How are options taxed in Australia?

It depends on whether you hold them on capital account as an investor or on revenue account as a trader carrying on a business. On capital account, gains and losses are capital gains and losses, and a position held more than 12 months may qualify for the 50% CGT discount. On revenue account, gains are ordinary income at your marginal rate and losses are generally deductible. The distinction is a question of fact, and the TOFA rules can override it. Confirm your position with the ATO or a registered tax agent.

Does an expired option still go in my tax return?

Yes. An option that expires worthless is still a disposal: the premium you paid is a capital loss on capital account, and a premium you received is a gain. Expiry leaves no trade confirmation of its own, which is why it is the most commonly missed line in an options tax record.

What happens at tax time if I am assigned?

Assignment ends the option and starts or ends a parcel of the underlying shares. The premium generally adjusts the cost base or the proceeds of that parcel rather than being taxed separately, so the two records have to be kept together.

Do I pay CGT on options I have not closed?

No. Australian CGT follows a CGT event, so an open position is not taxed on an unrealised gain. The event is closing out, expiry, exercise or assignment.

Does OpenFolio track options?

It records option trades alongside shares and crypto, keeps the premium and brokerage with each contract, and shows the account separately once you have option history. Options are included at recorded remaining cost rather than live market value.

Options guide

Options Trading in Australia

An option is a contract: the right, but not the obligation, to buy or sell shares at a set price before a set date. The buyer pays a premium for that right. The seller takes the premium and the obligation that comes with it.

The mechanics are the same everywhere. What differs in Australia is the tax: whether your gains sit on capital or revenue account, what the 50% CGT discount does to a position held more than a year, and what an expiry leaves behind in your records when no confirmation arrives. This page is about those parts, because they are the parts a US options tutorial will not tell you. General information only, not tax advice.

The four positions

Every options strategy is built from these. The asymmetry is the thing to understand first: a buyer can only lose the premium, a seller of a naked call has no ceiling.

Position	At open	You want	Worst case
Buy a call	Premium, paid up front	The share price above the strike before expiry	The premium. Nothing more.
Buy a put	Premium, paid up front	The share price below the strike before expiry	The premium. Nothing more.
Sell a call	Nothing: you receive the premium	The share price to stay below the strike	Uncapped if you do not hold the shares. Covered if you do.
Sell a put	Nothing: you receive the premium	The share price to stay above the strike	You may be assigned the shares at the strike, however far it has fallen.

Capital account or revenue account

This is the question the whole Australian tax treatment turns on, and it is decided by what you are doing rather than what you call yourself. An investor holding options on capital account has capital gains and losses: capital losses offset capital gains, carry forward when unused, and a position held more than 12 months may attract the 50% CGT discount. A trader carrying on a business holds on revenue account: gains are ordinary income at the marginal rate, and losses are generally deductible when incurred.

Which one applies is a question of fact and degree, with no single factor deciding it, and the TOFA rules can push gains and losses onto revenue account regardless. Complying super funds have their own treatment again. If you trade options at any volume, this is worth an hour with a registered tax agent before the year ends rather than after it. The ASX publishes a paper on the taxation of exchange traded options and the ATO's capital gains tax guidance covers the CGT side.

What each contract has to leave behind

Options generate more record-keeping per dollar than shares, and the records are easier to lose. A share sale produces a confirmation. An option that expires worthless produces nothing at all, and it is still a disposal.

Premium paid or received, per contract, in the currency it was traded in
Brokerage and exchange fees on open and on close, which form part of the cost base
Open and close dates, because the holding period decides the CGT discount on capital account
How the position ended: closed out, expired worthless, exercised, or assigned
The underlying parcel when exercise or assignment moves shares, with its own cost base

For FY26-27, those records feed the same CGT summary as your shares. If you are reconstructing a year of option trades in July, the premiums are usually findable and the expiries usually are not.

Definitions

Premium: The price of the option contract itself, paid by the buyer to the seller when the position opens.
Strike price: The price at which the underlying shares change hands if the option is exercised.
Expiry: The date the contract ends. An option not closed or exercised by expiry lapses, and an out-of-the-money option expires worthless.
Exercise: The holder taking up their right to buy or sell the underlying at the strike.
Assignment: The other side of exercise: the writer of the option is required to deliver or take the shares.
Covered call: Selling a call over shares you already hold, so delivery on assignment comes from the parcel rather than the open market.
Capital account: Holding a position as an investment, so gains and losses are capital gains and losses under the CGT rules.
Revenue account: Holding a position as part of a business of trading, so gains are ordinary income and losses are generally deductible when incurred.

Questions

How are options taxed in Australia?: It depends on whether you hold them on capital account as an investor or on revenue account as a trader carrying on a business. On capital account, gains and losses are capital gains and losses, and a position held more than 12 months may qualify for the 50% CGT discount. On revenue account, gains are ordinary income at your marginal rate and losses are generally deductible. The distinction is a question of fact, and the TOFA rules can override it. Confirm your position with the ATO or a registered tax agent.
Does an expired option still go in my tax return?: Yes. An option that expires worthless is still a disposal: the premium you paid is a capital loss on capital account, and a premium you received is a gain. Expiry leaves no trade confirmation of its own, which is why it is the most commonly missed line in an options tax record.
What happens at tax time if I am assigned?: Assignment ends the option and starts or ends a parcel of the underlying shares. The premium generally adjusts the cost base or the proceeds of that parcel rather than being taxed separately, so the two records have to be kept together.
Do I pay CGT on options I have not closed?: No. Australian CGT follows a CGT event, so an open position is not taxed on an unrealised gain. The event is closing out, expiry, exercise or assignment.
Does OpenFolio track options?: It records option trades alongside shares and crypto, keeps the premium and brokerage with each contract, and shows the account separately once you have option history. Options are included at recorded remaining cost rather than live market value.

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