Private ruling: Carrying on a business- contracts for difference
Date of advice: 20 July 2022
Published: November 2022
Ruling period: Income year ended 30 June 20XX. | Income year ended 30 June 20XX.
Date scheme commenced: 1 July 20XX.

Ruling: Q1: Am I carrying on a business of trading Contracts for Difference (CFD)? | A1: Yes. It is accepted that the trading activity has significant commercial purpose or character, that there is repetition and regularity of the activity, that it is planned, organised and carried on in a business-like manner and that the size scale and permanency of the activity together indicate that you are carrying on a business. Further information about carrying on a business, visit ato.gov.au and search for QC 31733 and QC 66047.

Relevant facts and circumstances: You are employed on a full-time basis in the financial industry and have qualifications relevant to accounting and finance. You obtained an Australian Business Number (ABN) solely for the purpose of trading in CFD. You have a dedicated space in your office to conduct trading CFD and have purchased office and technology equipment to conduct your trading activities. You do not have a business plan. You opened an account with a trading platform to commence trading in CFD with the intention of making a profit. During the first income year in the ruling period, you traded for several months, making a net loss. You ceased trading prior to the end of the income year due to limited available capital to engage in continuous trading. You recommenced trading CFD during the second income year in the ruling period with the intention to continue trading until further notice. You currently dedicate more than X hours per day trading and average more than XX transactions per day. Your business strategies include: • monitoring and analysing market fluctuations and patterns. • managing a diverse portfolio consisting of foreign currencies, gold, crude oil, and natural gas to mitigate risk and value avenues that are more profitable. • record all transactions using a system log. You have conducted extensive research on trading CFD and decision making and have attended CFD trading webinars. You regularly seek advice from expert groups from Legacy FX and have engaged, and regularly seek advice from, a broker.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 995-1