Private ruling: Business - am I in business - CFD trading
Date of advice: 23 July 2025
Published: 22 September 2025
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are the gains or losses from your contracts for difference (CFD) trading activities in the year ended 30 June 20XX considered as profits or losses made from carrying on a business? | A1: No. | Q2: If the answer to question 1 is no, are the gains or losses from your CFD trading activities in the year ended 30 June 20XX assessable under section 15-15 of the ITAA 1997 or deductible under sections 25-40 of the ITAA 1997? | A2: Yes.

Relevant facts and circumstances: Your intention is to derive income from trading activities and to achieve sustained profitability. You have no business plan. You spend X hours a day conducting regular and extensive research into market conditions, trading strategies, and financial instruments relevant to CFD trading. You subscribe to social media teaching channel and videos. You also maintain comprehensive and contemporaneous records of all trading activities, including transactions, analyses, and outcomes. You keep journals with the losing trades and analyse the reason of being stopped out. You have a system that is maximum X% to X% per trade to minimise the potential loss. You made a loss of approximately $XX in 20XX and $XX in 20XX. You complete XX trades per month. You work X hours a day, X days per week.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 15-15 | Income Tax Assessment Act 1997 section 25-40 | Income Tax Assessment Act 1997 Subsection 995-1(1) Question 1 | Are the gains or losses from your contracts for difference (CFD) trading activities in the year ended 30 June 20XX considered as profits or losses made from carrying on a business?

Reasons for decision: Summary: If the answer to question 1 is no, are the gains or losses from your CFD trading activities in the year ended 30 June 20XX considered as profits or losses made from an undertaking or scheme? | Detailed Reasoning - Reasons for decision: Taxation Ruling 2005/15 Income tax: tax consequences of financial contracts for differences (TR 2005/15) outlines the tax consequences of entering into a financial contract for differences (CFD). Paragraphs 11-15 of TR 2005/15 provide the following guidance on the tax implications of gains and losses from CFDs: 11. A gain from a financial contract for differences will be assessable income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) where the transaction is entered into as an ordinary incident of carrying on a business, or where the profit was obtained in a business operation or commercial transaction for the purpose of profit making. 12. A loss from a financial contract for differences will be an allowable deduction under section 8-1 of the ITAA 1997 where the transaction is entered into as an ordinary incident of carrying on a business or in a business operation or commercial transaction for the purpose of profit making. 13. A gain from a financial contract for differences will be assessable income under section 15-15 of the ITAA 1997 where a taxpayer enters into a financial contract for differences in carrying on or carrying out a profit-making undertaking or scheme, and the gain from it is not assessable under section 6-5 of the ITAA 1997. 14. A loss from a financial contract for differences where the gain would have been assessable under section 15-15 of the ITAA 1997 is an allowable deduction pursuant to section 25-40 of the ITAA 1997. Application to your circumstances Your CFD activities were undertaken with a view to making a profit and therefore your gains from trading CFDs are assessable under section 15-15 of the ITAA 1997 and your losses are deductible under sections 25-40 of the ITAA 1997 in the year in the year ended 30 June 20XX.

Subsection 995-1(1) of the ITAA 1997 defines 'business' as including any profession, trade, employment, vocation or calling, but does not include occupation as an employee. | Whether or not a person is carrying on a business is a question of fact and degree and is determined on a year-to-year basis. If a taxpayer's activities do not amount to the carrying on of a business in one income year that will not prevent them doing so in a later income year. Similarly, when the extent of an activity falls below what is required for that activity to be commercially viable the activity may no longer constitute the carrying on of a business. | Taxation Ruling TR 97/11 income tax: am I carrying on a business of primary production? (TR 97/11) lists the following indicators as relevant in determining if a business is being carried on: | • whether the activity has a significant commercial purpose or character | • whether the taxpayer has more than just an intention to engage in business | • whether the taxpayer has a purpose of profit as well as a prospect of profit from the activity | • whether there is regularity and repetition of the activity | • whether the activity is of the same kind and carried on in a similar manner to that of ordinary trade in that line of business | • whether the activity is planned, organised and carried on in a businesslike manner such that it is described as making a profit | • the size, scale and permanency of the activity, and | • whether the activity is better described as a hobby, a form of recreation or sporting activity. | These factors are considered in combination, no one factor is decisive. Whether a business is being carried on depends on the large or general impression gained. | The question of whether you were engaged in share trading is essentially based on the facts of your situation. This matter has been addressed in a number of court cases. In Case 6297 (1990) 21 ATR 3747 ( Case X86 ), 90 ATC 621 ( Case 6297 ), the following specific indicators of carrying on a business for someone carrying on a share market activity were listed as: | • the nature of the activities and whether they have the purpose of profit-making | • the complexity and magnitude of the undertaking | • an intention to engage in trade regularly, routinely, or systematically | • operating in a business-like manner and the degree of sophistication involved | • Whether any profit or loss is regarded as arising from a discernible pattern of trading | • The volume of the taxpayer's operation and the amount of capital employed by them | More particularly the case looked at specific indicators in respect of share traders: | • repetition and regularity in the buying and selling of shares | • whether the taxpayer is operating to a plan, setting budgets and targets, keeping records | • maintenance of an office | • accounting for the share transactions on a gross receipt's basis | • whether the taxpayer is engaged in another full-time occupation | In a more recent case Hartley v FCT (2013) AATA 601 (Hartley case) the AAT affirmed a decision of the Commissioner that a taxpayer was a share investor and was not carrying on a business of share trading and denied deductions that had been claimed on the premise that a business existed for the relevant years. | In the Hartley case the taxpayer was during relevant times a full-time council employee. According to the taxpayer, he had been actively involved in the share market for many years, which occupied about 15 hours of his time per week. He also claimed he had an arrangement with his employer where he could trade during business hours and then make up any time after hours. For the relevant tax years (the financial years ended 30 June 2010 and 30 June 2011), the taxpayer lodged tax returns claiming significant deductions on the basis that he was carrying on a business of share trading. After an audit, the Commissioner determined that the taxpayer was a share investor and issued assessments refusing the deductions. The AAT considered each of the relevant factors established in case law (in particular, the factors listed in Case 6297 ) in determining whether or not the taxpayer was engaged in a business of share trading. Although noting the 'matter was finely balanced', the AAT was of the view that the factors pointing against the existence of a share trading business were more significant than those pointing in favour of the existence of a share trading business. The factors in favour of the Commissioner's position identified by the AAT included the following: | • The buying and selling of shares were not regular or routine. | • There appeared to have been very little in the way of a plan, although a written plan was produced belatedly; the AAT added that very little appeared to have been done in terms of setting budgets and targets, and that the trading and the background research was simple and unsophisticated. | In the case of share trading repetition and regularity are considered to be important indicators on whether or not a business is being carried on, with the size and scale of the activity being supporting factors. | This indicator requires that you be able to show that the activity is carried on for commercial reasons and in a commercially viable manner. You need to be able to show that the interaction between the size and scale of the activity, the repetition and regularity and the intention and prospect of profit are sufficient to conclude that the activity has a significant commercial purpose. | You do not have a business plan. You have a system that is maximum X% to X% per trade to minimise the potential loss. | The intention of the taxpayer in engaging in the activity is a relevant indicator in determining whether a business is being carried on. | The Full Federal Court in Ferguson v Federal Commissioner of Taxation (1979) 26 ALR 307 stated that: | 'The fact that, concurrently with the activities in question, the taxpayer carries on the practice of a profession or another business, does not preclude a finding that his additional activities constitute the carrying on of a business. The volume of his operations and the amount of capital employed by him may be significant.' | You have other employment as a marketing specialist. You work X hours a day, X days a week. | This indicator is directed at determining whether the taxpayer entered into the activity with an intention to make a significant commercial or financial gain from it. In Hope v The Council of the City of Bathurst (1980) 144 CLR 1; 80 ATC 4386; (1980) 12 ATR 231 , Mason J states that business activities are usually activities that are 'engaged in for the purpose of profit on a continuous and repetitive basis'. | The intentions of the taxpayer are ascertained from looking objectively at their actions, including any arrangement entered into. All of the income expected to be received from, and all of the costs associated with, the activity are taken into account to determine what profit, if any, is expected. | It is important to show how the activity can make a profit. However, stronger evidence of an intention to make a profit occurs when the taxpayer has conducted research into his/her proposed activity, consulted experts or received advice on the running of the activity and the profitability of it before setting up the business. This was the situation in FC of T v. JR Walker 85 ATC 4179; (1985) 16 ATR 331. | Your intention is to derive income from these trading activities. You keep journals with the losing trades and analyse the reason of being stopped out. You subscribe to social media teaching channel and videos. | Whether there is regularity and repetition of the activity including the size, scale and permanency of the activity | You spend X hours a day conducting regular and extensive research into market conditions, trading strategies, and financial instruments relevant to CFD trading. You complete XX trades per month over the 20XX financial year incurring a loss of $XX. This shows that there is repetition however your activities are not of a significant size or scale. | After weighing up the objective facts and applying the indicators are set out in TR 97/11 to your circumstances, the Commissioner does not consider you were carrying on a business in the 20XX financial year.