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CFD taxation on gains and losses

ATO Community Support

Replies 0

Hi @ihaveaquestion,


We have answered this on our forum previously, you can view our response here.


If you have further questions please post them here.

Former Community Support

Replies 2

Hi @HariOm,


Thanks for getting in touch!


Generally speaking, profits and losses arising from trading CFDs are treated as income and deductible expenses as per TR 2005/15.

You can claim a deduction for your CFD loss against your other income. The only exception to this would be if you're in business of CFD trading, as you would also need to consider the application of the non-commercial loss rules to you.


I hope this helps, JodieM







Replies 1

Hi JodieM,

If the non-commercial loss applied to me, where can I report this?

I am using MyTax to lodge the tax return via MyGov.

Do I report these under sole trader? but I don't have ABN to trade CFDs.

The sole trader section also asking questions like what is my main business activity description, CFDs trading is not in the list and not let me continue. Other questions like trade debtors/creditors, which are not applicable to me.

Thank you in advance.

Former Community Support

Replies 0

Hi @CHon,


Thanks for your question!  To claim a loss you must have commenced CFD trading as a business activity. You can't claim a loss for a business that is little more than a hobby or lifestyle choice. From the information you have provided, it’s not clear if you’re actually in business. It is important to understand the differences between a hobby and a business for tax and other purposes. This video will help you to work out whether you are in business.


Taxation Ruling TR 2005/15 also applies to your situation; please refer to paragraph 15 and 41 within the Income tax: tax consequences of financial contracts for differences ruling.


15. A gain or loss from a financial contract for differences entered into for the purpose of recreation by gambling will not be assessable income under section 6-5 or section 15-15 of the ITAA 1997 or deductible under section 8-1 or section 25-40 of the ITAA 1997. A capital gain or capital loss from a financial contract for differences entered into for the purpose of recreation by gambling will be disregarded under paragraph 118-37(1)(c) of the ITAA 1997.


41. Having regard to the features of a financial contract for differences outlined at paragraphs 6 to 8 the Commissioner considers that a financial contract for differences would be entered into with either a profit making purpose or a recreational purpose, so that the gain or loss is either on revenue account or properly characterised as the product of gambling. Although it is not possible to exclude (as a matter of law) the possibility that a financial contract for differences will be entered into for some purpose that is neither profit-making nor recreational, it is (as a matter of fact) considered to be exceedingly unlikely.


I hope this helps you, JodieM