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Edited version of private advice
Authorisation Number: 1051932449036
Date of advice: 21 December 2021
Ruling
Subject: Contract for differences trading losses
Question
Are the losses you have incurred from your CFD activities deductible under section 25-40 of the Income Tax Assessment Act 1997(ITAA 1997)?
Answer
Yes.
Following the principles set out in Taxation Ruling TR 2005/15 Income tax: tax consequences of financial contracts for differences (TR 2005/15), the gains you have made from your CFD activities are assessable under section 15-15 of the ITAA 1997, and the losses you have incurred from your CFD activities are deductible under section 25-40 of the ITAA 1997.
This ruling applies for the following periods:
1 July 20XX to 30 June 20XX
1 July 20XX to 30 June 20XX
1 July 20XX to 30 June 20XX
1 July 20XX to 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You are employed in an unrelated industry.
You conducted CFD trading in your own time and in your personal name and speculated any gains or losses.
You used an online broker as a CFD Trading platform.
You acquired CFDs with the intention of making a profit.
You do not hold special qualifications in this area and as such used your research skills and limited knowledge to execute buys and sells on the platform.
Most of the underlying assets were either commodities or currencies.
In the 20XX-XX income year, most of the transactions occurred during the period November 20XX to January 20XX and then in the period April 20XX to June 20XX. There were no transactions for the period February 20XX to March 20XX.
In the 20XX-XX income year, most of the transactions occurred during the period July 20XX to January 20XX. The frequency of transactions reduced significantly from February 20XX to June 20XX.
In the 20XX-XX income year, there were only a couple of transactions in the month of July 20XX, September 20XX & October 20XX. The majority of transactions occurred in the month of June 20XX. There were no transactions for the rest of the year.
In the 20XX-XX income year, most of the transactions occurred during the period July 20XX to January 20XX. There was no activity reported from February 20XX to June 20XX.
You are not considered to be in business of trading CFDs.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 6-5
Income Tax Assessment Act 1997 section 8-1
Income Tax Assessment Act 1997 section 15-15