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Edited version of private advice
Authorisation Number: 1051911778603
Date of advice: 2 November 2021
Ruling
Subject: Am I in business - contracts for difference trading
Question 1
Does your activity amount to the carrying on of a business?
Answer
No.
Your Contracts For Difference (CFD) trading does not meet the factors contained in Taxation Ruling TR 97/11. Further information about carrying on a business can be found by searching 'QC 31733' on ato.gov.au
Question 2
Are the gains from your CFD trading activity assessable income, and are the losses from your CFD trading activity deductible?
Answer
Yes
The principles set out in Taxation Ruling TR 2005/15 Income tax: tax consequences of financial contracts for differences (TR 2005/15) have been applied, which provides the Commissioner's view on the income tax consequences of entering into financial CFD's.
In your case, as your CFD trading activities were not being carried on as a business, but rather as a profit making undertaking, the gains from the activity are assessable income, and the losses from the activity are deductible?
This ruling applies for the following periods:
Year ended 30 June 20XX
Year ended 30 June 20XX
Year ended 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You have significant experience in trading in financial products including shares, exchange traded funds, listed options, and contracts for difference (CFD's), however you do not hold any formal qualifications.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 15-15.
Income Tax Assessment Act 1997 section 25-40
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