A recent ruling in a criminal court case classified crypto assets as money, which goes against the long-held crypto tax Australian office that counts crypto as capital gains.
A court decision involving a federal police officer who allegedly stole 81.6 BTC in 2019 has resurfaced as more traders are contesting how cryptocurrency should be taxed in Australia. On May 19, Judge Michael O’Connell ruled that Bitcoin (BTC) should be treated as money rather than a taxable asset.
This means that the judge declared that Bitcoin is more similar to the Australian dollar, rather than a speculative asset like gold, shares or foreign currency.
According to the Australian Taxation Office website, crypto tax Australia classifies crypto under property instead of currency. More specifically, crypto falls under capital gains tax under the current framework used by the taxation office.
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As of June 24, the website still categorizes crypto under property with capital gains on swaps, DeFi, and wrapped tokens. However the ruling could mean that Bitcoin falls under fiat currency, potentially exempting it from the current capital gains tax framework.
How is crypto tax Australia operated?
Under the current framework, crypto is seen as an investment. Therefore, crypto assets fall under the capital gains tax mechanism. According to the website, activities that involve making transactions with crypto —such as selling, swapping or spending crypto— is considered a capital gains tax event.
On the other hand, the revenue generated from mining, staking, or earning crypto counts as ordinary income instead of capital gains. In those cases, then the ordinary income tax would be applied to the profit.
However, crypto assets meant for personal use with a value of below AUD 10,000 ($6,503) is considered an exemption to the capital gains tax. But anything above the threshold would be subject to CGT under the crypto tax Australia framework.
Most recently, Australia introduced cash transaction limits for crypto ATMs. The regulation mandates crypto ATM operators to implement a cash deposit and withdrawal cap of 5,000 Australian dollars or equal to $3,251. Not only that, operators must also display notices, warning users of potential fraud risks.
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