Taxation anomalies: Bitcoin vs Gold and Silver Coins

Australia’s taxation laws treat Bitcoin far more favourably than gold and silver coins even though all function as forms of currency. This creates distortions, arbitrage risks, and confusion for investors.

Capital gains tax

Capital gains tax (CGT) is paid on the profit from selling an asset. The rules differ sharply for Bitcoin and bullion coins. Bitcoin is eligible for a 50% CGT discount if held for more than 12 months• Bullion coins (gold and silver) on the other hand are classified as collectables, with no CGT discount and taxed at up to 45%

Example: If Bitcoin is bought at $10,000 and sold a year later for $50,000, the $40,000 gain is halved to $20,000 under the discount. At a 30% tax rate, this means $6,000 in tax. By contrast, the same $40,000 gain from gold coins could mean a tax bill of up to $18,000.

Personal use exemption

The rules also diverge when it comes to personal use. Bitcoin is exempt from CGT if used for personal purchases under $10,000. Bullion coins are exempt only up to $500, because they are classified as collectables

This wide gap means Bitcoin can be used much more flexibly than bullion for everyday transactions.

Implications for investors

For investors, the tax anomalies have clear consequences:

• Bitcoin investors may enjoy reduced tax liabilities and greater flexibility.• Bullion investors face higher tax burdens, discouraging use as a store of value.

The result is an uneven playing field that undermines neutrality across asset classes.

The case for reform

The ATO’s approach is under pressure as cryptocurrency adoption grows. The 2025 Wheatley decision, where the Victorian magistrates court held that Bitcoin is money, shows the fragility of current rules.

Reform should harmonise the treatment of Bitcoin and bullion by:

• removing artificial distortions in CGT and exemptions• ensuring neutrality across digital and tangible stores of value• recognising both as parallel monetary assets in a modern economy

Conclusion

The current tax framework favours Bitcoin over bullion coins in ways that are hard to justify. Harmonising their treatment would restore fairness, reduce arbitrage risks, and align taxation with economic reality.

Note: current ATO position (23 June 2025):

Personal-use exemption: if Bitcoin is acquired mainly for personal use and the cost is ≤ A$10,000, it is CGT-exempt.

CGT discount: “When you sell or otherwise dispose of an asset, you can reduce your capital gain by 50%, if both of the following apply:– you owned the asset for at least 12 months, you are an Australian resident for tax purposes.This is called the capital gains tax (CGT) discount.”