Will Bitcoin Be Tax-Free in Australia? Legal Ruling Challenges ATO’s Crypto Policy

Key takeaways

• Australia is one of the world’s most crypto-aware nations, with over 31% of citizens owning digital assets and nearly 1,800 crypto ATMs across the country.

• Crypto is currently taxed as property in Australia, triggering capital gains tax (CGT) on disposal and income tax on mining, staking or payments.

• A May 2025 court ruling may challenge the status quo, suggesting that Bitcoin could be classified as “Australian currency,” potentially exempting it from CGT.

• The ATO has not changed its policy yet, but the outcome of the appeal could set a transformative precedent for future crypto taxation in Australia.

Australia’s cryptocurrency tax landscape is undergoing significant scrutiny and potential transformation in 2025. With the Australian Taxation Office (ATO) intensifying its focus on digital assets and recent legal developments challenging existing tax interpretations, both investors and policymakers are navigating a complex and evolving environment.

Let’s dive into the Australian cryptocurrency market and taxation to find out what has changed and whether it is favorable for crypto users or not. 

Is cryptocurrency legal in Australia?

Australia has rapidly emerged as a global leader in cryptocurrency adoption. Data from the 2025 Independent Reserve Cryptocurrency Index (IRCI) reveals that approximately 31% of Australians have owned or currently own cryptocurrency, positioning the nation among the top adopters worldwide. 

With 93% of Australians aware of at least one cryptocurrency, Bitcoin remains the most recognized and held digital asset. Approximately 70% of crypto investors include it in their portfolios.

The surge in adoption is not limited to individual investors. Institutional interest is also on the rise, with major financial institutions like BlackRock, Grayscale and VanEck integrating digital assets into their offerings. The Australian Securities Exchange listed its first spot Bitcoin exchange-traded fund (ETF) on June 20, 2024, when VanEck’s VBTC began trading, marking a major milestone for regulated crypto exposure in Australia. 

Australia’s cryptocurrency market is supported by a robust network of exchanges, both domestic and international. Some exchanges operating in the country include:

• Swyftx: A Brisbane-based exchange known for its user-friendly interface and a wide range of supported cryptocurrencies. Swyftx has gained popularity among Australian users for its competitive fees and comprehensive trading features.

• CoinSpot: Established in 2013, CoinSpot is one of Australia’s most established exchanges, offering over 430 cryptocurrencies. It is particularly favored by beginners due to its high security standards and easy-to-use platform.

• Coinbase Australia: The Australian arm of the global exchange Coinbase, registered with the Australian Transaction Reports and Analysis Centre (AUSTRAC), provides a secure platform for trading a variety of cryptocurrencies.

• WhiteBIT: A European-headquartered exchange that has expanded into the Australian market, offering a comprehensive trading platform with support for over 325 cryptocurrencies.

Additionally, Australia has seen a significant increase in the number of cryptocurrency ATMs, becoming a leader in the Asia-Pacific region. 

As of May 2025, there are approximately 1,817 crypto ATMs across the country, with major concentrations in Sydney (631), Melbourne (382), Brisbane (319), Perth (159) and Adelaide (110).

However, this rapid growth has attracted regulatory scrutiny. AUSTRAC has raised concerns about potential money laundering activities facilitated through these ATMs and has emphasized the need for operators to implement robust Anti-Money Laundering (AML) and counter-terrorism financing (CTF) measures.

Moreover, Australia’s regulatory environment has been evolving to accommodate this growth. The Australian Securities and Investments Commission (ASIC) and the ATO have been actively developing policies to protect investors while encouraging innovation.

Did you know? In October 2024, Coinbase became the first official cryptocurrency partner of the Nike Melbourne Marathon Festival. Through this marketing partnership, over 35,000 participants were offered digital medals with permanent records of their race results stored on the blockchain. Additionally, runners had the opportunity to receive $20 in Bitcoin upon completing their first trade on Coinbase, aiming to introduce them to the crypto economy in a secure and engaging manner.

Understanding the crypto tax framework in Australia

In Australia, cryptocurrencies are treated as property rather than currency. Consequently, disposing of crypto assets, whether through selling, trading, gifting or using them for purchases, triggers a capital gains tax (CGT) event. 

• The capital gain or loss is calculated as the difference between the asset’s value at disposal and its original cost base. Notably, if the cryptocurrency is held for more than 12 months, individuals may be eligible for a 50% CGT discount.

• Cryptocurrency received as income, through activities like mining, staking or as payment for services, is taxed as ordinary income. The taxable amount is determined by the fair market value of the cryptocurrency at the time of receipt.

Reporting obligations and ATO guidelines

The ATO mandates that all cryptocurrency transactions be reported in annual tax returns. In Australia, the financial year runs from July 1 to June 30, and tax returns are generally due by Oct. 31 of the same calendar year.

• Taxpayers must maintain detailed records of their digital asset activities for at least five years, including dates, values in Australian dollars and the nature of each transaction.

• To facilitate accurate reporting, the ATO provides online tools and calculators to help taxpayers determine their CGT obligations. MyTax Portal is the ATO’s official platform for lodging tax returns, including cryptocurrency transactions.

• The ATO has intensified its data-matching protocols, collaborating with Australian cryptocurrency exchanges to collect customer information, including transaction data and personal identifiers. This initiative aims to ensure compliance and identify discrepancies in reported income. 

• Taxpayers who receive warning letters from the ATO are advised to review their cryptocurrency transactions and amend any inaccuracies in their tax filings promptly.

• Decentralized finance (DeFi) activities, such as lending, borrowing, staking and yield farming, have specific tax implications in Australia. The ATO considers many DeFi transactions as CGT events, particularly when there is a change in ownership of crypto assets. 

• Additionally, earnings from DeFi activities are typically categorized as ordinary income, assessed at their fair market value in Australian dollars when received.

Did you know? The ATO has initiated a data-matching program targeting approximately 700,000 to 1.2 million individuals and entities each financial year. This initiative aims to identify taxpayers who may have failed to report disposals of crypto assets in their income tax returns. By acquiring data from cryptocurrency exchanges and matching it against ATO systems, the program seeks to enhance compliance and ensure accurate tax reporting. 

Thus, the ATO has been actively treating crypto as property for taxation. So, what has really changed? 

Potential legal reclassifications and implications

A May 2025 ruling by a Victorian magistrate in Australia has sparked significant discussions regarding the classification of Bitcoin and its implications for capital gains tax.

• On May 19, 2025, a Victorian magistrate ruled on a case involving former Australian Federal Police officer William Wheatley, who was accused of stealing 81.6 Bitcoin (BTC) in 2019.

• Judge Michael O’Connell determined that Bitcoin could be classified as “Australian currency” rather than property.

• This interpretation challenges the ATO’s long-standing position, established in 2014, which treats Bitcoin as a CGT asset, thereby subjecting its disposal to capital gains tax. 

• Adrian Cartland, a tax lawyer and co-defendant in the case, stated, “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 upheld on appeal, this ruling could lead to significant financial implications. Cartland estimates potential CGT refunds totaling up to 1 billion Australian dollars (approximately $640 million) for individuals who have previously paid taxes on Bitcoin transactions.

• The implications of this ruling are far-reaching. If this stands, Bitcoin transactions might no longer trigger capital gains tax events. This could significantly alter how crypto is taxed in Australia.

However, it is important to note that this ruling is currently under appeal and has not yet altered the ATO’s enforcement policies. Until further notice, the ATO continues to require that Bitcoin and other crypto assets be reported as CGT assets.

 What’s next for crypto taxes in Australia?

Australia’s crypto tax regime may be standing on the brink of significant change. While the current framework continues to classify digital assets like Bitcoin as property, the legal landscape is shifting fast. 

The landmark ruling in May 2025 that labeled Bitcoin as “Australian money” opens the door to possible tax exemptions on crypto disposals.

But there’s a catch: The ruling is under appeal, and the ATO has not updated its guidance. Until a higher court confirms the reclassification, all individuals and businesses must continue to comply with existing tax rules.

Looking ahead, 2025 could become a watershed year for digital asset policy in Australia. Policymakers, regulators and legal experts are closely watching the case, knowing that its final verdict could reshape how crypto is treated, not just legally, but economically.

For crypto holders, investors and builders, what is the best move for now? 

Stay informed, maintain clear records, and follow the ATO’s current directives. Because if things do change, they could change fast and in your favor.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.