Source: Cointelegraph
Original text: (Australian court ruling could lead to USD 640 million in Bitcoin (BTC) tax refunds)
An Australian court ruling could open the door for up to USD 640 million in capital gains tax (CGT) refunds for Bitcoin (BTC) transactions, after a judge ruled that cryptocurrencies should be considered currency rather than taxable assets.
On May 19, the Australian Financial Review (AFR) reported that this ruling stemmed from a criminal case involving federal officer William Wheatley, who was accused of stealing 81.6 Bitcoins (BTC) in 2019. At that time, these assets were worth approximately USD 492,000. At current market prices, these tokens are worth over USD 13 million.
In the case, Victoria Judge Michael O'Connell ruled that Bitcoin qualifies as currency rather than property, comparing the digital asset to the Australian dollar rather than stocks, gold, or foreign currency.
This interpretation could set a legal precedent, potentially placing Bitcoin transactions outside the scope of Australia's current CGT regime.
In an interview with AFR, tax lawyer Adrian Cartland stated that this ruling "completely overturns" the current position of the Australian Taxation Office (ATO).
Since 2014, the ATO has classified crypto assets as CGT assets. This means that users must pay tax when selling or trading them. According to ATO guidelines, any disposal of Bitcoin, including selling it for fiat currency, exchanging it for other cryptocurrencies, or using it to purchase goods or services, constitutes a CGT event.
This framework has formed the basis for taxing cryptocurrency transactions in Australia for over a decade. However, the recent ruling challenges this approach by suggesting that Bitcoin is more like currency than property. This could exempt it from CGT.
Cartland stated that the court ruled that Bitcoin is a currency in Australia. "That is, it is not a CGT asset. Therefore, the purchase and disposal of Bitcoin have no tax consequences," the tax lawyer added.
If this ruling is upheld on appeal, Cartland estimates there could be a potential tax refund totaling AUD 1 billion (USD 640 million).
However, while Cartland believes there could be refunds of up to AUD 1 billion, the ATO stated there is no official data confirming the potential refund amount if the case changes the taxation of Bitcoin in Australia.
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