# Trading overseas: Do I pay tax? - (US Futures)



## aussiebuggaa

Let say for example, I made $50k profit from trading the futures market in the United State.  Every now and then I transfer my profit back into my Australian Bank account.  I do not have to pay US tax on the profit gained from the trading activity using my US brokerage account.  At the end of the year, my broker sends me the details of my profit and loss.  If I don't declare this to the ATO, does this mean the profit I made from overseas trading is tax free!  I’m not trying to invade tax but it seems appropriate not to declare as the trading activities was conducted in the US not Australia. 

One other question: Does profiting from Futures contracts counts towards CGT?  

Could anyone that has been trading overseas for a living, please come forward and clarify this?  Cheers.


----------



## Stinger

An Australian tax resident must pay tax on all Australian and foreign source income so yes you do have to pay tax on the US capital gains.


----------



## fourth

What if you never move the earnings back in to Australia?


----------



## Mr J

I was under the impression that you had to pay US tax, and then write it off when you declare the income to the ATO? I'd be very surprised if there is no US tax to pay.


----------



## Abcguy

fourth said:


> What if you never move the earnings back in to Australia?




That doesn't matter. If you are considered an Australian resident under any of the 4 tests then any income received by you or any of your overseas accounts gets taxed in Australia. If you don't declare the income then it is illegal. However, any foreign tax, known as foreign tax credits (FTC) already paid on that income can be used to offset against your tax payable like as if they are franking credits.


----------



## CanOz

Hi there folks, long time no see!

I'm wondering what it takes to trade from Thailand as a non resident for tax for everywhere?

I've been planning on moving to Thailand for a year or two now and i will make this a reality within the next two years. Still, I'm having trouble determining if i need to pay tax somewhere or not. It seems very few have dealt with expats that have never returned home or taken up residence for tax purposes somewhere else.

My plan is to be trading in Thailand in 18 months, tax free.

Does anyone have any experience with this?

Cheers,


CanOz


----------



## prawn_86

Sorry to dig up an old thread but i was wondering what those of you who trade o/s and use IB and the like do with regards to tax?

I am finally getting round to opening an IB account and want to make sure everything is all good from a tax perspective. As soon as i have a realised capital gain i assume that goes on my income for the yr, converted back to AUD at an average rate.

Can anyone recommend an accountant experienced in this area? I am in need of a new one anyway as mine never keeps his deadlines.

Thanks


----------



## white_goodman

when opening US account you have to sign a W8BEN form


----------



## McLovin

white_goodman said:


> when opening US account you have to sign a W8BEN form




Do you need to request a TIN from the IRS as well?


----------



## white_goodman

McLovin said:


> Do you need to request a TIN from the IRS as well?




i guess you could if you had one, but there is a part on the form for a foreign tax number so our TFN


----------



## McLovin

white_goodman said:


> i guess you could if you had one, but there is a part on the form for a foreign tax number so our TFN




Looks like you don't, if you're just trading...

I wouldn't be giving them my TFN.



> Do I Need One?
> A TIN must be furnished on returns, statements, and other tax related documents. For example a number must be furnished:
> When filing your tax returns - A change in IRC section 6109 regulations in 1996 mandates the use of a TIN on tax returns.
> When claiming treaty benefits - There was a change in the IRC section 1441 regulations in 2001 which mandates the use of a TIN in order to claim tax treaty benefits. *A TIN must be on a withholding certificate if the beneficial owner is claiming any of the following:
> 
> Tax treaty benefits (other than for income from marketable securities)
> *
> Exemption for effectively connected income
> 
> Exemption for certain annuities




http://www.irs.gov/Individuals/International-Taxpayers/Taxpayer-Identification-Numbers-(TIN)


----------



## white_goodman

McLovin said:


> Looks like you don't, if you're just trading...
> 
> I wouldn't be giving them my TFN.
> 
> 
> 
> http://www.irs.gov/Individuals/International-Taxpayers/Taxpayer-Identification-Numbers-(TIN)




I was under the impression they do withholding tax of 30%

lemme google

EDIT: capital gains = 0% income = 30% or foreign treaty

would scalping futs be capital gains or income?


----------



## McLovin

white_goodman said:


> I was under the impression they do withholding tax of 30%
> 
> lemme google
> 
> EDIT: capital gains = 0% income = 30% or foreign treaty
> 
> would scalping futs be capital gains or income?




Income. 

As I understand, the withholding tax withheld is 15% for Australian tax residents and the amount paid in the US can be offset in Australia as a deduction but not a refund.


----------



## blackjack

CanOz said:


> Hi there folks, long time no see!
> 
> I'm wondering what it takes to trade from Thailand as a non resident for tax for everywhere?
> 
> I've been planning on moving to Thailand for a year or two now and i will make this a reality within the next two years. Still, I'm having trouble determining if i need to pay tax somewhere or not. It seems very few have dealt with expats that have never returned home or taken up residence for tax purposes somewhere else.
> 
> My plan is to be trading in Thailand in 18 months, tax free.
> 
> Does anyone have any experience with this?
> 
> Cheers,
> 
> 
> CanOz




Thailand funds - 1 paid 80% last year
no tax
there is tax on dividends paid on funds at 10%
still good


----------



## bellenuit

prawn_86 said:


> I am finally getting round to opening an IB account and want to make sure everything is all good from a tax perspective. As soon as i have a realised capital gain i assume that goes on my income for the yr, converted back to AUD at an average rate.




You don't use an average rate. You must use the exact rate for each element that is part of the capital gain calculation.

So if your cost base is just the purchase price and brokerage, you convert that to Australian dollars at the exchange rate for the purchase date. You convert the net proceeds to Australian dollars at the exchange rate applicable to the sell date. The capital gain or loss is the difference in these two Australian dollar amounts. Note that if there is a big difference in the exchange rates between these two days, you could actually end up with a capital gain in Australian dollars when it is a loss in US dollars or vice versa. That doesn't matter. It is the gain or loss in Australian dollars calculated as above that you use. Like Australian shares, US shares held for longer than 12 months are entitled to the 50% discount on the capital gain.

The ATO website has a list of daily exchange rates for 30 or so countries, including the US, for each of the last several years. It is kept in tables by month and is made available a few days after month end.


----------



## Tano

So i have opened up a US account with optionsExpress and signed a W8BEN form. I am charged at 15% tax on gains by the IRS which can be used as franking credit with my australian tax.  So if i am due to pay 30% to the ATO for this account then i only need to pay (30% ATO - 15% IRS ) = 15% to the ATO.

But if im a low income earner and only need to pay 10% tax then (10% ATO - 15% IRS ) = -5% to the ATO. Does this mean i loose 5% since the IRS is not going to give me a refund?


----------



## masoud919

Tano said:


> So i have opened up a US account with optionsExpress and signed a W8BEN form. I am charged at 15% tax on gains by the IRS which can be used as franking credit with my australian tax.  So if i am due to pay 30% to the ATO for this account then i only need to pay (30% ATO - 15% IRS ) = 15% to the ATO.
> 
> But if im a low income earner and only need to pay 10% tax then (10% ATO - 15% IRS ) = -5% to the ATO. Does this mean i loose 5% since the IRS is not going to give me a refund?



I have the same question. If I have low income, would I lose tax to IRS??


----------

