and if Bitcoin can be considered a property.

According to legal professionals, this new interpretation of Bitcoin, if upheld in the higher courts, could force a complete rethink of the tax treatment of crypto in Australia. It could even open the door for retrospective claims, with investors potentially eligible to reclaim taxes paid on past crypto transactions, amounting to billions of dollars.

The judgment makes a case for theft, and Wheatley has appealed against the judge’s decision to consider Bitcoin as property.

The ATO and crypto holders have conflicting interests

The implications for the ATO and over 1.9 million taxpayers who have a crypto asset account with an Australian crypto asset exchange aren’t clear yet.

The ATO has also said that it doesn’t have data on the exact amount that has been paid as tax on Bitcoin transactions, as it bundles it with other income and CGT reporting. This may add an extra strain to potential refunds should the case go on to require the ATO to make refunds.

However, while there may be some form of optimism in the camp of crypto holders, legal commentators warn that the ruling doesn’t automatically change the law. It will take either a definitive legal challenge or new legislation to codify Bitcoin’s status as money and determine its tax treatment.

Cryptopolitan Academy: Coming Soon - A New Way to Earn Passive Income with DeFi in 2025. Learn More

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
Natural Gas sinks to pivotal level as China’s demand slumpsNatural Gas price (XNG/USD) edges lower and sinks to $2.56 on Monday, extending its losing streak for the fifth day in a row. The move comes on the back of China cutting its Liquified Natural Gas (LNG) imports after prices rose above $3.0 in June. It
Author  FXStreet
Jul 01, 2024
Natural Gas price (XNG/USD) edges lower and sinks to $2.56 on Monday, extending its losing streak for the fifth day in a row. The move comes on the back of China cutting its Liquified Natural Gas (LNG) imports after prices rose above $3.0 in June. It
placeholder
Analysts Highlight 4 Reasons Why ETH Price Could Rebound Strongly in MayEthereum (ETH) has declined for five consecutive months. However, it enters May with rising optimism.
Author  Beincrypto
May 07, Wed
Ethereum (ETH) has declined for five consecutive months. However, it enters May with rising optimism.
placeholder
Avalanche Price Forecast: AVAX set to extend losses as Open Interest drops to one-month lowAvalanche (AVAX) trades in the green by almost 1% at press time on Wednesday, as it tests a crucial support floor that has held for over two months.
Author  FXStreet
Jun 18, Wed
Avalanche (AVAX) trades in the green by almost 1% at press time on Wednesday, as it tests a crucial support floor that has held for over two months.
placeholder
Gold price bulls seem reluctant amid hawkish Fed-inspired USD strengthGold price (XAU/USD) attracts some dip-buying during the Asian session on Thursday and recovers a part of the previous day's losses to the $3,363-3,362 area, or the weekly trough.
Author  FXStreet
21 hours ago
Gold price (XAU/USD) attracts some dip-buying during the Asian session on Thursday and recovers a part of the previous day's losses to the $3,363-3,362 area, or the weekly trough.
placeholder
Bitcoin Price Forecast: BTC on the verge of a breakdown amid possible US strike on IranBitcoin (BTC) price edges slightly higher, trading near $104,700 at the time of writing on Thursday, after stabilizing above a key level, the 50-day Exponential Moving Average (EMA) at $103,100.
Author  FXStreet
16 hours ago
Bitcoin (BTC) price edges slightly higher, trading near $104,700 at the time of writing on Thursday, after stabilizing above a key level, the 50-day Exponential Moving Average (EMA) at $103,100.
goTop
quote