Australia is known for its crypto-friendly environment, but recent legal developments may completely change how Bitcoin is taxed in the country.
Bitcoin Reclassification: Major Legal Update
In May 2025, a significant ruling by Victorian Magistrate Michael O’Connell in a Bitcoin theft case suggested that Bitcoin could be recognized as Australian currency, not property. This landmark statement has sparked intense debate across the crypto community and tax authorities.
Adrian Carter, a co-defendant in the case, said:
“It was held that Bitcoin is Australian money. That is, it is not a CGT asset. Therefore, acquisitions and disposals of Bitcoin have no tax consequences.”
If Bitcoin is officially reclassified as currency, this could eliminate capital gains tax (CGT) on BTC transactions and result in the government owing nearly AUS$1 billion (approx. US$640 million) in past tax collections.
Is Bitcoin Really Tax-Free Now?
Not yet. The ruling is under appeal and has not been officially regulated. While the decision received attention, the Australian Tax Office (ATO) has not updated its guidance. Until higher courts confirm Bitcoin as legal tender, the existing tax framework remains in place.
Current Crypto Tax Regime in Australia (2025)
- Cryptos including BTC, ETH, NFTs, stablecoins, and DeFi are classified as CGT assets.
- Subject to Capital Gains Tax between 0% and 40%, based on individual income brackets.
- A 50% CGT discount applies if assets are held for over 12 months before being sold.
- The ATO tracks all crypto activity, and non-compliance can lead to legal penalties.
Any Tax Loopholes for Crypto Investors?
Despite rumors, there are no loopholes in the current regime. Even if investors hope for CGT exemptions, the law remains unchanged until Bitcoin is officially recognized as currency by a higher court and accepted by the ATO.
Final Thoughts
Unless Bitcoin is formally reclassified, Australian investors and businesses must follow the existing crypto tax rules. The ATO continues to treat digital assets as property, not money, and capital gains tax still applies to all crypto-related transactions.
