Claiming commissions and daily interest against tax

[chesl73]

Hi,

I've searched the posts and seen general tax questions but couldn't find this particular answer so was hoping someone might be able to answer.

If I buy a CFD (long) and I get charged say $10 each way in commissions and I hold the CFD for say two weeks and I have to pay $20 in interest. This is a total expense for the trade of $40.

Can I claim this in my tax return as a investment expense?

Thanks

 

[Richard Dale]

Yes. However, exactly where you apportion in your return it depends upon whether you are designated as a share trader or an investor.

 

[jono1887]

Yes. However, exactly where you apportion in your return it depends upon whether you are designated as a share trader or an investor.

He's not trading equities though, aren't the rules slightly different for CFDs?

 

[Richard Dale]

This describes it in detail:
http://law.ato.gov.au/atolaw/view.htm?find="TR 2004/D17"&docid=DTR/TR2004D17/NAT/ATO/00001

 

[chesl73]

Great. Thanks Richard.
I assume I can also do this for normal shares as well if I'm considered a 'trader'? ie, if I just trade shares, this any different, I can still claim against my costs such as commisions?

 

[jono1887]

So essentially they get treated the same way as shares?

 

[Richard Dale]

Yes

 

[Krusty the Klown]

So essentially they get treated the same way as shares?

Any contract, such as a contract for difference, is considered an asset by the ATO.

You treat it the same way you do any other asset.

 

[Krusty the Klown]

Hi,

I've searched the posts and seen general tax questions but couldn't find this particular answer so was hoping someone might be able to answer.

If I buy a CFD (long) and I get charged say $10 each way in commissions and I hold the CFD for say two weeks and I have to pay $20 in interest. This is a total expense for the trade of $40.

Can I claim this in my tax return as a investment expense?

Thanks

Commissions should always be added to the cost base of the asset.

For an equity CFD you can claim the interest on a CFD the same as you treat margin loan interest, so even if you use the CGT provisions for profit and loss on the CFD, you can claim the interest against your earned income.

The justification for this is that IF the CFD pays dividends, then you can claim the interest expense against the dividend income.

This is for CFD's over equities only. You cannot do this if the CFD is over a currency or commodity or futures contract as they do not provide ordinary income - only capital gains.

For a non-equity CFD, add the interest to your cost base of the CGT asset along with the commissions.