CFD & Futures Tax in NZ: How Your Trades Are Taxed

The short version

• CFDs and futures are financial arrangements for NZ tax — a category with its own rules.
• Those rules ignore the capital-vs-revenue distinction: your gains are income, taxed at your marginal rate, and your losses are deductible. There's no "it was capital, so tax-free" argument here.
• Most retail traders are cash basis persons, so you generally return realised P&L — matching how your broker reports.
• The catch: any open positions at 31 March need a base price adjustment (BPA) — a year-end wash-up so unrealised movements are accounted for.
• Everything is converted to NZD, and you declare the net result on your IR3.

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CFDs and futures trip people up because they don't fit the mental model most Kiwis have for tax — "no capital gains tax, so my trading profit is tax-free." For these instruments, that reasoning doesn't even get off the ground, because they're taxed under a completely different set of rules. Here's the plain version.

Why CFDs and futures are different

A contract for difference or a futures contract isn't ownership of an underlying asset — it's a contract whose value moves with a price. NZ tax law treats these as financial arrangements, and financial arrangements have their own regime that overrides the usual capital/revenue question.

Gains are income — and losses are deductible

Here's the practical upshot of being a financial arrangement: the rules disregard the distinction between capital and revenue. That cuts both ways, and mostly in a fair direction:

• Your profits are taxable income, added to your other income and taxed at your marginal rate (10.5%–39%).
• Your losses are deductible — a genuine offset, not something stranded as a "capital loss."

So there's no debate about whether you're a "trader" or "investor" the way there is with shares. With CFDs and futures, the financial-arrangement treatment applies regardless.

Cash basis, and the year-end BPA

Most individual traders qualify as cash basis persons, which keeps life simple: you generally account for your realised gains and losses — the closed trades — which lines up with what your broker statement shows.

The part people miss is the base price adjustment (BPA). If you're holding open positions at the end of the tax year (31 March), you need a wash-up calculation that brings those unrealised positions to account, so income isn't indefinitely deferred just by leaving trades open over year-end. If you've closed everything out before 31 March, this is a non-event; if you carry positions, it matters.

A worked example

Say over the year you close CFD and futures trades for a net $22,000 profit, all realised, and you have no open positions at 31 March.

• That $22,000 is income. On top of a $70,000 salary, it sits in the 33% band, so roughly $7,260 of tax — set aside, because nothing was withheld.
• If instead you'd made a $22,000 loss, that loss is deductible against your other income (subject to the usual rules), reducing your overall tax.

Either way, it's on income account. The financial-arrangement rules take the "is it capital?" question off the table.

Records and NZD

Your broker likely reports in USD or another currency. Every figure has to be converted to NZD for your return. Keep a clean, dated record of each closed trade and its NZD value — and, if you hold positions over year-end, the data you'll need for the BPA. This is exactly the sort of multi-currency, many-trades bookkeeping that's miserable by hand and quick with the right tool.

Common mistakes

• "No CGT, so it's tax-free." CFDs and futures are financial arrangements — gains are income, full stop.
• Forgetting the BPA on open positions. Leaving trades open over 31 March doesn't defer the tax; the year-end adjustment brings them to account.
• Assuming losses are stuck. They're deductible on income account — don't leave them unclaimed.
• Not converting to NZD. Broker P&L in USD isn't your tax figure; the NZD equivalent is.
• No records for open positions. You'll need entry values and year-end values for the BPA.

What to do next

If you trade CFDs or futures, treat the net result as income and get it onto your IR3 — and if you carry positions over year-end, factor in the BPA. TradeLog NZ tracks your trades, converts them to NZD, and gives you the figures for your return; you can also get a quick estimate from the free NZ trading tax calculator.

Worth reading next: the full NZ trader tax guide, and if you also trade forex, the NZ forex tax guide covers the same financial-arrangement territory.

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Do I pay tax on CFD trading in New Zealand?

Yes. CFDs are financial arrangements under NZ tax law, and the financial arrangements rules treat your gains as income taxed at your marginal rate. There's no capital gains exemption for them. The upside is that losses are deductible on income account, so a losing year genuinely reduces your tax.

Are futures trading profits taxable in NZ?

Yes. Like CFDs, futures contracts are financial arrangements, so profits are taxable income and losses are deductible. The capital-versus-revenue distinction that matters for some share investing doesn't apply — the financial-arrangement treatment covers both gains and losses.

What is a base price adjustment (BPA) and do I need one?

A BPA is a year-end wash-up calculation under the financial arrangements rules. If you hold open CFD or futures positions at 31 March, the BPA brings those unrealised positions to account so income isn't deferred simply by keeping trades open over the year-end. If you've closed all positions before 31 March, you generally won't need one for that year.

Can I deduct CFD or futures losses in NZ?

Generally yes. Because these are financial arrangements taxed on income account, losses are deductible rather than being stranded as non-deductible capital losses. The exact treatment depends on your circumstances, so confirm with an accountant — but the starting point is that the loss is a real, usable deduction.

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This article is general information only and does not constitute formal tax advice. The financial arrangements rules are complex and individual circumstances vary. Review with a qualified NZ tax accountant before filing. TradeLog NZ accepts no liability for errors in your tax return. For the official rules, see IRD on financial arrangements.