# How do I work out profit?



## silent (4 June 2009)

Hope if I post on right this section...

I just finished share game under ASX sponsored by Westpac

I started with $50,000 last Feb and yesterday finished with $61,130.
result profit was $11,130 ($6,049 divendend included)
but already spent brokage fee whoping $6,719 ($30 a trade)

I know this is not good figure anyway I can learn some mistake or right from share games...

So let pretend I go to accounat for tax on CGT and find how much left on my hands? 

Thanks
Silent


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## beamstas (4 June 2009)

silent said:


> Hope if I post on right this section...
> 
> I just finished share game under ASX sponsored by Westpac
> 
> ...




Brokerage is included in CGT, you started with $50,000 and finished with $61,130. You made a Capital Gain of $11,130


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## prawn_86 (4 June 2009)

beamstas said:


> You made a Capital Gain of $11,130




So if you were trading under your name you would be taxed at your marginal rate for that amount if you held for less than 1 yr or taxed at your marginal rate on half of that amount if you had held for over a year. I think...

(Accountants please correct me if im wrong)


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## beamstas (4 June 2009)

prawn_86 said:


> So if you were trading under your name you would be taxed at your marginal rate for that amount if you held for less than 1 yr or taxed at your marginal rate on half of that amount if you had held for over a year. I think...
> 
> (Accountants please correct me if im wrong)




That is correct
Unless you are a trader.
Im not going to go into the definition of a trader because i don't know -- the tax office doesn't even know


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## silent (4 June 2009)

prawn_86 said:


> (Accountants please correct me if im wrong)



Yeah this is correct sorry my spelling is terrible


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## silent (4 June 2009)

beamstas said:


> That is correct
> Unless you are a trader.
> Im not going to go into the definition of a trader because i don't know -- the tax office doesn't even know



Umm... If trading under my name just for personal fund and ATO would hunt me down because of Tax File number I guess...
Thats why I just wanted know how much profit left, I had hope if money's worth...


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## beamstas (4 June 2009)

silent said:


> Umm... If trading under my name just for personal fund and ATO would hunt me down because of Tax File number I guess...
> Thats why I just wanted know how much profit left, I had hope if money's worth...




I wasn't saying don't put it in if you are a trader
Maybe i should be more clear.


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## nathanblack (6 June 2009)

silent said:


> Hope if I post on right this section...
> 
> I just finished share game under ASX sponsored by Westpac
> 
> ...




its not so black and white. your PROFIT was $11,130(this takes into account your brokerage), however its not all capital gain. Some of that ($6,049) was dividend and may have franking credits attached. 

assuming dividend was unfranked, it will just be treated as income and added to your other taxable income. you will pay your marginal rate on those dividends.

the other profit was from capital gain. you own share for less than 12months, so the entire amount is also added to your taxable income for the year. if you own for more than 12months you are entitled to 50% discount on tax(ie you only add 50% of your profit to your taxable income)


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## Mr J (6 June 2009)

> if you own for more than 12months you are entitled to 50% discount on tax(ie you only add 50% of your profit to your taxable income




Too bad I can't invest in Mr J's fund for 12+ months and get the same benefit .


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## jono1887 (6 June 2009)

I spoke to my parents accountant and apparently you can claim that your investments/trades in the stock market has 'gambles' and there would be no tax implications on your profits (or losses). Does anyone have anymore information about this??


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## prawn_86 (6 June 2009)

jono1887 said:


> I spoke to my parents accountant and apparently you can claim that your investments/trades in the stock market has 'gambles' and there would be no tax implications on your profits (or losses). Does anyone have anymore information about this??




CFD's are classed as gambling income through the tax office, but shares are not as far as im aware due to the fact that they are an actual asset rather than just a derivative.


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## jono1887 (6 June 2009)

prawn_86 said:


> CFD's are classed as gambling income through the tax office, but shares are not as far as im aware due to the fact that they are an actual asset rather than just a derivative.




so if you trade cfd's you dont pay taxes on profits??


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## prawn_86 (6 June 2009)

jono1887 said:


> so if you trade cfd's you dont pay taxes on profits??




As far as i'm aware thats correct


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## Krusty the Klown (6 June 2009)

silent said:


> Hope if I post on right this section...
> 
> I just finished share game under ASX sponsored by Westpac
> 
> ...




Your CGT result would be as follows:

As $6,179 of your profits was dividend, that leaves $5,081 of capital gain. Your brokerage of $6,719 is added to your $50K cost base.

So proceeds from sale = $55,081
Cost base = $56,719
Result = -$1,638

You made a capital loss of $1,638. You cannot claim this as a loss against other income in this tax year, but you can deduct it from capital gains for tax purposes in future years.



jono1887 said:


> so if you trade cfd's you dont pay taxes on profits??




CFD's are treated the same as other financial derivative instruments. It is up to your interpretation of tax law however. If you did one CFD trade in the year, you may be able to treat it as a gambling win. 

If you traded consecutively, in a regular manner like most share traders, it would be deemed assessable income.


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## Kryzz (6 June 2009)

jono1887 said:


> so if you trade cfd's you dont pay taxes on profits??




Good case to reference here:

Ruling

11. A gain from a financial contract for differences will be assessable income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) where the transaction is entered into as an ordinary incident of carrying on a business, or where the profit was obtained in a business operation or commercial transaction for the purpose of profit making. 

http://law.ato.gov.au/atolaw/view.htm?docid=TXR/TR200515/NAT/ATO/00001

Shaun.


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## Lone Wolf (6 June 2009)

Check the PDS for your broker, it'll probably say something in there about tax on CFD's. Ultimately you should check with a tax agent.

I don't know if I'm allowed to copy and paste part of a PDS on here so I won't. But the Go Markets PDS, in reference to an Australian resident who does not carry on a business and enters into a CFD with the intention of making a profit, states that any profit or loss you make should be included in your assessable income or allowed as a deduction.

It would be nice if you could have tax free gains from CFD's but from my understanding that's not the case here in Australia. There is still the blurred line regarding whether are you trading or gambling though. Most people who think they are trading with CFD's are probably doing something closer to gambling. But if they thought they were trading and intended to make a profit, the ATO probably wants their share.


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## Krusty the Klown (6 June 2009)

I believe the idea that gains from CFD trading can be treated as gambling wins comes from the UK when CFD's first started there around 10 years ago, when you could claim them as such.

I don't know if this is still the case though.


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## Mr J (6 June 2009)

Lone Wolf said:


> It would be nice if you could have tax free gains from CFD's but from my understanding that's not the case here in Australia. There is still the blurred line regarding whether are you trading or gambling though. Most people who think they are trading with CFD's are probably doing something closer to gambling. But if they thought they were trading and intended to make a profit, the ATO probably wants their share.




You would have to prove you're not in the business of trading to profit, which I imagine is impossible, considering that you're trading a financial instrument. Trading and gambling are no different, but they are of course treated very differently by most, including the courts.


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## silent (7 June 2009)

prawn_86 said:


> CFD's are classed as gambling income through the tax office, but shares are not as far as im aware due to the fact that they are an actual asset rather than just a derivative.




Please ignore my pardon and what's stand for CFD?
I tried search and doesn't help me...


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## silent (7 June 2009)

Krusty the Klown said:


> Your CGT result would be as follows:
> 
> As $6,179 of your profits was dividend, that leaves $5,081 of capital gain. Your brokerage of $6,719 is added to your $50K cost base.
> 
> ...




Thank for relvant on CGT result...

I guess I need know more facts before I throw real sash in the tradings.


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## CanOz (7 June 2009)

silent said:


> Please ignore my pardon and what's stand for CFD?
> I tried search and doesn't help me...




CFD = Contract for Difference - Basically a derivitive product that allows you to buy and sell a contract for the difference in the prices of stocks. In simple terms they are traded just like stocks but with leverage.

Check this out ... CFDs

CanOz


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## KurwaJegoMac (7 June 2009)

silent said:


> Please ignore my pardon and what's stand for CFD?
> I tried search and doesn't help me...




CFD stands for Contract for Difference. It is an agreement between a buyer and a seller to exchange the difference in value of a particular instrument between when the contract is open and when it is closed.

If you wanted to learn more, the ASX website is a great place to start: 

http://www.asx.com.au/products/cfds/education/online_courses.htm

*EDIT: Beaten to it by CanOz!


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## silent (7 June 2009)

Thanks for great helps...


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