# IB Share Trader Taxation



## aviator (20 December 2019)

Hi All,

Hoping I can get some help regarding taxation as a Share Trader ("trading as a business") using Interactive Brokers (IB). Specifically which categories of IB reports to use to do a tax return. On the surface, there appear to be a number of options:

1) The Net Asset value summary approach

  Change in NAV    Total
  Starting Value                      121,126.08
      Mark-to-Market                  17,682.97
      Dividends                            5,946.78
      Withholding Tax                    -190.78
      Change in Dividend Accruals    132.69
      Interest                              1,097.04
     Change in Interest Accruals      -37.80
     Other Fees                            -585.53
     Commissions                      -1,306.08
     GST                                     -185.25
     Other FX Translations                 4.41
  Ending Value    143,684.52

Can I use the Mark-to-Market as the trading gain/loss, if so how would I record it in section P8 (Business income), particularly as there is no concept of Opening Stock and Purchases?

Is the business income then the sum of? 

      Mark-to-Market                  17,682.97 (trading gain/loss)
      Interest                               1,097.04
      Other FX Translations                  4.41


Presumably then the expenses would be the negative items below the interest

     Change in Interest Accruals      -37.80
     Other Fees                            -585.53
     Commissions                      -1,306.08
     GST                                     -185.25 (if registered for GST i.e. ABN)

Presumably then the dividend shown in the summary as, 

      Dividends                            5,946.78
      Withholding Tax                    -190.78

     would use the IB dividend statements to record more detail in the Dividend section of         the tax return

2) Realized/Unrealized Performance Summaries and Open Positions approach

This would permit identifying Opening Stock/Purchases/Closing stock/Cost of Sales etc.
It would also permit selection of the most tax effective valuation method per share/parcel (i.e. cost or market). However this is much more complicated as all the costs have to be integrated such as FX translations etc. The Net Asset value movement would remain the same and yet the trading gain/loss (e.g. realized) would be different to MTM, not sure what category would go up/down to compensate.

Do I need to use approach 2? if so how to do this correctly to ensure that the NAV is reconciled with that of the MTM approach?

3) Trades section approach/confirmations

Initially this appears to be a way to get the total profit/loss of all closed trades but a closer look indicates that the total of all closed trades can be different to that in the Realized Summary report. Items such as capital returns are only shown in the Realized Summary.

I have also noticed some anomalies in the IB statement/tax (dividend) reports and am not sure how to deal with them:

a) IB do not show cost basis adjustment for Trusts deferred tax in the Activity Statements
b) IB include all distributions in the year it was paid whereas for some trusts it's retrospective for the previous financial year
c) Some AU dividends/distributions are only reported in the Annual Reports and not the AU fiscal report.

Not sure how to deal with a) and b), ignore (maybe only significant to a Capital Gains model)? I uploaded IB confirmations into Sharesight and can see differences for a) and b) categories.

Any help very much appreciated. How do other people do their IB related taxation?


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