# Trader or Investor Query - Accountant Issue



## Prospector (28 September 2006)

Hi People

My accountant has just mentioned that as I have a large amount of unrealised gains at the end of the last financial year he needs to account for that.

So I have presumed he has therefore classifed me as a Trader.  One of the entities I buy/sell shares in is a Pty Ltd, registered for GST and the share thing is just something I do rather than let unused money sit in the bank.  It is by no means 'core business activity' and in the last financial year made 47 trades, less than one a week.

So, should I dispute this classification?  Are there any benefits in being classified as such or being a Pty Ltd is there no choice?


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## lesm (28 September 2006)

Prospector said:
			
		

> So, should I dispute this classification?  Are there any benefits in being classified as such or being a Pty Ltd is there no choice?




Hi Prospector,

If it is not clear why he has classified you the way he has, you can ask him/her to explain the rationale behind the classificiation. The accountant should be able to make it clear whether there is a choice or not and the pros and cons from a tax perspective.

If you are not happy or convinced by the explanation you can request that it be raised with the ATO for a formal advice or decision. Afterall, the accountant works for you.

Alternatively, you can raise it with the ATO yourself.

Cheers.


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## Duckman#72 (30 September 2006)

Prospector said:
			
		

> Hi People
> 
> My accountant has just mentioned that as I have a large amount of unrealised gains at the end of the last financial year he needs to account for that.
> 
> ...




Hi Prospector

There are a couple of things you need to sort out with your accountant. I am not sure what you mean by "he needs to account for that".

Firstly - I am assuming that it is your company that you are talking about. If you are having a full set of financial statements prepared then he/she may be recording your shares at market value at year end. He/she might not be classifying you as a trader (but there is a fair chance that is what he's done).

Whether or not you are better off will depend upon the mix of gains v losses. The ATO look at a range of factors when determining whether a someone is an ivestor versus trader - including intention to make a profit, skills held by the taxpayer, frequency, investment, trading plans etc. Don't be concerned about the 47 trades - in my opinion that would be enough to argue that were a trader (if you want that classification). 

Duckman


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