# Tax concessions for full time traders?



## Neutral (15 April 2011)

I did a search but couldn't find anything on this subject. Are there any tax concessions for full-time traders?

I would hate to think that all capital gains are taxed at 50% nominal rate if held for less than 12 months which most FX trades would account for.


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## skyQuake (15 April 2011)

Neutral said:


> I did a search but couldn't find anything on this subject. Are there any tax concessions for full-time traders?
> 
> I would hate to think that all capital gains are taxed at 50% nominal rate if held for less than 12 months which most FX trades would account for.




Nothing for traders, the 50% thing is for investments held over 12 months.


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## Gringotts Bank (15 April 2011)

Home office expenses, computer upgrades, software, data, etc. should be tax deductable.


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## TulipFX (15 April 2011)

My trading income is treated as a business revenue as I do it in a company name.


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## skc (15 April 2011)

Neutral said:


> I did a search but couldn't find anything on this subject. Are there any tax concessions for full-time traders?
> 
> I would hate to think that all capital gains are taxed at 50% nominal rate if held for less than 12 months which most FX trades would account for.




What are you on about? There is no 50% tax rate anymore.


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## Neutral (19 April 2011)

TulipFX said:


> My trading income is treated as a business revenue as I do it in a company name.




Yes that is what I was wondering. Can you set up an ABN as a full-time trader and pay less tax? ie. your profession being that of a full-time trader?


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## Neutral (19 April 2011)

skc said:


> What are you on about? There is no 50% tax rate anymore.




So what is the CGT rate now and is it still asset held for x length of time structured = tax ratio?


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## AlterEgo (19 April 2011)

Neutral said:


> So what is the CGT rate now and is it still asset held for x length of time structured = tax ratio?




If you're a 'trader' rather than an 'investor', your profits are regarded as income, not capital gains, so you pay income tax on it not CGT.


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## Neutral (19 April 2011)

AlterEgo said:


> If you're a 'trader' rather than an 'investor', your profits are regarded as income, not capital gains, so you pay income tax on it not CGT.




Ok that's good news 
How does one apply to the ATO to be registered as a full-time trader? 
Is ther a specific occupation name to register an ABN under?


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## skc (19 April 2011)

Neutral said:


> So what is the CGT rate now and is it still asset held for x length of time structured = tax ratio?




Your CGT rate is your marginal tax rate. The amount of capital gains can be halved, I.e. 50% discount, if you hold the investment over 12 months. 



AlterEgo said:


> If you're a 'trader' rather than an 'investor', your profits are regarded as income, not capital gains, so you pay income tax on it not CGT.




As a trader you can still have investments. But you must be able to demonstrate that you are investing and not trading. Well according to my tax accountant anyway.


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## Paulo30 (20 April 2011)

It's pretty hard to be an FX investor.. unless you bought a stack of currency and were prepared to sit on it long term, such as people who stockpile US Dollars at times like present. Investing vs trading is more applicable to the stock market or markets other than derivatives.


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## kimleow (28 May 2011)

why not say your FX trading is your hobby? you dont pay tax on your hobbies.... depends on the size of your account. If you only have  afew K then you'l be ok, but if you have a fair bit of money in there then you might come unstuck.


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## alwaysLearning (24 June 2011)

kimleow said:


> why not say your FX trading is your hobby? you dont pay tax on your hobbies.... depends on the size of your account. If you only have  afew K then you'l be ok, but if you have a fair bit of money in there then you might come unstuck.




what if you had a 10k account?


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## Superboot (26 June 2011)

Hi,

I understand some traders create a company, am I correct in thinking the benefits of this are -

1. allows the distribution of profits to its members - particularly if it is set up as a family trust you can allocate profits to low income earning members and therefore minimising tax.
2. caps the tax rate at 30c in the dollar
3. creates more options for claiming expenses - how creative can you be (e.g. car leasing?)
4. Others?

Question:
My goal is to try and build the equity of my portfolio over the next 8 years without withdrawing any of the profits. I am trying to work out the best way to do this without getting taxed more than I need to. Suggestions? 

Cheers


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## builder2818 (26 June 2011)

Superboot said:


> Hi,
> 
> I understand some traders create a company, am I correct in thinking the benefits of this are -
> 
> ...




If you are trading through a trust you would not be paying tax at the company rate of 30%. The trust would have it's own ABN and TFN and any profits would be distributed to the beneficiaries and they would pay tax at their MTR. A trust cannot distribute losses and will carry forward any losses occurring in a financial year. Also, it must pass ALL profits onto the beneficiaries. If using a company as a trustee, it would simply be best to set up a $2 company which does no trading or earn an income. 

If you decide to trade through a company directly, you would not need a trust but any profits would be locked in the company - I guess that's what you said your intentions are but I am sure that somewhere down the track if you were profitable you would want to start enjoying the fruits of your labour - but you would be screwed because of your account structure.


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