Edited version of private advice

Authorisation Number: 1052437549941

Date of advice: 20 August 2025

Ruling

Subject: Income tax - Contracts for difference trading

Question

Are the profits or losses you made from contracts for difference (CFD) trading assessable under section 15-15 or deductible under section 25-40 of the Income Tax Assessment Act 1997 (ITAA 1997), and treated as profits or losses made from a profit-making undertaking or scheme?

Answer

Yes.

This ruling applies for the following period:

For the income year ended 30 June YYYY

The scheme commenced on:

DDMMYYYY

Relevant facts and circumstances

You have been trading contracts for difference (CFD's), forex and indices products for the purpose of profit-making since the income year ended 30 June YYYY until MMYYYY.

You use an online trading platform and are a sophisticated investor.

Your trading knowledge is based on your experience using technical analysis tools such as moving averages and technical analysis tool to identify trading opportunities as a result of both major and minor economic events.

Due to a change in personal circumstances you ceased all CFD trading during YYYY and closed out all of your open positions.

Your total realised gains during the ruling period were $X and your total realised losses were $X.

Your transactions are not entered into as an ordinary incident of carrying on a business, or obtained in a business operation or commercial transaction for the purpose of profit making.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 15-15

Income Tax Assessment Act 1997 section 25-40

Reasons for decision

Tax treatment of contracts for difference (CFD) trading

Taxation Ruling TR 2005/15 Income tax: tax consequences of financial contracts for difference outlines the Commissioner's view on the taxation treatment of CFD's. A CFD is a form of cash settled derivative that allows investors to take risks on movements in the price of a subject matter (the 'underlying') without ownership of the underlying.

Where trading activities will be regarded as the carrying out of a profit- making undertaking, rather than entered into as an ordinary incident of carrying on a business, or where the profit was obtained in a business operation or commercial transaction for the purpose of profit, then a gain from trading will be accounted for under section 15-15 of the ITAA 1997 due to the gain not being assessable under section 6-5 of the ITAA 1997.

A loss from a financial CFD where the gain would have been assessable under section 15-15 of the ITAA 1997 is an allowable deduction pursuant to section 25-40 of the ITAA 1997 (paragraphs 13 and 14 of TR 2005/15).

Speculating in the futures market can be taxable on revenue account, rather than on capital account even if those activities are insufficient to constitute the carrying on of a business (paragraph 31 of TR 2005/15).

Application to your circumstances

As your transactions are not entered into as an ordinary incident of carrying on a business, or obtained in a business operation or commercial transaction, your profits and losses were made from a profit-making undertaking or scheme. Therefore, your profits are assessable under section 15-15 of the ITAA 1997 and your losses are deductible under section 25-40 of the ITAA 1997 during the ruling period.