# Forex tax implications



## white_goodman (6 January 2009)

Just curious how forex tax is calculated? do we declare overseas accounts?? 

currently i have a Gomarkets account with the balance in AUD

i also have an IBFX account in USD balance...

how is tax calculated/done? (i have no knowledge only started forex this financial year)


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## Stormin_Norman (6 January 2009)

in my instance its treated as income (the company's income anyway).

all OS accounts need to be declared and i pay company tax on the profits.


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## white_goodman (6 January 2009)

Stormin_Norman said:


> in my instance its treated as income (the company's income anyway).
> 
> all OS accounts need to be declared and i pay company tax on the profits.




but with USD accounts say ive earned $40k in USD do i convert that by the exchange rate to aud when i do my tax or do i have to convert each winning/losing trade by the exchange rate when the trade was made.... which will be a pain if i make a few thousand trades


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## Trembling Hand (6 January 2009)

white_goodman said:


> but with USD accounts say ive earned $40k in USD do i convert that by the exchange rate to aud when i do my tax or do i have to convert each winning/losing trade by the exchange rate when the trade was made.... which will be a pain if i make a few thousand trades




Your P & L for tax purposes is all the money you have made/lost in AUD up to 12:00 AM on July 1st. That includes wins/losses from currency movements.

If your account is in USD for some reason confused you need to use that value for P & L at the close of the fin year.

( I think DYOR


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## white_goodman (6 January 2009)

Trembling Hand said:


> Your P & L for tax purposes is all the money you have made/lost in AUD up to 12:00 AM on July 1st. That includes wins/losses from currency movements.
> 
> If your account is in USD for some reason confused you need to use that value for P & L at the close of the fin year.
> 
> ( I think DYOR




ok so if i have $40k USD at the end of financial year i convert based on that.... its not that unusual there arent many forex brokers that i know that do account balance in AUD


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## Stormin_Norman (6 January 2009)

i used OandA + IG markets cause they do AUD.

its the exchange rate @ 30 june.


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## tayser (7 January 2009)

I was advised by the tax office that I needed to know the AUD value of the capital gain/loss *at the time of realising it* - i.e if you're denominated in USD or any other currency other than AUD, you need to know the AUD value of that currency at that time.

I've had other advice to the contrary (sort of) but to be on the safe side in accounts where I'm denominated in a currency other than AUD, I'm noting that cross rate at the time I close a trade (I only have AUD or USD accounts, so for the USD accounts I just note the BID of AUD/USD at the time of closing a trade).


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## white_goodman (7 January 2009)

tayser said:


> I was advised by the tax office that I needed to know the AUD value of the capital gain/loss *at the time of realising it* - i.e if you're denominated in USD or any other currency other than AUD, you need to know the AUD value of that currency at that time.
> 
> I've had other advice to the contrary (sort of) but to be on the safe side in accounts where I'm denominated in a currency other than AUD, I'm noting that cross rate at the time I close a trade (I only have AUD or USD accounts, so for the USD accounts I just note the BID of AUD/USD at the time of closing a trade).




thats gonna be a bitch, if im running an EA and make a few thousand trades a year


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## prawn_86 (7 January 2009)

white_goodman said:


> thats gonna be a bitch, if im running an EA and make a few thousand trades a year




I would assume it would be the same as what Tayser said.

I run a couple websites, and a lot of their costs are in USD, but obviously im taxed in AUD, so if i pay for hosting each month, i am paying the AUD amount, which can vary every month, so thats the figure the ATO want, not the rate at June 30.

Its easy for me though as i can just look back over my CC statements, however i agree for people trading heaps it will be very annoying. Perhaps you should look into an AUD account?


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## Trembling Hand (7 January 2009)

tayser said:


> I was advised by the tax office that I needed to know the AUD value of the capital gain/loss *at the time of realising it* - i.e if you're denominated in USD or any other currency other than AUD, you need to know the AUD value of that currency at that time.
> 
> I've had other advice to the contrary (sort of) but to be on the safe side in accounts where I'm denominated in a currency other than AUD, I'm noting that cross rate at the time I close a trade (I only have AUD or USD accounts, so for the USD accounts I just note the BID of AUD/USD at the time of closing a trade).






prawn_86 said:


> I would assume it would be the same as what Tayser said.
> 
> I run a couple websites, and a lot of their costs are in USD, but obviously im taxed in AUD, so if i pay for hosting each month, i am paying the AUD amount, which can vary every month, so thats the figure the ATO want, not the rate at June 30.





Guys if ya gonna take that from the ATO get it in writing because this is what is going to happen and you are going to run into trouble.

lets say you have a trading profit that after closing your trades its $50,000 USD profit (yeah I know but stick with me) and the exchange rate is 1:1 USD to AUD. you note in your tax return for a $50,000 profit AUD profit,

BUT after your trades are closed the AUD falls by 50% to the USD. You now have $100,000 AUD at June 30th. That's $50,000 unclaimed income that the ATO will want tax on. If you have cash in USD its still a *trade open* that's why its the rate at the end of the fin year. And it remains open which means Mark to Market comes into play.


OF COURSE I'm Not a Tax expert. *DYOR.* (pay someone who is)


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## tayser (7 January 2009)

Trembling Hand said:


> Guys if ya gonna take that from the ATO get it in writing because this is what is going to happen and you are going to run into trouble.
> 
> lets say you have a trading profit that after closing your trades its $50,000 USD profit (yeah I know but stick with me) and the exchange rate is 1:1 USD to AUD. you note in your tax return for a $50,000 profit AUD profit,
> 
> ...




I'm not a tax expert either and I did do my own research and that's what I came up with.  

Another scenario put forward to me was that you only need to know the AUD value of the money you bring back into the country which sounds more on the dodgey side of things (given the tax treaties between countries).

In the end however, the fact remains: being denominated in AUD is the simplest for tax purposes - your statements from your broker clearly show capital gains and losses and you just need to tally them and report them.


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## white_goodman (7 January 2009)

ive got a aud account with Gomarkets but i need to use nano lots for one of my strategies and only really ibfx offers this feature... oh well off to my accountant soon i guess to get the 411


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## pilbara (7 January 2009)

tayser said:


> I was advised by the tax office that I needed to know the AUD value of the capital gain/loss *at the time of realising it* - i.e if you're denominated in USD or any other currency other than AUD, you need to know the AUD value of that currency at that time.



The ATO publishes daily, monthly and annual rates, 

http://www.ato.gov.au/taxprofessionals/content.asp?doc=/content/22855.htm

and has the following guidance for which rate is appropriate:
http://www.ato.gov.au/taxprofessionals/content.asp?doc=/content/57624.htm


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## SoBadAtTrading (18 April 2009)

Hi guys,

What if I have a day job but been trading forex for side income (or losses!) since last year, are the gains or losses treated as capital gains/losses or income gains/losses?? I would think it's more of a income thing since i trade daily but then i don't own any business.

Thanks!


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## tayser (19 April 2009)

pilbara said:


> The ATO publishes daily, monthly and annual rates,
> 
> http://www.ato.gov.au/taxprofessionals/content.asp?doc=/content/22855.htm
> 
> ...




Yes but read this page: http://www.ato.gov.au/taxprofessionals/content.asp?doc=/content/34749.htm

It tells you when you can use average rates or when you need to know rates at the time of the event.

It's fuzzy, I'm still noting AUD/USD rates regardless.


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## >Apocalypto< (19 April 2009)

Trembling Hand said:


> Guys if ya gonna take that from the ATO get it in writing because this is what is going to happen and you are going to run into trouble.
> 
> lets say you have a trading profit that after closing your trades its $50,000 USD profit (yeah I know but stick with me) and the exchange rate is 1:1 USD to AUD. you note in your tax return for a $50,000 profit AUD profit,
> 
> ...




TH your on the money as a CPA told me the same thing.....

I don't know about other traders but I face income tax this year.

Cheers


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