Gabriel Crazzi, 35, from Chambers Flat, south of Brisbane, is facing seven charges including making "incursions into foreign states with the intention of engaging in hostile activities" and preparations for the incursions.
In a bail application in the Queensland Supreme Court, Crazzi is alleged to have travelled to Syria in 2014 and to fight with a group described as Khattab Jamaat against the Syrian government.
The Crown will also allege Crazzi acquired optical scopes and mounts for a weapon before growing disenchanted and increasingly "worried" about his involvement.
"He had become disillusioned about the opposition fighting groups and saw that there was no long-term solution to the war in Syria," Justice David Jackson said.
Crazzi returned to Australia in July 2014 where he married, started a family and small business before his arrest in March 2021.
Since his return to Australia, Crazzi did not appear to draw law enforcement attention before being mysteriously shot in the calf in 2017.
Crazzi refused to make a formal complaint or reveal the identity of the gunman.
Police also discovered Crazzi using a cypher-encrypted mobile phone that he declined to allow investigators to access.
Justice Jackson conceded the incidents were "of concern" but did not prove an ongoing involvement in extremist activities.
"These circumstances do raise some concerns about the applicant's activities, but they do not show a substantial basis for the belief that he has committed any particular offence since returning to Australia in July 2014," the judge said.
The court rejected the argument Crazzi represented an unacceptable risk to commit acts of "violent extremism".
"There is no evidence that the applicant had any intention of engaging in violent actions of extremism in the Australian community," Justice Jackson said.
"On the face of it, the applicant has not been shown to have the means or the travel documents to leave Australia and does not appear to have any particular connections that could assist him."
Crazzi was granted bail but must adhere to strict conditions.
"The family is very relieved with the court's decision, they are happy with the result," lawyer Abdul Rashidi said outside court.
"They are looking forward to having Gabriel back home and Gabriel will be looking forward to clearing his name."