Hi all,
Would someone know if the income that we get from CFD (Contract for Difference) can be classified as Capital Gain Income?
There are some of my CFD positions that I hold for more than a year (I know that most people use CFD for short term trading, but I use it for long term as well). Will I be able to claim the 50% CGT discount on this?
Thanks!
Best regards,
Anton
Hello @savedsinner,
Apologies for the delay.
No income you receive for CFDs cannot be classed as capital gain income.
The ATO's view is that CFDs are always considered ordinary income and are not a capital asset. This view is outlined in: TR 2005/15 Income tax: tax consequences of financial contracts for differences (TR2005/15)
Can someone help please??
@savedsinner wrote:Hi all,
Would someone know if the income that we get from CFD (Contract for Difference) can be classified as Capital Gain Income?
There are some of my CFD positions that I hold for more than a year (I know that most people use CFD for short term trading, but I use it for long term as well). Will I be able to claim the 50% CGT discount on this?
Thanks!
Best regards,
Anton
Hello @savedsinner,
Apologies for the delay.
No income you receive for CFDs cannot be classed as capital gain income.
The ATO's view is that CFDs are always considered ordinary income and are not a capital asset. This view is outlined in: TR 2005/15 Income tax: tax consequences of financial contracts for differences (TR2005/15)
Thanks for the reply @KaraATO
But I see in the PDF ruling document para 41 it says "A financial contract for differences is a CGT asset undersection 108-5 of the ITAA 1997. On the closing out of the position(whether or not by means of entering into an equal and oppositecontract) or on the maturity of the contract, a CGT event C2 happensunder section 104-25 of the ITAA 1997"
So it looks like CFD is classified as a CGT asset.
Appreciate if you can clarify this one for me. Thanks
Best regards,
Anton
Hello @savedsinner,
Thank you for your reply.
Yes, that is correct. Paragraph 41 of TR 2005/15 does point out where a CFD can be considered a capital asset. However, it is referring to a situation where the CFD was not held for a profit making purpose.
Paragraph 40 details that in some cases it is possible a person entered into a contract for differences for purposes other than to make a profit. In these cases a capital gain or loss might arise.
Paragraph 41 explains when it arises and the capital event that occurs.
Where a CFD was entered into with the purpose of making a profit it is considered ordinary income.
Hope this helps. Please let us know if you need any further clarification.
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