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Simmie(Newbie)Newbie
16 Nov 2021

CFD as an investment? 18 months ago I entered into a CFD buy contract, the underlying instrument being the ASX200 index. My intention is to hold the contract as an investment for an undetermined period – perhaps several years - even until it passes on to my estate. So far the investment has grown significantly in line with the actual AUS200 index. The investment is protected by a very substantial margin; it does not cost me to keep the contract open because my broker charges no commission or interest, but relies on spreads. I would like to know the tax implications because: 1. I am not closing out the contract any time soon as short term profit is not my aim, but long term gain is. I am retired and not in the business of CFD or share trading. 2. I have a Buy contract with no current intention to close it, so will a CGT event apply when the contract is eventually closed? 3. Or will the full profit (if any, when the contact is closed) be treated and taxed as normal revenue income acquired in a single tax year? In fact, the profit has been accrued, but has not been realized (nothing credited to my cash account – only to equity) over a year or more.

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3,818 views
1 replies

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Most helpful replyATO Certified Response

BlakeATO(Community Support)Community Support
ATO Certified Response17 Nov 2021

Hi @Simmie


CFDs are on a revenue account, not capital. This means they work under income tax rules, not capital gains rules.


This means you claim a deduction for any expenses when you incur them. When you realise your gains, whether direct to you or as reinvested amounts, those amounts are taxable at that time.


If you only have small CFDs, or one-off instances, you report them as other income on your tax return. It's reported in the year you receive the payment. This is the case even if the value has accrued over multiple years before being paid to you.


You can read about CFDs in TR 2005/15 Income tax: tax consequences of financial contracts for differences

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Most helpful replyATO Certified Response

BlakeATO(Community Support)Community Support
ATO Certified Response17 Nov 2021

Hi @Simmie


CFDs are on a revenue account, not capital. This means they work under income tax rules, not capital gains rules.


This means you claim a deduction for any expenses when you incur them. When you realise your gains, whether direct to you or as reinvested amounts, those amounts are taxable at that time.


If you only have small CFDs, or one-off instances, you report them as other income on your tax return. It's reported in the year you receive the payment. This is the case even if the value has accrued over multiple years before being paid to you.


You can read about CFDs in TR 2005/15 Income tax: tax consequences of financial contracts for differences

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