Form 6781 Explained for Australians: US Futures & Options Tax 2025

As more Australians diversify their investment portfolios across global markets, US futures and options trading has become increasingly popular. But with international investing comes a web of tax rules, and if you’re trading US futures or options, you may encounter IRS Form 6781—an American tax document with real implications for Aussie expats, SMSF trustees, and globally minded investors.

What is Form 6781 and Who Needs It?

Form 6781, officially known as “Gains and Losses From Section 1256 Contracts and Straddles”, is a US Internal Revenue Service (IRS) form. It applies to taxpayers who trade certain types of contracts, including regulated futures contracts, foreign currency contracts, and non-equity options—many of which are traded on US exchanges.

• Australian expats living or working in the US

• Australians with US brokerage accounts trading these instruments

• SMSFs or trusts with direct exposure to US futures/options

In 2025, US tax authorities remain vigilant about foreign investors’ reporting obligations, especially with expanded international data-sharing agreements. If you receive a US brokerage statement showing Section 1256 gains or losses, expect to see references to Form 6781.

How Form 6781 Impacts Your Tax Position

The key feature of Section 1256 contracts is their unique tax treatment: the IRS splits gains and losses between short-term (40%) and long-term (60%) capital gains, regardless of how long you actually held the contract. This ‘60/40 rule’ can result in a lower effective tax rate for US taxpayers compared to the usual short-term capital gains rate.

For Australians, the implications depend on your residency status and tax treaties:

• Australian residents for tax purposes generally report all worldwide income to the ATO, but may claim a foreign tax offset for any US tax paid.

• Australian expats who are US tax residents must file Form 6781 with their US return, and may also need to report those gains in Australia.

• Double tax treaties between Australia and the US can help avoid double taxation, but precise record-keeping is essential.

In 2025, new IRS reporting standards and increased scrutiny of foreign accounts mean that correct and timely filing is crucial. Errors can lead to penalties or delays in processing foreign tax credits.

Practical Scenarios: Australians and Form 6781

Let’s look at some real-world examples to illustrate when Form 6781 comes into play:

• Case 1: Aussie expat in New York Sarah, an Australian IT consultant working in New York, trades S&P 500 futures. Her US broker issues her a 1099-B showing Section 1256 gains. She must complete Form 6781 with her US tax return and declare this income to the ATO, claiming a credit for any US tax paid.

• Case 2: Australian SMSF with US options A self-managed super fund holds US exchange-traded options. The fund’s tax agent receives a statement detailing Section 1256 gains. While the SMSF doesn’t file a US return, it must keep records in case the IRS or ATO requests evidence of foreign income reporting.

• Case 3: Crypto derivatives Some US crypto exchanges offer regulated futures contracts classified under Section 1256. If an Australian investor trades these products, Form 6781 rules could apply. In 2025, the IRS clarified that some crypto options and futures fall under these rules, so traders need to check their brokerage statements carefully.

2025 Updates and Best Practices

The 2025 tax year brings some important reminders for Australians with US investments:

• Brokerage reporting: Many US brokers now provide clearer breakdowns of Section 1256 contracts, making it easier to identify gains or losses requiring Form 6781.

• Straddles and hedging: The IRS continues to target complex strategies (like straddles) that use options and futures for tax deferral. If you engage in these, review your reporting obligations closely.

• Crypto derivatives: The IRS has extended Section 1256 rules to some crypto futures and options, adding a new layer of reporting for digital asset investors.

• International data sharing: Australia and the US share investment data under the FATCA and CRS regimes, so underreporting is riskier than ever.

For Australians, the best move is to maintain detailed records of all US futures and options trades, understand the tax treatment under both US and Australian law, and ensure all relevant forms (including Form 6781) are completed accurately if required.