A recent court decision in Australia has stirred questions about how the Australian Taxation Office (ATO) might treat Bitcoin in the future. For anyone holding Bitcoin or other crypto assets, this development could affect how gains and disposals are taxed.
What happened
In a recent criminal case involving the theft of Bitcoin, a court in Victoria ruled that Bitcoin should be considered more like cash than a traditional asset. The judge’s reasoning compared Bitcoin to Australian dollars, rather than to shares, gold or other forms of property.
This view differs from the ATO’s current stance. Since 2014, the ATO has treated cryptocurrencies as capital gains tax (CGT) assets.
What this could mean for Bitcoin holders in Australia
If this ruling is upheld or adopted more widely, selling or exchanging Bitcoin might no longer be treated as a CGT event. That could mean some transactions would fall outside capital gains tax obligations.
There is early speculation that, if the ruling is extended, it could open the door to claims or amended returns for crypto investors. However, the ATO’s current approach remains unchanged. As it stands, any disposal, exchange or use of Bitcoin may still trigger a CGT liability.
What to consider if you hold crypto assets
- Keep clear and accurate records of all purchases, sales and usage of crypto assets.
- Continue to follow the ATO’s current guidance while this issue plays out legally.
- Speak with your adviser if you have questions about how these developments could impact your situation.