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Custodian model vs. outright ownership - which is better from the tax perspective?

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erippi

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16 March 2013
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Hi,

I have an account at InteractiveBrokers and at Commsec in which I hold my positions in some ETFs traded at ASX.

InteractiveBrokers follows the custodian model (via BNP Parabis), while Commsec follows the outright ownership model (CHESS sponsored).

Which approach is more effective from the taxation perspective?
 
no difference in terms of tax treatment as you are the beneficial owner in both cases.

FWIW i have basically the same setup (long term holdings including ETFs in CHESS, short term options trading in IB) and find that it works quite well, though i won't let the IB account creep above 25% of total capital, as i'm a little paranoid about broker failure. YMMV.
 
erippi said:
Thanks. I've been with IB since 2013. No issues.
Click to expand...
I actually closed IB account last week due to its time difference? found that the prices are 2-5 mins lag to live price ,
And the last straw was when the IPO coinbase was listed.
When coinbase was listed it didn't actually show up on platform for 10mins
 
Dark1975 said:
I actually closed IB account last week due to its time difference? found that the prices are 2-5 mins lag to live price ,
And the last straw was when the IPO coinbase was listed.
When coinbase was listed it didn't actually show up on platform for 10mins
Click to expand...
as I am in the process of going live IB, has this been confirmed?
cause that is a get rich quick machine :)
check SP live has gone up, buy IB now at a lower price, then sell after lag cash profit, you so mean you can look in future if trading IB? :) How did you reach that conclusion?
 
A SMSF is a custodial model, 15% tax as long as it remains compliant.

Probably not what you wanted to hear.?
 
qldfrog said:
as I am in the process of going live IB, has this been confirmed?
cause that is a get rich quick machine :)
check SP live has gone up, buy IB now at a lower price, then sell after lag cash profit, you so mean you can look in future if trading IB? :) How did you reach that conclusion?
Click to expand...
How did I reach this conclusion, easy I watched the live trade chanel , and I shouldn't know future prices ?
But i also have discord with live traders in new York.
But you can confirm my info by blogs on whirlpool or YouTube?
Always Dyor ?
 
>>> Probably not what you wanted to hear.

Of course not :). What I meant was, for the Commsec ETFs I get a bunch of over-complicated (for me, who is not an accountant) annual reports. Only because of them I have to go to an accountant to get help with putting the figures from these statements onto the tax return.

And for the IB held ETF's I get a simple table of four columns which look straightforward at least. So, I was wondering if something is averaged out and with IB I might be losing something on taxes.
 
i don't hold any ETFs in IB (i just use it for short term trading) but keep in mind IB's reporting is all based on US tax rules. that likely explains some of the differences. IB is a great broker, but i never use their reports when doing my taxes on my short term trading portfolio for that reason, i record everything in a custom built spreadsheet and use that to work out the numbers instead.

for Aust tax purposes, if it's a foreign domiciled ETF you need to work out which proportion of the income is classed as assessable foreign source income, how much tax was withheld (which turns into a foreign income tax offset), how much of it is classed as non-primary production, etc.

when such ETFs are held under CHESS sponsorship (which is where i hold my ETFs), they send you a statement at the end of the FY which is specifically tailored to your individual holding, from which you can (with some difficulty, at least for me, so i just get the accountants to do it) work out what's classified as what. not sure whether IB provides a similar statement, since i don't hold any ETFs there, but i would imagine it's difficult for them to do, as under the custodian account model your holding would get mixed in with the holdings of the same underlying for all the other clients.
 
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