Pardon the interruption - the ATO enters bitcoin property debate

The Australian High Court’s docket does not often feature bitcoin as a central character. That was until recently, when the High Court granted special leave to Adam Poulton in a dispute with Jeff Conrad, who paid Poulton to invest $10,000 in bitcoin on his behalf.

On 7 May 2026, the Federal Commissioner of Taxation filed submissions seeking leave to intervene in the matter (Poulton v Conrad (H1/2026)), a Hobart Registry appeal that raises a direct question at the boundary of private law and the digital economy: whether a holding in bitcoin is 'property' under Australian common law, and if so, exactly what kind of property it is.

This question has remained a live issue in Australia despite overseas courts and domestic courts repeatedly treating crypto assets as property in practical contexts. Generally speaking, the courts have approached bitcoin as a species of valuable, controllable asset that the law can recognise and protect.

The Commissioner’s proposed intervention is confined and does not seek to argue the whole appeal. He targets Ground 1 of the matter only: the 'property' character of a bitcoin holding. Naturally, that characterisation feeds into a wide range of legal consequences far beyond the immediate parties - after all, if bitcoin is not property, should the Commissioner be allowed to tax it?

Intervention in a High Court matter is discretionary. In his submissions, the Commissioner points to the established approach: leave may be granted where the applicant’s functions and powers may be 'directly and substantially affected' by the Court’s decision, and where the proposed submissions offer assistance that is distinct from the parties’ submissions without undue cost or delay.

Why the ATO cares

The Commissioner explains his interest in practical terms. In 2014, the ATO issued two Taxation Determinations (TD) addressing Bitcoin’s treatment under the Australian tax law. TD 2014/26 proceeds on the view that Bitcoin holdings are property within s 108‑5(1)(a) of the Income Tax Assessment Act 1997 (Cth), meaning a bitcoin holding is a capital gains tax (CGT) asset and therefore subject to capital gains taxation. TD 2014/27 proceeds from the same premise and addresses when bitcoin can be considered trading stock under Australian tax laws.

Those determinations are public rulings. The Commissioner says that where a public ruling applies and a taxpayer relies on it by acting consistently with it, the Commissioner is bound to administer the law in accordance with the ruling. He describes nearly 12 years of administration on the basis that a bitcoin holding is property.

The Commissioner sets out his primary concern, being that if the High Court were to conclude that a bitcoin holding is not property at common law, the Commissioner says that outcome is likely to bear 'significantly, if not determinatively' on whether it is 'any property' for CGT asset purposes, with potential consequences for Commonwealth revenue, and it may also affect whether bitcoin can be treated as trading stock. In other words: it would hamstring the Commissioner's ability to tax dealings in bitcoin.

Core property principles and the Ainsworth test

The Commissioner's submission begin with a framing point about 'property' that is both orthodox and important for crypto assets. The submission states that the common law's use of the term 'property' is wide and context-dependent (with our emphasis added):

‘Property’ is not ‘a monolithic notion of standard content and invariable intensity’; nor ‘a term of art with one specific and precise meaning’. The term is ambiguous and the very concept may be elusive. Importantly for present purposes, ‘property’ does not refer to a thing, but to a person’s relationship with a thing. And the breadth of the word is such that ‘it can be used to describe all or any of very many different kinds of relationship between a person and a subject matter’.

With that in mind, the Commissioner adopts the familiar four-part formulation from the key case of National Provincial Bank v Ainsworth as a practical analytical tool: a right or interest will fall within the category of property where it is:

1. definable;

2. identifiable by third parties;

3. capable of assumption by third parties; and

4. has permanence or stability.

Something that satisfies the above four criteria is said to satisfy the Ainsworth test.

In his submission, the Commissioner applies the Ainsworth test to a bitcoin holding with specific reference to the actual mechanics of the bitcoin blockchain.

On the first limb of the Ainsworth test, the Commissioner states that the relevant 'thing' for property analysis is the ledger entry, being a discrete balance recorded at a particular address (with our emphasis added):

The relevant thing is thus the ledger entry itself: a defined, discrete numerical quantity, capable of identification by reference to the unique address at which it is recorded, incapable of confusion with any other holding, and transferable only by a transaction that extinguishes the balance at the origin address and records it at the destination address.

By way of analogy, the Commissioner contends that in this respect a bitcoin holding is no less definable than the balance recorded by banks in numbered accounts that are held with them.

On the remaining limbs, the submission focuses on the public visibility of addresses and transaction history (supporting 'identifiable by third parties'), the system’s transfer mechanics (supporting 'capable of assumption'), and the stability created by the blockchain ledger’s immutable and persistent record of holdings and transactions (supporting 'permanence and stability').

Information, exclusivity and control

The Commissioner contends that a major fault line in the appeal is the characterisation of a Bitcoin holding as 'mere information', which has been one of the primary contentions for the bitcoin=property naysayers.

The Commissioner addresses the argument by stating that information is treated differently at law because it can be copied and shared without depriving the original holder:

As noted, the conclusion that a person’s relationship with mere information is not property is principally informed by information’s non-exclusivity: when it is transferred – or, more accurately, when it is transmitted – mere information belongs to both the transferor and the transferee. It can thus be infinitely duplicated.

The Commissioner then explains the features of bitcoin that matter most for distinguishing it from mere information: the protocol’s prevention of 'double spending,' supported by the ledger and consensus mechanisms, and the resulting practical exclusivity over the holding:

A number of factors make Bitcoin qualitatively different from mere information. The holder of Bitcoin is prevented from double-spending the Bitcoin by the nature of the transaction ledger and the consensus mechanisms by which transactions are verified. Double-spending is also inhibited by the creation of a new private key after each transfer of Bitcoin. In that way, ‘[o]wnership by one person prevents ownership by another.’ That is, a holder of Bitcoin has excludable control over access to the Bitcoin and, unlike information, which remains usable even when it is shared, Bitcoin may only be transferred by its owner once, making it rivalrous, like tangible things.

What kind of property?

The classification problem is an old common law problem resurfacing in a new setting. The submission notes the traditional split between choses in possession and choses in action, and the historical insistence that there is no third category.

The Commissioner supports recognition that Bitcoin holdings are capable of possession, and, if the law demands selection within the traditional dichotomy, expresses a preference for treating a bitcoin holding as a chose in possession.

He also points to recent legislative movement in the same direction. The Commissioner's submissions refer to the Corporations Amendment (Digital Assets Framework) Act 2026 (Cth), which introduces a statutory concept of 'possession' of a digital token based on factual control, including the ability to transfer the record and exclude others from transferring it.

Conversion and detinue

The Commissioner does not argue whether the torts of conversion or detinue are made out on the facts, instead focusing on the legal consequences of classification. The submissions explain that treating bitcoin as property capable of possession matters because of the long-running debate about whether the tort of conversion applies to intangible rights, and the way courts have historically relied on 'documentary intangible' concepts to extend conversion to value that sits behind documents.

Conclusion

The ATO has administered the tax system for more than a decade on the footing that a bitcoin holding is property, reflected in its public rulings on CGT assets and trading stock. A High Court ruling to the contrary would not be a tidy or self-contained correction. Rather, it would smash through the tax system and open a difficult period of reassessment and dispute management where taxpayers have arranged their affairs, and the Commissioner has administered them, on the basis of the existing view.

That context explains the tone of the Commissioner's submissions. He presents bitcoin as an orthodox fit for property analysis by returning to first principles, contending that 'property' describes legal relationships rather than merely physical objects. Read as a whole, the intervention is an attempt to close off a recurring argument and have the common law state the position in terms that remain workable for both private law remedies and public administration. In other words, the Commissioner wants to nip this one in the bud.

We leave you with a final question for thought: if a bitcoin holding were truly nothing more than mere information, something that can be transmitted without loss and duplicated without consequences, then why not share some of your bitcoin with me?

Written by Steven Pettigrove and Luke Higgins