Private ruling: Am I in business
Date of advice: 8 May 2025
Published: 14 July 2025
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Is the income derived from your CFD trading activities assessable as business income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes | Q2: Are the following expenses incurred in relation to your CFD trading activities deductible as business expenses under section 8-1 of the ITAA 1997? • Prepaid and home Wi-Fi • Subscriptions • Computer and accessories • Computer maintenance • Borrow fees and margin interest • Transaction Costs | A2: Yes. | Q3: Can the value of unrealised gains or losses from open CFD positions at the end of the financial year be included in your assessable income under section 70-35 of the ITAA 1997? | A3: No Issue 2 - GST | Q4: Does GST apply to CFD trading activities conducted under the sole proprietorship? | A4: No

Relevant facts and circumstances: You engaged in CFD trading using a multi-strategy approach that combined scalping, swing trading and occasional longer-term holdings. Your strategy is primarily based on trading signals while being highly responsive to broader market conditions. You traded ASX-listed equities. You did not trade commodities, indices or FX instruments. You used online platforms for technical analysis, drawing trend lines, applying custom indicators and identifying high-probability setups. You used software tools for order execution, monitoring live market depth and accessing data for ASX equities. You do not have a formal business plan. Your actively review and adapt your trading strategy based on the following: • Technical analysis: key support/resistance levels, trendlines, volume signals and momentum indicators • Company specific news: earnings announcements, operational updates and leadership changes • Commodity price movements: particularly relevant for resource-based ASX companies • Political and macroeconomic developments: Domestic and international events that impact market volatility and investor sentiment You do not hold any formal qualifications that relate to CFD trading activities. You have practical experience in financial markets including trading shares and CFDs as an investor. You undertake independent research and continuous self-education through financial literature, market analysis and broker resources. Your ABN is not registered for GST. You conduct your trading activities under your ABN and business name. You do not carry on any other enterprise. You executed approximately X individual trades. On average, you made X trades daily, X trades weekly and X trades monthly. The number of trades depended on market volatility, available capital and technical setups. You were employed in a fly-in, fly-out (FIFO) role on a rotating roster. You worked X hours per week at this employment during your weeks on. You dedicated X hours per day to your trading activities whilst working your FIFO role. You dedicated X hours per day to your trading activities whilst in your off period. You spent on average X hours per week on trading activities. This included: • Monitoring live markets and scanning for setups • Conducting technical and news-based analysis • Executing and managing trades • Reviewing past trades, journaling and refining your strategy • Reading financial news and staying up to date on economic and political events that impact ASX-listed companies. You plan each trade using chart-based setups and risk management rules. The majority of your trades were held for minutes or up to a week and required active monitoring and adjustment. You occasionally held trades for longer periods X weeks maximum. You conducted your trades using margin via your broker. You had a 1:5 leverage ratio. You invested a minimum capital of X per trade and a maximum capital of X per trade. You used your personal savings as capital for your CFD trading activities, which was transferred into your trading account. You typically had X to X in free equity available for trades. You maintained up to X in funds dedicated to your CFD trading activities. This included: • Capital actively held in the trading account • Funds retained in reserve to manage drawdowns, add to margin or top up the account if required. Your overall realised profit for the 20XX financial year was X. You were charged borrow fees when short selling (selling borrowed shares with the intention of buying them back at a lower price) a stock. These were applied daily and varied depending on liquidity and borrow availability of stock. You had interest charged on the borrowed portion of leveraged trades. This was calculated daily. You were charged a brokerage fee or transaction charge at the open and close of each trade. This was typically a fixed price or small percentage of the transaction value. You use pre-paid internet while trading remotely when working your FIFO role. You are subscribed to X, X and X. You use these for technical analysis and monitoring live markets to assist with CFD trading. You conduct your trading activities online from your computer.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1997 section 8-1 | Income Tax Assessment Act 1997 Division 40 | Income Tax Assessment Act 1997 section 25-10 | Income Tax Assessment Act 1997 section 25-25 | Income Tax Assessment Act 1997 section 70-35 | A New Tax System (Goods and Services Tax) Act 1999 section 9-5 | A New Tax System (Goods and Services Tax) Act 1999 section 9-40 | A New Tax System (Goods and Services Tax) Act 1999 section 23-5 | A New Tax System (Goods and Services Tax) Act 1999 Division 40 | A New Tax System (Goods and Services Tax) Act 1999 subsection 40-5(1) | A New Tax System (Goods and Services Tax) Act 1999 section 188-10 | A New Tax System (Goods and Services Tax) Act 1999 section 188-15 | A New Tax System (Goods and Services Tax) Act 1999 paragraph 188-15(1)(a) | A New Tax System (Goods and Services Tax) Act 1999 section 188-20 | A New Tax System (Goods and Services Tax) Act 1999 paragraph 188-20(1)(a) | A New Tax System (Goods and Services Tax) Regulations 2019 regulation 40-5.06 | A New Tax System (Goods and Services Tax) Regulations 2019 regulation 40-5.09 | A New Tax System (Goods and Services Tax) Regulations 2019 subregulation 40-5.09(3)

Reasons for decision: Detailed Reasoning - Issue 1 - income Tax: Question 1 - d etailed reasoning General tax treatment of CFD's Transacting with financial contracts for differences is a commercial activity of investing in a cash-settled derivative, albeit in the legal form of a contract of gaming and wagering, in relation to an underlying financial risk. The action of purchasing financial risk is commercial (Taxation Ruling TR 2005/15 Income tax: tax consequences of financial contracts for difference (TR 2005/15)). A gain or loss from a financial contract for differences will be assessable income under section 6-5 of the ITAA 1997 or an allowable deduction under section 8-1 of the ITAA 1997 if 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 (Paragraph 11 and 12 of TR 2005/15). A gain or loss from a financial contract for differences will be assessable income under section 15-15 of the ITAA 1997 if the transaction is entered 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. Where the gain is assessable income under section 15-15 a loss is an allowable deduction under section 25-40 of the ITAA 1997 (Paragraph 13 and 14 of TR 2005/15). Whether or not CFD transactions are a business activity or a profit-making undertaking, the resulting gains and losses are not assessable on capital account in either case. If a person enters into a contract for difference for purposes other than to make a profit then the question arises as to whether the gain or loss will be a capital gain or loss (Paragraph 40 of TR 2005/15). Carrying on a business of CFD trading Whether activities undertaken constitute the carrying on of a business is essentially a question of fact determined by weighing all the relevant indicators together to form a general opinion of whether a business is being carried on. The factors taken into consideration in determining if a taxpayer is carrying on a business are set out in Taxation Ruling TR 97/11 Income tax: am I carrying on a business of primary production? (TR 97/11). Whilst TR 97/11 considers the carrying on of a business of primary production, the principles applied in it have been applied by the courts in determining whether a business of share trading is carried on. The following indicators are relevant: • Whether the activity has a significant commercial purpose of character • Whether there is more than just an intention to engage in business • Whether there is a purpose of profit as well as a prospect of profit from the activity • Whether there is repetition and regularity of the activity • Whether the activity is of the same kind and carried on in a similar manner to that of the ordinary trade in that line of business. • Whether the activity is planned, organised and carried on in a businesslike manner such that it is directed at making a profit. • The size, scale and permanency of the activity. • Whether the activity is better described as a hobby, a form of recreation or a sporting activity. The factors considered particularly relevant in determining if CFD trading constitutes a business is discussed in TR 2005/15 (Paragraph 17 of TR 2005/15). These factors include: • Whether transactions are entered into in a systematic way, organised and 'businesslike' way • The repetition or regularity of the transactions • The scale of the transactions • Whether the transactions are related to, or part of other activities of a businesslike character • The purpose of the taxpayer • The degree of skill employed in how the taxpayer engages in the transactions 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. Whether the activity has a significant commercial purpose 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. The high level of transactions that you completed during the 2023 financial year indicates that your CFD trading activity has a commercial purpose. You made approximately X CFD trades, trading on average X per day with an intention to make a profit this indicates that there was a commercial purpose to your activities. Your previous practical experience and regularity in CFD trading indicates further that your activities have a commercial purpose. Whether there is more than just an intention to engage in business The mere intention to carry on a business is not enough. There must be activity. You had more than a mere intention to carry on a business as you engaged in CFD trading activities throughout the whole financial year. Your activities are not experimental or preparatory as you carried out a large volume of CFD trades throughout the financial year. Whether there is a purpose of profit as well as a prospect of profit from the activity The carrying on of a business is usually such that the activities are engaged in for the purpose of profit on a continuous and repetitive basis. The taxpayer must be able to show how the activity can make a profit. In your circumstances, you have made a profit in the financial year. You conduct independent research and self-education through financial literature, market analysis and broker resources to assist you with making profitable CFD trades. You have a multi-strategy approach that you actively reviewed and adapted to respond to market conditions and risk-reward opportunities. There is sufficient evidence present to demonstrate that the activity has a purpose and prospect of profit. Whether there is a repetition and regulatory of the activity One of the key factors to consider whether a business of share trading is being carried on is the repetition and regularity of the CFD trading activities. The higher the volume of trades, the more likely it is that a business is being carried on. You are considered to have a high level of CFD trades that is in line with the number of trades that would be expected of a person conducting a CFD trading business. When looking at the holding pattern for these transactions you do not hold the majority of your CFD trades for more then a week. On occasion you may hold a CFD trade for up to three weeks. You traded CFDs regularly each day. You have a high volume of trades that is carried out regularly and repeatedly throughout the year indicates that it is more likely that a business is being carried on. Whether the activity is of the same kind and carried on in a similar manner to that of the ordinary trade in that line of business Activities are more likely to be carrying on a business where they are carried on in a similar manner to other businesses in the industry. The following information indicates that you are carrying out your CFD trading activities in a similar manner to others in this industry: • Your transaction volume was similar to others in this industry and are capable of making a profit. • You invest up to X per trade and maintained up to X in funds dedicated to your CFD trading activities. • Whilst you don't have any formal qualifications you have extensive practical experience in financial markets and undertake research and continuous self-education to improve your knowledge of the activity. Your large volume of trades and practical experience in financial markets indicate that your are carrying on CFD trading activities similar to CFD trading business in the industry. Whether the activity is planned, organised and carried on in a businesslike manner such that it is directed at making a profit Activities are more likely to amount to the carrying on of a business where they are carried out in a systematic and organised manner, this usually involves form of forward planning such as contingencies and market fluctuations, setting profit targets, budgets, maintaining operations on a consistent basis, retaining and pursuing profitable activities, discontinuing unprofitable activities and keeping appropriate business records. You implement a multi-strategy approach to maximise trades. Your strategy is based on trading signals that are highly responsive to broader market conditions. You adapt your strategy after conducting technical analysis using CFD specific trading programs. You also review company specific news and commodity price movements and adapt your CFD trades accordingly. You maintain your operations on a consistent basis spending an average X hours per week on CFD trading activities whilst working in un-related employment. Whilst you are engaged in an unrelated full-time occupation your activity is planned around this employment, spending X hours on CFD trading per day whilst working at this employment and X hours on CFD trading activities on your days off. You conduct your activities as a sole trader under an ABN and business name. Your activities are carried out in a systematic and organised manner as your activity is panned, organised and carried on in a business-like manner that is directed at making a profit. The size, scale and permanency of the activity The volume of your CFD trading activity is high and done on a larger scale. The large volume and value of trades indicate that a business is being carried on. Whether the activity is better described as a hobby, a form of recreation or a sporting activity A hobby is an activity that is conducted to gain personal enjoyment and satisfaction with no view to make a profit. Your activities are not considered to be a hobby as you do not gain personal enjoyment and satisfaction from the activity. You have conducted the activity with an intention to make a profit. Conclusion After considering the above factors and your specific circumstances, it is considered that you were carrying on a business as a CFD trader. Your CFD trading exhibits a commercial purpose, as shown by the high volume of trades, consistent engagement and clear profit intent. You actively traded throughout the financial year, demonstrating more than just and intention and your activities were neither experimental nor preparatory. The prospect and purpose of profit are evident as you made a profit. You conduct independent research, adapt strategies and engage in regular trading. Repetition and regularity support this, with daily, weekly and monthly trades similar to others carrying on a business of CFD trading. You operate in a businesslike manner, following structed trading strategies and dedicating X hours weekly. The scale and permanency of your trading transactions and high volume of trades confirm it is not a hobby or recreational activity. You conducted a large volume of trades throughout the financial year sufficient to constitute a business. Therefore, as you were carrying on a business of CFD trading, your gains from trading CFDs are assessable under section 6-5 of the ITAA 1997 and losses are deductible under section 8-1 of the ITAA 1997 to the extent that they are incurred in producing your assessable income. | Detailed Reasoning - Question 2 - detailed reasoning: Section 8-1 of the ITAA 1997 allows a deduction for all expenses to the extent they are incurred in gaining or producing assessable income except where the outgoings are of a capital, private or domestic nature or relate to earning of exempt income or a provision prevents you from deducting it. For expenditure to form an allowable deduction, the expenditure must be incidental and relevant in the sense of having the essential character of expenditure incurred in the course of gaining or producing assessable income. There must be a sufficient connection between the expenses and the operations or activities which gain or produce the assessable income (refer to Federal Commissioner of Taxation v Cooper (1991) FCR 177; 91 ATC 4396; (1991) 21 ATR 1616). Pre-paid and home Wi-Fi The periodic (e.g. monthly) fees paid to internet service providers to maintain access to the internet are deductible if there is sufficient nexus with your income earning activities. As you conduct CFD trading online, the periodic access fees are deductible under section 8-1 of the ITAA 1997 to the extent of that use. If the internet is used for private purposes as well as your income earning activities, then the expense should be apportioned accordingly. Subscriptions You are subscribed to a financial analysis platform, a publication that reports on business, finance, investment and politics and real-time data fees of market news, security information and company research from markets. You use these subscriptions to technical analyse and monitoring live market depth so that you are able to review and adapt your trading strategy. These subscriptions are incurred in producing your assessable income; therefore, you can claim a deduction. Computer and accessories Under Division 40 of the ITAA 1997 you may depreciate computer hardware and software used for the purpose of producing assessable income. Section 40-25 of the ITAA 1997 allows as deduction for the decline in value of a depreciating asset that is held for the income year. Section 40-30 of the ITAA 1997 defines what can be considered a depreciating asset. Some intangible assets are specifically included, and software has been included as an intangible asset under sub-section 40-30(2) of the ITAA 1997. The rate of depreciation for intangible depreciating assets is set by sub-section 40-95(7) of the ITAA 1997. Software is included in the table with an effective life of X years. As you use the computer to conduct your CFD trading activities the cost of the computer and its accessories may be allocated over its useful life and allowed as a deduction each year, if you are the owner. The amount of the depreciation deduction each year will have to be apportioned if the computer and its accessories are used for non-incoming producing purposes. Maintenance Section 25-10 of the ITAA 1997 provides a specific deduction is allowed for expenditure incurred for repairs to a depreciating asset that you held or used solely for the purpose of producing assessable income. If you held or used the asset only partly for that purpose, you can deduct so much of the expenditure as is reasonable in the circumstances (subsection 25-10(2)). Any capital expenditure cannot be deducted under section 25-10 of the ITAA 1997. As you use your computer to conduct CFD trading activities you can claim a deduction for the maintenance costs incurred. Borrow fees and margin interest Section 25-25 of the ITAA 1997 provides a specific deduction is allowed for borrowing expenses to the extent that the money is used to produce assessable income. You are charged borrow fees on the margin amount by your broker for holding short positions overnight. You are also charged interest on the margin amount that you borrow to conduct your trades. Therefore, these fees are borrowing expenses that you incur on money used to produce assessable income and are deductible to the extent that they are used for that purpose. Transaction costs You incur brokerage, execution fees and per-trade charges when conducting CFD trades. These transaction costs are incurred in producing your assessable income; therefore, you can claim a deduction Question 3 - d etailed reasoning Trading stock is defined to include anything produced, manufactured or acquired which is held for the purposes of manufacture, sale or exchange in the ordinary course of business. (Section 70-10 of the ITAA 1997) When accounting for trading stock at the end of an income year you include the value of your trading stock in working out your assessable income and deductions. (section 70-35 of the ITAA 1997) A CFD is merely a form of cash settled derivative that allow investors to take risks on movements in the price of a subject matter (the 'underlying') without ownership of the underlying. Since CFDs do not involve ownership of the underlying asset, they are not considered trading stock as the asset itself cannot be sold or exchanged as part of ordinary business operations. Therefore, as CFD are not treated as trading stock the value of open CFD positions at the end of the income year cannot be included in working out your assessable income and deductions for that income year. Only realised gains or losses that you incur tin the income year can be included. | Detailed Reasoning - Question 1 - detailed reasoning: Section 9-40 of the GST Act provides that you must pay GST on any taxable supply that you make. Section 9-5 of the GST Act provides that you make a taxable supply if: (a) you make a supply for consideration (b) the supply is made in the course or furtherance of an enterprise that you carry on (c) the supply is connected with the indirect tax zone, and (d) you are registered or required to be registered for GST. However, the supply is not taxable to the extent that it is GST-free or input taxed. Relevantly, financial supplies are input taxed under subsection 40-5(1) of the GST Act and are defined in regulation 40-5.09 of the A New Tax System (Goods and Services Tax) Regulations 2019 (GST Regulations). Regulation 40-5.09 of the GST Regulations state that: (1) The provision, acquisition or disposal of an interest mentioned in subregulation (3) is a financial supply if: (a) the provision, acquisition or disposal is: (i) for consideration; and (ii) in the course or furtherance of an enterprise; and (iii) connected with the indirect tax zone; and (b) the supplier is: (i) registered or required to be registered; and (ii) a financial supply provider in relation to supply of the interest. A financial supply provider is defined in regulation 40-5.06 of the GST Regulations. This regulation provides, among other things, that an entity that supplies an interest is the financial supply provider of the interest. Goods and Services Tax Determination GSTD 2005/3 Goods and services tax: are contracts for difference and financial spread betting contracts financial supplies ? provides that a CFD is a financial supply, being an interest in a derivative mentioned in item 11 of the table in subregulation 40-5.09(3) of the GST Regulations. Registered or required to be registered for GST Section 23-5 provides that you are required to be registered for GST if: (a) you are carrying on an enterprise; and (b) your GST turnover meets the registration turnover threshold (currently $75,000 unless you are a non-profit body). Section 23-10 of the GST Act provides who may be registered for GST. You may be registered if under this Act you carry on an enterprise (whether or not your turnover is at, above or below the registration turnover threshold). For the purpose of section 23-15 of the GST Act, the current GST registration turnover threshold (other than for non-profit bodies) is $75,000. You are making input taxed financial supplies and are carrying on a CFD trading enterprise. Therefore, you meet the requirement in paragraph 23-5(a) and subsection 23-10(1). Subsection 188-10(1) provides that you have a GST turnover that meets the registration turnover threshold if: (a) your current GST turnover is at or above $75,000 and the Commissioner is not satisfied that your projected GST turnover is less than $75,000; or (b) your projected GST turnover is at or above $75,000. Your 'current GST turnover' is defined in section 188-15 of the GST Act as the sum of the values of all of your supplies made in a particular month and the preceding 11 months. Your 'projected GST turnover' is defined in section 188-20 of the GST Act as the sum of the values of all of your supplies made in a particular month and the following 11 months. Paragraphs 188-15(1)(a) and 188-20(1)(a) of the GST Act provide that input taxed supplies are disregarded when calculating your current and projected turnovers respectively. Your turnover consists solely of input taxed supplies of trading in CFD's which you are not required to include in the calculation of your GST turnover. Therefore, your GST turnover does not meet the GST registration turnover threshold under paragraph 23-5(b) of the GST Act and you are not required to be registered for GST. Note: You may voluntarily register for GST; however, any purchases made in relation to the supply of trading in CFD's will not be creditable acquisitions, and any GST paid on these acquisitions is unable to be claimed back on an activity statement. You may however be entitled to reduced credit acquisitions on some purchases.