Alright,
So i have decided to become a share trader, realizing that i always sell my shares/options before 12 months so i won't benefit from the 50% CGT.
What's the first step ? or is it as easy as keeping record of brokerage fees and claiming it when doing tax returns ?
Thanks!
Becoming a share trader is not an election. It is a question of fact. The following factors may be relevant in determining whether one is in the business of trading shares;
the nature of the activities, particularly whether they have the purpose of profit making
the repetition and regularity of the activities
organisation in a business-like manner, the keeping of books or records and the use of a system
the volume of the operations, and
the amount of capital employed.
For some reason, people seem to have this idea that if they qualify as a share trader, they will get an advantage by getting a deduction for brokerage.
If you are buying and selling your shares so often (say within the same year) then you are effectively getting a deduction for brokerage anyway because it is included in your cost base and reduces your capital gain.
Also, you dont need to be in the business of share trading to get a deduction for investment related expenses. Brokerage is different because it is an incidental cost in acquiring an asset and directly referrable to the acquisition. Other investment related expenses will still be deductible even if you are on capital account e.g. Investment newsletters.
Remember the general rule for deductions:
You can deduct from your assessable income any loss or outgoing
to the extent that:
(a) it is incurred in gaining or producing your assessable income;
or
(b) it is necessarily incurred in carrying on a *business for the
purpose of gaining or producing your assessable income.