Edited version of private advice

Authorisation Number: 1052228152249

Date of advice: 14 March 2024

Ruling

Subject: Contracts for difference - deducting losses

Question 1

Are your gains and losses from trading financial contracts for differences (CFD) assessable under section 15-15 and deductible under section 25-40 of the Income Tax Assessment Act 1997 (ITAA 1997) respectively?

Answer

Yes.

Considering your circumstances, we accept that you entered into financial contracts for differences in carrying on or carrying out a profit-making undertaking or scheme but were not carrying on a business.

In accordance with Taxation Ruling TR 2005/15 Income tax: tax consequences of financial contracts for differences any gains you have made from trading CFD are assessable under section 15-15 of the ITAA 1997. Any losses you have made from trading CFD are deductible under section 25-40 of the ITAA 1997.

Where carrying out a profit-making undertaking or scheme, CFD trading profit is included at Question 24 - Other Income, and CFD trading losses are included at D15 - Other deductions.

Question 2

Are any unused losses able to be deducted in a future year?

Answer

Yes.

Considering your circumstances, any unused tax loss will be able to be deducted in a future year as per section 36-10 of the ITAA 1997. Further information on carrying forward tax losses can be found by searching 'QC 45333' on ato.gov.au.

This ruling applies for the following period:

Year ended 30 June 20YY

The scheme commenced on:

1 July 20YY

Relevant facts and circumstances

This private ruling is based on the facts and circumstances set out below. If your facts and circumstances are different from those set out below, this private ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You are employed in two unrelated fields.

In the 20YY-YY financial year, you opened a trading account with an online brokerage to trade financial contracts for difference (CFD) with a motive to make a profit from each trade.

You conducted the activities with a profit-making purpose, rather than as part of conducting a business.

You processed the trades yourself and you did not engage a third party to act on your behalf such as a broker.

You traded Country A Indices in this time, and occasionally purchased options for select Country A equities.

You made the following transactions in the relevant period:

•         XX total trades

•         XX profitable trades

•         XX unprofitable trades.

The closed trades resulted in an aggregated loss.

You do not have a business plan.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 15-15

Income Tax Assessment Act 1997 section 25-40

Income Tax Assessment Act 1997 section 36-10

Income Tax Assessment Act 1997 section 36-15