Futures Trader Tax Questions

[NAsX]

Hi guys,

First of all, apologies for yet another tax thread, I've read through as many of the existing ones but just wanting to get some further clarification/confirmation of my understanding, hence this thread.

From what I've read so far, trading any futures contracts, whether AUS or international futures, the gains are taxed under ATO as long as you are a resident. If one's activities are not deemed by the ATO as carrying on a business, futures trading activities are simply taxed under CGT.?

If however, you are classified as a trader, than it is taxed as regular income and the trading expenses may be eligible for deduction for running the business. On the ATO site, it mentioned carrying on a business with share trading, I assumed that financial futures contracts also fall in the same category?

I'm in the process of tracking down a good accountant that can advise me further on this (in Brisbane, if anyone has any recommendations), in the mean time however, I know that quite a few guys on the forum trade futures extensively, I was hoping if anyone is 'running a trading business' can give some information as to how they had their 'status' certified by the ATO? ie. do you simply apply for an ABN and they conduct their verification...etc.

Thanks for any info in advance

 

[9Dragons]

I have an idea, why dont you open the future account under overseas address, therefore it is not taxable.

 

[korrupt_1]

I have an idea, why dont you open the future account under overseas address, therefore it is not taxable.

interesting idea.... but wont you get taxed by the local country?

 

[MRC & Co]

Good thread.

I would imagine you would need an ABN to be classified as a 'business'............? And then you would just be taxed at the flat business rate.

Any news on this yet NAsX?

Otherwise it is just taxed as CGT, which I don't really understand, considering it is based on your marginal tax rate and simply halved if you have held for longer than 12 months.

 

[Trembling Hand]

I would imagine you would need an ABN to be classified as a 'business'............? And then you would just be taxed at the flat business rate.

Any news on this yet NAsX?

Otherwise it is just taxed as CGT, which I don't really understand, considering it is based on your marginal tax rate and simply halved if you have held for longer than 12 months.

MRC their is no flat business tax rate. Their is a flat company tax of 30%. But you can have many other types of business. Like sole trader, partnership and all diff types of Trusts.

An ABN is also not the diff between carrying on a business. All an ABN helps you to do is be part of the GST system.

You can be in business and just be a "sole trader" as defined by the ATO in that case all your Biz activity would be under your personal tax file number and personal Tax rates.

 

[MRC & Co]

Ah yes, thx TH, I remember all that info now on the diff business structures.

So if ATO recognises you as a 'business', you are taxed as per usual, but can also write off expenses (such as data, equipment etc?).

Might have to try that one out with them! Would love to be able to write off the thousands of dollars hardware I had to buy!

 

[Trembling Hand]

So if ATO recognises you as a 'business', you are taxed as per usual, but can also write off expenses (such as data, equipment etc?).

Might have to try that one out with them! Would love to be able to write off the thousands of dollars hardware I had to buy!

Expenses and capital equipment are Two very different things. Simplistically expenses (data, Internet, brokerage, elec, phone, rent etc) are deductions from income before tax. Capital equipment can be depreciated but the purchases are first considered profit(because you have to make money before you can buy something). You need tax advise on this one as thats a bit simplistic and I will tie myself up in bad advice if I sound like I know what the hell I'm talking about.

 

[MRC & Co]

lol, yeh, I've been trying to find a good accountant, seen a couple, but both didn't seen to know what they were talking about exactly and wouldn't even bother explaining their answers.

Will keep searching, really need to find one who specialises with other traders, too bad they are so few and far between!

 

[NAsX]

Hi all,

Ok I've been able to get some info from the ATO recently and this is purely based on my own circumstances, so please seek your own advice.

What I was told was that when you are not considered a trader, which is purely self-assessed, you declare your P&L just like stocks under CGT. However, if you were to self-assess and classify your trading activities as carrying on a business, then as TH mentioned you can have all different sorts of businesses, eg. sole trader, trust...etc, and if I remember correctly, they said that your tax rate would be based on the sort of business that you run (might need to verify this again), and all business expenses you will be able to deduct from income according to the specific business type.

They also mentioned that there's no set rules about who's a trader, and since it's all self-assessed, they can't give a definite answer. However, if in the event that you do get audited in a few years, you will need to provide relevant information such as trading activity logs...etc that you used to support your self-assessment.

Yes, finding a good accountant that knows this sort of business has proven to be a hard task, luckily I won't have to worry about it until next year

Hope this helps and comments welcome!

 

[9Dragons]

interesting idea.... but wont you get taxed by the local country?

yes, I heard that NZ has no capital gain tax.
Anyone can verified this ?

 

[amy997]

thats true, theres no capital gains tax in nz

 

[RazzaDazzla]

No CGT in NZ? so why isn't their stockmarket going bananas with traders?

Is their any tax over their 'similar' to CGT?

Seems a little too good to be true

 

[CanOz]

No CGT in NZ? so why isn't their stockmarket going bananas with traders?

Is their any tax over their 'similar' to CGT?

Seems a little too good to be true

More importantly is there tax on capital gains made outside NZ if you reside there, in the US for example? If there is not then its just now moved to my number one desired place of residence (it was close before for the trout fishing alone).

CanOz