Australian Court Rules Bitcoin as Money, Exempts It from Capital Gains Tax
Date: 2025-05-20 Author: Henry Casey Categories: IN WORLD
The Federal Court of Australia has made a decision that could radically change the country's tax landscape for crypto investors. The central figure in the case was investor David Kale, who challenged the practice of the Australian Taxation Office (ATO), which considers Bitcoin as an asset subject to taxation at a rate of up to 45% through Capital Gains Tax (CGT).
Kale insisted that Bitcoin is not property, but a form of money, and therefore income from its use should not be subject to capital gains tax. Judge Mark Moshinsky agreed with the plaintiff's arguments, emphasizing that Australian law does not provide for CGT to be paid on money used solely as a medium of exchange.
The judge said Bitcoin exhibited the key characteristics of a currency - it was a medium of exchange and a unit of account, and therefore should be treated as money. On this basis, he concluded that Bitcoin should not be subject to capital gains tax.
Tax lawyer Adrian Cartland told the AFR that the ruling was a game-changer for the ATO's approach to taxing cryptocurrencies. He said it could lead to a review of the taxes paid by crypto investors since 2011, and could result in significant refunds.
Cartland estimated that the amount of compensation could be between $640 million and $1 billion. This could include both a recalculation of taxes paid and deductions that investors were previously unable to claim due to Bitcoin being treated as a taxable asset.
Contextually, this decision coincides with a report by AUSTRAC, the Australian Financial Transactions and Reporting Centre, which found that more than 400 cryptocurrency exchanges and more than 5,000 money transfer services do not comply with anti-money laundering, fraud and terrorist financing regulations. This highlights the widespread need for a legal review of how digital assets are regulated in the country.
