# Trading FX with Interactive Brokers with SMSF



## dclayw (10 January 2013)

Is anyone doing this. I've had a personal a/c with IB for around 10 years and now I have an account with them in the name of my SMSF. These days I'm trading mainly fx and occasional futures, no stocks or anything else, (not with IB anyway). I have drawn up a Risk Management Statement for the SMSF to outline risks etc in this type of trading. At this point I've done very little trading with IB in the SMSF.

I'll likely have several hundred fx trades/year with IB in the SMSF. How do accountants/auditors look at this, I mean they normally charge per transaction. But with fx trading with IB you just get a cash report at the end of the year that shows commissions/deposits/withdrawls/fees/transfers/interest/Net Trade (Sales)/Net Trade (Purchases). It's a very concise report with all the info in one place, there is no need to look at individual transactions as such. (Note: I'm assuming trading just fx here, no shares or anything so there will be no CGT events and no dividends).

I'm thinking of moving away from my current SMSF auditor, mainly because their fees are going up 30-40% each year. Can anyone recommend a friendly cost effective auditor. My SMSF is pretty simple, 2 members, an operating account, 2 other bank accounts, an NAB trading account for (share investing) and now the IB trading account, that's it.


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## Trembling Hand (10 January 2013)

Several hundred trades a year would be considered "carrying on a business of financial instruments" (ATOs definition of a trader). As you are not aloud to "carry on a business " within a SMSF are you sure you can do this?


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## dclayw (10 January 2013)

It's always been a grey area and as far as I know never tested. Whilst it would appear that trading fx/futures and the like is permissable I guess the volume of transactions might be a bit of a concern.

My IB accounts are REG T Margin. With IBs real time margining and auto liquidation if minimum maintenance margin is not met, I'm not sure if that constitutes a charge on the asset or not.

ESuperFund have fx and futures etc available with IB. What happens there, they limit the number of transactions?, or the intent is only to allow hedging? It's a very grey area and as the ATO states, each case is looked at individually.

The SMSFReview talks about fx trading on their web site. That's not to say it's allowed under the law ofcourse. But it is something that's out there and I'm sure there are plenty of SMSFs doing it in one form or another.

I think the real issue is volume, so maybe 50 trades a year is alright, whereas 200 isn't.

I'll run it past my current auditor and see what they reckon (having a few issues with them atm).


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## Trembling Hand (10 January 2013)

Would be interested in the outcome. I personally am only guessing from a logical standpoint, clearly not the way to go when the ATO and auditors are involved......


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## kid hustlr (10 January 2013)

Definitely check with the ATO on this.

I used to help out with a few SMSF's and whilst some of the more 'active players' never had any issues you don't want any compliance problems in your super fund, best check first.


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## rnr (10 January 2013)

Trembling Hand said:


> Several hundred trades a year would be considered "carrying on a business of financial instruments" (ATOs definition of a trader). As you are not aloud to "carry on a business " within a SMSF are you sure you can do this?




http://www.ato.gov.au/content/00241937.htm

Well worth a read but pay particular attention to ensure your Deed covers the relevant areas of concern.

The usual disclaimers apply.


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## McLovin (10 January 2013)

rnr said:


> http://www.ato.gov.au/content/00241937.htm
> 
> Well worth a read but pay particular attention to ensure your Deed covers the relevant areas of concern.
> 
> The usual disclaimers apply.




Interesting. I did not know that. I thought there was a blanket ban on carrying on a business, but the only real hurdle appears to be the sole purpose test.


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## Trembling Hand (10 January 2013)

McLovin said:


> If the very active portion was a small (relatively and absolutely) amount of the SMSF then it may be considered part of an overall wider diversification policy. If trading FX/futures/sea shells was using substanially all the funds in the SMSF then it would appear to be being used to run a business through a tax shield.




In that case it would almost certainly be the case of running a business. 200 trades a year using a standard futs contract could be easily 200 X $150,000 = $25 mill!!!!

Just cannot see how you could go arguing that that is not "trading".


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## McLovin (10 January 2013)

Trembling Hand said:


> In that case it would almost certainly be the case of running a business. 200 trades a year using a standard futs contract could be easily 200 X $150,000 = $25 mill!!!!
> 
> Just cannot see how you could go arguing that that is not "trading".




See the link *rnr* provided. I deleted that post you quoted because it's wrong. 

You can carry on a business, you just can't run it for any other reason than to provide for the retirement of your members. So you can't use it as a tax shield on corporate profits and pay yourself a big wage.

There's some pretty well to do SMSF's, iirc, 10-15 of them have assets >$100m.


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## dclayw (10 January 2013)

Thanks for that link rnr, I had not come across that before. Looks promising.

This may also be of interest. It's a general discussion on the info contained in rnr's link:

http://www.moneymanagement.com.au/smsf-weekly/smsf-strategies/mlc-peter-hogan-ato-business-like-activity-smsf


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## dclayw (25 January 2013)

Back to my original question at the start of this thread. I've just sacked my auditor, they seem to be of the view they can charge the earth for being incompetent. This auditing of SMSFs needs a real shakeup IMO. It's mandatory but there are no controls over it, auditors and accountants charge what they want. This firm had been auditing my fund for 15 years by the way. It will never happen but my vote would be for self regulation with very severe penalties for doing anything that obviously circumvents the law. The government would never introduce anything like that though, they see the SMSF area as being an unwieldy beast so anything that can limit the number of them has to be a good thing. In a few years time don't be surprised to see the levy at around $1000, or even a % of fund assets with a cap.

Anyway, can anyone recommend me a friendly auditor. I just need an auditor, not an accountant. I've always done my own accounts (sort of automated through excel spreadsheets) but I'm probably going to subscribe to BGL Simple Fund once they release their Simple Fund 360 product later this year. So a friendly auditor that uses BGL perhaps. I'm in Brisbane but I guess it doesn't matter all that much where the auditor is.


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## jorgon (10 February 2013)

dclayw said:


> Anyway, can anyone recommend me a friendly auditor. I just need an auditor, not an accountant. I've always done my own accounts (sort of automated through excel spreadsheets) ..



Hi dclayw
Yes, I would recommend Maximize Accountants of Wishart in Queensland.  They are quite happy to accept print-outs of my Excel spreadsheets and charge extremely reasonable fees.  Also they have never let me down with any ATO deadlines.


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## TulipFX (12 February 2013)

We have a number of super funds invested in our MAM. While personally I can't offer any great insight, I know at least one is operated by an SMSF accountant himself.

Thank you to jorgon for the recommendation of the accountant above. It is good to know of accountants with experience in this area who do not charge like wounded bulls.


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## jorgon (12 February 2013)

TulipFX said:


> Thank you to jorgon for the recommendation of the accountant above. It is good to know of accountants with experience in this area who do not charge like wounded bulls.




Please note I only have experience of this firm acting as *auditors*.


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## dude4012 (29 September 2013)

IB and SMSF's are not that easy.. mainly due to IB only doing USA stuff..

See 
http://www.villagemall.com.au/content/WebPorfolio/services/bps.htm

Provides full Australian tax reporting, including SMSF..

In general you cannot use the IB report for any tax reporting, see reasons on list above..

Enjoy..


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