Your CFD trades went against you and you want to know whether the ATO will let you claim the loss. In most cases the answer is yes, and the result is better than many online guides suggest: because the ATO treats contracts for difference as revenue, not capital, a genuine CFD loss generally reduces your taxable income in the year you incur it, including income from your job.
This guide explains the ATO’s position in Taxation Ruling TR 2005/15, the difference between a profit-seeking trader, a trader carrying on a business, and a recreational gambler, how the non-commercial loss rules do and do not apply, exactly where CFD results go in the 2025-26 return, and the records you need to keep. It corrects a widespread myth that CFD losses are capital losses that can only be used against capital gains.
It is written for individuals trading CFDs over shares, indices, forex, commodities and crypto through an Australian or offshore platform. If your trading is in crypto assets themselves rather than CFDs over them, see our guide to the tax impact of Bitcoin and cryptocurrency in Australia, because actual crypto is taxed under the capital gains rules.
Key takeaways
- CFDs are on revenue account. TR 2005/15 says gains are assessable income (section 6-5 for a business, section 15-15 for a profit-making undertaking) and losses are deductible (section 8-1 or section 25-40).
- A CFD loss is not a capital loss. It reduces taxable income from all sources in the year incurred, including salary, unless the non-commercial loss rules defer it.
- Non-commercial loss rules only bite if you are in business. A profit-seeking trader who is not carrying on a business is outside Division 35; a business trader must meet the income requirement and a test, or defer the loss.
- Recreational gambling is the exception: a CFD entered into purely for recreation produces no assessable gain and no deductible loss.
- Report at question 24 Other income and D15 Other deductions (supplementary section) unless you are in business, in which case use the business schedule. Never at capital gains.
- Keep broker statements for five years. No records, no deduction.
CFD tax treatment at a glance
| Your situation | Gains | Losses | Where reported (2025-26 return) |
|---|---|---|---|
| Profit-seeking trader, not carrying on a business (most individuals) | Assessable under s 15-15 as a profit-making undertaking | Deductible under s 25-40 against all income in the year incurred; Division 35 does not apply | Question 24 Other income (label V) / D15 Other deductions (label J) |
| Carrying on a business of CFD trading | Assessable under s 6-5 as business income | Deductible under s 8-1, but Division 35 (non-commercial losses) may defer the loss | Question 15 Net income or loss from business, with the business and professional items schedule |
| Recreation by gambling | Not assessable | Not deductible; any capital gain or loss is disregarded | Not reported |
| Any trader | Not a capital gain – the CGT rules do not produce a separate gain | Not a capital loss | Nothing at question 18 Capital gains |
Source: ATO, TR 2005/15 paragraphs 11 to 15; ATO non-commercial losses guidance; Individual supplementary tax return 2026 instructions, question 24 and D15. Checked 7 October 2026.
What is a CFD and why does the ATO treat it differently from shares?
A contract for difference is a derivative: an agreement with a provider to exchange the difference between the opening and closing price of an underlying asset. You never own the shares, currency or index you are trading on, you trade on margin, and positions are typically opened and closed within days or weeks. Those features are why the ATO issued a specific ruling, TR 2005/15, rather than applying the share-investor rules.
The ruling’s core finding is that a CFD is entered into either to make a profit or for recreation, and that a third purpose is “exceedingly unlikely”. A profit-seeking CFD is a commercial transaction, so the result is income or a deduction, not a capital gain or loss. In the ATO’s words, a gain from a financial contract for differences “will be assessable income under section 6-5” where it is an ordinary incident of carrying on a business, or “under section 15-15” where the taxpayer enters into it “in carrying on or carrying out a profit-making undertaking or scheme”, and a loss “will be an allowable deduction” under section 8-1 or section 25-40 respectively.
Shares bought to hold for dividends and growth, by contrast, are CGT assets, and losses on them are capital losses that can only offset capital gains. That is the model many CFD articles wrongly copy. A CFD is still technically a CGT asset, and closing it out is a CGT event, but because the gain is already assessable as income the CGT rules do not create a second taxable amount, and the ruling makes clear that the loss is a revenue deduction.
Three categories of CFD trader
1. Profit-seeking trader who is not in business
This is where most individuals sit. You trade CFDs to make money, perhaps a few positions a month alongside a full-time job, but not in the systematic, organised, “businesslike” way the ATO looks for before it accepts that a business exists. Your gains are assessable under section 15-15 and your losses deductible under section 25-40. Because section 25-40 is a deduction like any other, it reduces your taxable income from every source in the year you incur the loss. The ATO has confirmed in published edited private rulings that for a trader in this position “the non-commercial loss legislation has no application”, and that such losses “are deductible under section 25-40”. Private rulings bind only the applicant, but they show how the ATO applies TR 2005/15 in practice.
2. Carrying on a business of CFD trading
If your trading has the hallmarks of a business – high volume and frequency, a trading plan, record-keeping systems, significant capital and time, an intention to profit as an occupation rather than a sideline – the ATO treats you as carrying on a business. Gains are business income under section 6-5 and losses are deductible under section 8-1. The catch is Division 35, the non-commercial loss rules, which apply to business activities carried on by individuals. To offset a business loss against your other income in the same year you must meet the income requirement (taxable income plus reportable fringe benefits, reportable super contributions and total net investment losses under $250,000) and pass one of the four tests in Division 35 (assessable income from the activity of at least $20,000, a profit in three of the past five years, real property of at least $500,000 used in the activity, or other assets of at least $100,000), or obtain the Commissioner’s discretion. Otherwise the loss is deferred and carried forward against future profits from the same activity. The ATO has also noted that “ordinary economic and market fluctuations are not regarded as special circumstances” for the discretion.
3. Recreation by gambling
TR 2005/15 paragraph 15 says a gain or loss from a CFD “entered into for the purpose of recreation by gambling will not be assessable income … or deductible”, and any capital gain or loss is disregarded under the CGT gambling exemption. The ruling treats this as rare: the ATO considers it “exceedingly unlikely” that a CFD is entered into for a purpose that is neither profit-making nor recreational, and it will not accept a loss-making trader simply relabelling themselves a gambler to avoid declaring the years they won.
Which category am I in?
The ATO’s edited private rulings describe the bar for a CFD trading business as “quite high, with the most significant factors usually the volume of trading and conducting operations in a businesslike manner”. If you place a handful of trades a month around a day job, you are almost certainly a profit-seeking trader outside Division 35. If you trade full-time with a documented strategy, risk limits and hundreds of positions a year, prepare for the business analysis and the non-commercial loss tests.
Worked examples
Sarah – profit-seeking trader, salary earner. Sarah earns $90,000 as an engineer and trades index CFDs on evenings, closing about 60 positions in 2025-26. Her net result is a $5,000 loss after financing charges. The loss is deductible under section 25-40. Her taxable income falls to $85,000, saving her $1,500 of tax at the 30% marginal rate plus $100 of Medicare levy. She reports the gross gains at question 24 Other income and the losses and costs at D15, and keeps her broker statements.
Sarah in a winning year. In 2026-27 she makes a net $7,000 gain. The whole $7,000 is assessable income at her marginal rate. There is no 50% CGT discount, because the gain is income, not a capital gain – this is the flip side of being able to deduct losses against salary.
David – carrying on a business. David trades CFDs full-time, 1,500 positions a year, with a written plan and dedicated capital. He loses $8,000 in 2025-26 against $60,000 of other income. He is carrying on a business, so Division 35 applies. His assessable income from trading (gross gains) exceeded $20,000, so he passes the assessable income test and his income is under $250,000, so he can offset the $8,000 against his other income, reducing taxable income to $52,000. Had he failed every test, the loss would be deferred to a future year of trading profits.
How to report CFD gains and losses in your 2025-26 return
There is no CFD label in the individual return. Based on the ATO’s 2026 supplementary return instructions, a profit-seeking trader who is not in business reports as follows:
- Gains: total your closed-position gains for the year and include them at question 24 Other income, category 4 (income not in categories 1 to 3), label V, with a description such as “CFD trading gains”.
- Losses and costs: total your closed-position losses, financing charges and commissions and claim them at D15 Other deductions, label J, as a deduction not claimable elsewhere.
- Do not report CFD results at question 18 Capital gains, and do not net them against share or crypto capital gains or losses.
- If you are carrying on a business, complete the business and professional items schedule and report the net result at question 15; any deferred non-commercial loss goes at question 16.
In myTax the equivalent fields sit under “Other income” and “Other deductions” once you personalise your return. If you use a tax agent, give them the full-year broker statement rather than a summary; the gross gains and losses are needed separately, not just the net figure, and the gross gain figure matters for the Division 35 tests. Our tax deduction guides cover the other items commonly claimed alongside trading costs.
Rule of thumb
If you traded CFDs to make money, the year’s net loss comes off your taxable income and the year’s net gain goes on – in full, with no CGT discount. Treating a CFD loss as a capital loss, or a CFD gain as a discounted capital gain, is wrong either way.
Costs you can include
- Financing or overnight charges on positions held open, which are part of the cost of the contract.
- Commissions and spreads charged by the provider.
- Market data, charting and platform subscriptions used for the trading activity, apportioned if partly private.
- Interest on money borrowed specifically to fund trading, in the proportion used for the activity.
- Not deductible: deposits and margin lodged with the provider (they are not expenses), fines, or the cost of courses that teach you to trade before you start (these relate to a new income-earning activity).
Records the ATO expects
The ATO’s records you need to keep guidance applies: written evidence for five years from the date you lodge, and if the ATO reviews your return and you do not have evidence, “your claims can be disallowed”. For CFDs that means annual and monthly statements from your provider, trade-by-trade confirmations showing open and close dates and prices, financing and commission charges, bank records of deposits and withdrawals, and a note of how you apportioned any shared costs such as data subscriptions. Export the statements each financial year; offshore platforms do not always keep history available indefinitely. If you have lost paperwork, our guide to claiming deductions without receipts explains what substitutes the ATO accepts.
Common mistakes
- Reporting CFD losses as capital losses and carrying them forward unused while paying full tax on salary.
- Claiming the 50% CGT discount on CFD gains. There is no discount on revenue gains.
- Netting CFD results against share or crypto capital gains. They are different buckets.
- Calling yourself a business to use section 8-1 when the trading does not meet the business tests – and then being caught by Division 35 anyway.
- Reporting only the net figure without being able to show gross gains, gross losses and costs.
- Ignoring winning years. If you deduct losses as a profit-seeking trader, you must declare gains in the same way.
- Relying on an old ATO Community thread instead of the ruling. Community answers (such as this one) are general guidance, not binding advice; TR 2005/15 is the public ruling.
FAQ about CFD losses and the ATO
Can I claim a CFD loss against my salary?
Usually, yes. Under Taxation Ruling TR 2005/15 a CFD entered into to make a profit is on revenue account: gains are assessable income and losses are deductible (section 25-40, or section 8-1 if you are carrying on a business). A revenue deduction reduces your taxable income from all sources, including salary and wages, in the year the loss is incurred. The exception is a CFD entered into purely for recreation by gambling, where neither gains nor losses are recognised.
Are CFD losses capital losses?
No. This is the most common mistake. The ATO’s ruling treats CFD gains and losses as ordinary or statutory income and deductions, not as capital gains and losses. Although a CFD is technically a CGT asset, the gain is assessed as income, so there is no separate capital gain, and a loss is a revenue deduction rather than a capital loss that can only be used against capital gains.
Do the non-commercial loss rules stop me claiming CFD losses?
Only if you are carrying on a business of CFD trading. Division 35 of the tax law applies to business activities carried on by an individual. If you trade CFDs as a profit-making activity without being in business, the ATO has said in published private rulings that Division 35 has no application and the loss is deductible under section 25-40 in the year it is incurred. If you are in business, you need to meet the $250,000 income requirement and pass one of the four tests (or obtain the Commissioner’s discretion) to offset the loss against other income, otherwise it is deferred.
Where do I report CFD gains and losses in my tax return?
For a trader who is not in business, CFD gains go in the supplementary section at question 24 Other income (category 4, label V) and losses at D15 Other deductions (label J). If you are carrying on a business of trading, the results go through the business and professional items schedule and question 15 Net income or loss from business. CFD results do not go at question 18 Capital gains.
What records do I need for CFD trading?
Keep your broker statements and trade confirmations showing each position’s opening and closing dates and prices, financing (overnight) charges, commissions and spreads, and your deposit and withdrawal history, for five years from the date you lodge. The ATO can disallow a deduction you cannot substantiate.
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CFD trading sits in a corner of the tax law that most general guides get wrong, and the difference between a revenue loss against your salary and a stranded capital loss can be thousands of dollars. Nanak Accountants prepares returns for traders and investors across Australia, including the business-versus-profit-seeking analysis and the Division 35 tests. Call 1300 626 258, contact us or book a free 15-minute consultation. The ATO’s own overview of capital gains tax is the right starting point for the shares and crypto you actually own.
This article is general information only and is not personal tax advice. The treatment of CFDs was checked against ATO Taxation Ruling TR 2005/15, the ATO’s non-commercial losses guidance, published edited private rulings and the 2026 individual supplementary tax return instructions on 7 October 2026.
