Martin Markovic


Australian futures markets have experienced unprecedented growth in the past few years. The taxation implications for the majority of futures market participants who are traders are relatively straightforward. However, the taxation implications for non-traders are far from straightforward. This paper examines the contentious issues of whether futures contracts involve the 'sale' of 'property' and if so, was that property 'acquired'?

These issues and the possible application of s 25A(1) ITAA have been evaded or inadequately dealt with by the courts and the Commissioner of Taxation. It is established that futures contracts may constitute 'property' if they are legal choses in action but there remain doubts as to whether a chose in action is 'acquired' or 'created' when a party enters into a futures contract.

Furthermore, the Commissioner's inference that a 'sale' takes place upon an assignment or novation in futures transactions is rejected. As such, the second limb of s 25A(1) may play a vital role in catching non-business speculating profits.