# Which accountant do you vouch for?



## RobinHood (21 May 2009)

With the end of financial year coming up I'm beginning to look for an accountant to do my returns. I'm a student with gains from various sources (mainly CFD's, futures) apart from work this year, but also with losses (trading futures) vastly exceeding those gains. My fear is having to pay tax on gains which no longer exist. Should I be going to some basic local accountant?, as an expensive accountant specializing in trading would be totally unjustified in my case.

Where do the rest of you go? any recommendations on where to look?


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## Trembling Hand (21 May 2009)

If I was in your situation I would do it myself. Always good to know how that side of your business works and no better way than to do it yourself.

From my experience the run of the mill accountant has a brain meltdown when you hand them a P & L from trading. For some bizarre reason they never want to apply normal biz and tax rules to them  And for good ones car, who know what they are doing you will not be able to afford them :

And as a sole trader with a first up year loss you will not be paying tax.

of course DYOR


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## rub92me (21 May 2009)

Don't think you need an accountant for that. Just look up the ATO site for the rules. It is only a gain/loss for a trade from a tax perspective when you close a position. Your broker(s) should be able to give you the list of all closed trades in the tax year. Just plonk them all in a spreadsheet. If your net P&L is negative from all these trades you won't be paying associated capital gains tax.


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## Kez180 (22 May 2009)

Lol some of you guys must be going to H&R Block or the equivalent...

I work at a small accounting firm (Less than 20 Staff) and many of our clients trade volumes of shares...

We charge around $160/hour for individual tax returns... depending how many trades you have I can't imagine it taking more than 3 hours to do the whole return... 

I did the CGT worksheet on a stock broker with 3 different HINs and 5 pages of trading statements on each... That took me 3 hours....

Odds are that the trades will be capital in nature and not revenue and as such you will not be able to offset it against your normal income... this will depend on your individual circumstance...

Any decent accountant will be able to look after you... 

~Kieran


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## Taltan (22 May 2009)

If your financially/computer literate you should probably do it yourself. There won't be any tax on the trading as you have more losses than gains. 

If you do go to an accountant, in your case the tax laws will be the same whether they're big or small so definately don't pick an expensive one (of course your welcome to PM me and I'll do it for you). As Kez180 said any decent accountant will be able to look after you


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## Trembling Hand (22 May 2009)

Kez180 said:


> Lol some of you guys must be going to H&R Block or the equivalent...
> 
> We charge around $160/hour for individual tax returns... depending how many trades you have I can't imagine it taking more than 3 hours to do the whole return...
> 
> ...




This is exactly my point of why accountants lose their brain when it comes to traders. Their default position is CGT. 

If I had a coffee shop would you ask for documentation and P&L on every latte' I sold?


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## SoBadAtTrading (22 May 2009)

Interactive Broker's statement does not take into account P & L for forex trades. It does a good job with stocks and futures. So how does one calculate p & l for fx trades then as they are counted as cash transactions.


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## Bushman (22 May 2009)

Trembling Hand said:


> This is exactly my point of why accountants lose their brain when it comes to traders. Their default position is CGT.
> 
> If I had a coffee shop would you ask for documentation and P&L on every latte' I sold?




Not surprising that. The ATO have put out a memo that they will be cracking down on 'traders' taking a tax write-off on trading losses in the bear market. 

Accountants as a rule do not want to mess with the ATO and the ATO is revenue hungry at the moment. 

See page 3 of today's AFR.


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## cutz (22 May 2009)

So how do you guys present you years trades to the accountant, as one total profit amount or as a spreadsheet with all the individual trades?

Reason I ask is last financial year my accountant preferred to enter all the individual trades from my spreadsheets onto the system, I would have preferred to present a total for the year ( short term trades only).

Can't see what difference it makes, still pay the same tax on both methods.

Any thoughts ?


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## awg (22 May 2009)

cutz said:


> So how do you guys present you years trades to the accountant, as one total profit amount or as a spreadsheet with all the individual trades?
> 
> Reason I ask is last financial year my accountant preferred to enter all the individual trades from my spreadsheets onto the system, I would have preferred to present a total for the year ( short term trades only).
> 
> ...




I have a thought.

The longer method justifies charging a lot more.

The accountants seem to insist on checking every transaction

It is probably due to their Indemnity requirements IMO

There are several accountants on ASF, so they may be able to say.

but if u do your own return.

the bottom line is all that counts.

if u get audited, just make sure you have all the transactions notes and spreadsheet entries

then just give it to them and say.."check this"


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## Trembling Hand (22 May 2009)

awg said:


> I have a thought.
> 
> The longer method justifies charging a lot more.
> 
> ...




Yes I would like to hear why as well. Its absolute nonsense.

If you are carrying on a business, any other business, they do not ask to check every transaction.

I guess its cuz accountants have very very tiny brains : even smaller than a traders


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## cutz (22 May 2009)

awg said:


> if u get audited, just make sure you have all the transactions notes and spreadsheet entries
> 
> then just give it to them and say.."check this"




Yeah, i like it.


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## awg (22 May 2009)

My affairs require an accountant.

He is worth what I pay him

I start with a file about 6 inches thick.

work that down to a 1 inch file 

the accountant gets a 1cm file

takes me about 20hrs.

(fortunately my trading SMSF is FULLY AUTOMATED via electronic reconcilliation and costs $600 flat, even if I do 1000 trades...that is totally separate tho)

I keep a fat file of all my buy/sell/ and chess notes in chronological order.

I know for a fact that you used to be able to make an apt at the ATO, rock up, and they must help you complete yr return.

My personal accountant is very cautious about being sued, due to mistakes.

The trading/investing is gray..I would get a ruling, if dubious, which it is if you have a paid job as well, depending on other matters to.

If you know what classification you fall under, and can work it all out yourself, that is the best way, especially if you are a trader, too easy


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## Gillie (22 May 2009)

Think i'll just ignore "TremblingHands" comments, I'm of both worlds... LOL

Myself being an accountant/broker, you quite often see that clients don't keep very good records. We always have clients' accountants ringing us for this report or that report. 

IMO i believe if you can't keep good records then why are you investing and why have you got all this money?How have you kept track of it?

Good work AWG, like your style....


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## awg (22 May 2009)

Gillie said:


> Think i'll just ignore "TremblingHands" comments, I'm of both worlds... LOL
> 
> Myself being an accountant/broker, you quite often see that clients don't keep very good records. We always have clients' accountants ringing us for this report or that report.
> 
> ...





Hi Gillie,

You have the cloak of anon here brother.

I think we all agree, that immaculate records need to be retained.

Would you be so kind as to offer an opinion on whether Indemnity is the primary reason most Accountants insist on individual reconciliation?

Seeing that you are here and all


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## voyz (22 May 2009)

may be a silly question but how much tax do u generally pay on your trading income? if i make 70k a year on my day job will the money i made in the market say it 15k put me in a higher tax braket or anything? how can u be eligible to classify yourself as a trader and make deductions for a trading business?


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## Gillie (22 May 2009)

Sure not a prob....

I wouldn't say that it is not the primary reason, but there is strong reasoning behind it to be in the top 3. Firstly, the client minimises their expenses if the accounts are ordered and straight forward, by saying to the client this is going to minimise their expense is also a good way to retain future business as well - nothing worse than turning up to your accountant with a shoe box full of receipts - had that done.... Secondly, Prudence & Materiality - easy to find erroneous items when ordered individually. Thirdly, I would put Indemnity; nothing worse than receiving a stage 3 Audit request from the ATO. (Stage 3 Audit is when you are requested to attend an interview with the ATO in person and present all your documentation - had this with a client once).

In the last few years there have been several high profile cases where people have had tax advice from accountants relating to equities and derivatives, and the advice has erred in some way or another. And, due to the large premiums involved for the accountants Indemnity Insurance you can now see why they are a bit cautious - and the settlements of course - I know if we had the choice we would always settle out of court.

One that i was involved with 3 years ago, with another company, was to do with a super fund (can't go into too much detail) they were trading derivatives and made heavy losses through doing it. The trustees subsequently came back and said that the account was mismanaged and we erred on advice regarding the derivatives. But, It was found by the courts that the company was only in 10% error and the client was 90% liable, as we followed the practise of the investment portfolio, trust deed and client directions. The only thing the company was found to be liable for was the size of the transactions - even though these were confirmed with the client(s).


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## Bushman (22 May 2009)

Gillie said:


> :
> 
> Myself being an accountant/broker,...




An accountant, a broker and you played test cricket for Australia?


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## cutz (22 May 2009)

Hi Gillie,

So as an accountant and assuming a trader keeps immaculate records, do you you want to see a spreadsheet containing hundreds of opened and closed trades ( thousands in the case of some guys here) or do you prefer just to have a total for the financial year for entry into the ATO system ?


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## awg (22 May 2009)

Trembling Hand said:


> Yes I would like to hear why as well. Its absolute nonsense.
> 
> If you are carrying on a business, any other business, they do not ask to check every transaction.
> 
> I guess its cuz accountants have very very tiny brains : even smaller than a traders




Surely yrs is not done transaction 1 at a time TH?





Gillie said:


> Sure not a prob....
> 
> I wouldn't say that it is not the primary reason, but there is strong reasoning behind it to be in the top 3. Firstly, the client minimises their expenses if the accounts are ordered and straight forward, by saying to the client this is going to minimise their expense is also a good way to retain future business as well - nothing worse than turning up to your accountant with a shoe box full of receipts - had that done.... Secondly, Prudence & Materiality - easy to find erroneous items when ordered individually. Thirdly, I would put Indemnity; nothing worse than receiving a stage 3 Audit request from the ATO. (Stage 3 Audit is when you are requested to attend an interview with the ATO in person and present all your documentation - had this with a client once).
> 
> ...





My AC was telling me of a firm that got sued, caused they incorrectly calcd GST, meaning the client didnt sell other stuff to balance out, and had to pay $350k tax. 

He sued, but they did not settle, he had to go all the way, and won in court.

Derivatives in SMSF is a pot of poison in some ways, if too many blow up, the ATO will probably do something


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## Cartman (22 May 2009)

just bouncing in here in between the workings of why the eur/usd and usd/chf are slightly out of whack temporarily 

tax men (accountants) need share stuff to be fairly specific because the Gov (big brother) knows ALL about it ---- if u make a falsey, the "suits" will eventually catch up with u  (unless you have "no fixed address"  --- ive never been caught cause i live in a cave, but that is another story !!!

if u keep good records, as TH says, nothing wrong with doing yr own thing ---- 

i personally use an accountant cause i cant read or write !!!  

all u need to give them is totals (assuming u have added up correctly) ---  u bought X u sold Y u made *how much*  !!!!!! 

bottom line is the accountant will make u sign the dreaded "indemnity" to alleviate themselves of ALL responsibility in case the cr@p hits the fan 

*YOU* are responsible for your own book keeping ---- *totals* are all u need to give to the accountant  ----- 

ps  i do all the hard work every tax year and he still charges me a squillion bucks   ---- forget being a trader; become an accountant  !!! lol


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## Trembling Hand (22 May 2009)

If you accountant tells you he/she needs to "know" every transaction for what ever reason RUN!!

It is nonsense. Just a way to charge you for more than what it takes.

Will someone who is defending the accountant getting every transaction tell me why they don't want to do this for every business?? 

because they would be laugh at then lose all the clients. :



awg said:


> Surely yrs is not done transaction 1 at a time TH?



 Would be funny wouldn't it. I wouldn't need a shoe box to pass them the records - i would need a shoe factory


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## Gillie (25 May 2009)

Trembling Hand said:


> If you accountant tells you he/she needs to "know" every transaction for what ever reason RUN!!
> 
> It is nonsense. Just a way to charge you for more than what it takes.




That's funny....

We don't want to charge more for the services we offer, which is why I stated:

"Firstly, the client minimises their expenses if the accounts are ordered and straight forward, by saying to the client this is going to minimise their expense is also a good way to retain future business as well - nothing worse than turning up to your accountant with a shoe box full of receipts - had that done...."

We don't need to know every transaction (but it could be a good idea), but, we need to be able to reconcile the items back to the figures you have given us and the ATO will also want to reconcile it if you are ever audited. Also, some times on trades you need to work out an adjusted cost base for the securities as well.

A spreadsheet containing hundreds/thousands of trades isn't all that difficult to manipulate to give you the answers you need, as there are formulas/functions/macros that you can use to accomplish this. I prefer to use macros, because as long as the data is in the right fields all you have to do is click a button. If you can do this for your clients, then a click of a button could cost $100 instead of $1,000. Plus, this frees me up to do other things to bring in revenue.


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## Kez180 (25 May 2009)

Trembling Hand said:


> This is exactly my point of why accountants lose their brain when it comes to traders. Their default position is CGT.
> 
> If I had a coffee shop would you ask for documentation and P&L on every latte' I sold?




Depending on the nature of your trades any gains may be either capital or revenue in nature... ATO has specific rules on that which you are welcome to google....

Lol and if you can't even give your accountant a shoe box full of trade confirmations we can always search your HIN....


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## Trembling Hand (25 May 2009)

You guys are full of it!! but I guess if your clients cannot figure out weather they are a trader or investor and subject to CGT etc then I guess thats why you rip them off with the rubbish you have stated!! :


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## Kez180 (25 May 2009)

Trembling Hand said:


> You guys are full of it!! but I guess if your clients cannot figure out weather they are a trader or investor and subject to CGT etc then I guess thats why you rip them off with the rubbish you have stated!! :




It isn't about ripping clients off... if the client wants to hand us a figure stating that they made a total of $500 capital loss for x year then we will use their figures... and they might get charged $100-$200 for the tax return...

if they don't know whether it would be more beneficial to index the cost bases, take the 12 month discount or what elements to add to the cost base, then they are better off supplying trade information and letting us figure it out... 

oh and you are a turkey...


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## Gillie (26 May 2009)

I always thought turkey tasted a bit fowl....


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## Kez180 (26 May 2009)

Gillie said:


> I always thought turkey tasted a bit fowl....




I bet you are a father....


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## Gillie (27 May 2009)

What gave that away?


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## awg (27 May 2009)

Kez180 said:


> I bet you are a father....






Gillie said:


> What gave that away?




heres one for both of you then.

can be used in the office as well

Q) (kid doing homework/ workmate)....  have you seen a ruler?

A) (father)....yes you are talking to one

Can also be used with variations when asked about "rubber"


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